Hosted services are like financial leasing
It stuck me earlier as I was speaking to someone about equipment financial deals with suppliers and banks that the hosting model is very similar to it - although with far more added value.
A financing deal basically allows you to purchase an expensive piece of equipment - say a 5000 euro server - and pay it back over a period of time. This saves the company cash flow and also allows the company access to more ‘assets’ (inverted commas as the equipment is not as asset until it’s owned) which they will use to help grow or streamline the business.
In the case of hosted services - servers in particular, as it’s most relevant to the example above - a company can lease a server over a period of time (same benefits as above) AND get the additional benefits of managed services (staff expertise), IP connectivity (a good data centre will have lots of redundant and carrier neutral bandwidth), fast upgrades/repairs (based on agreed SLA’s), and most importantly, a hosted off-site server in a world-class data centre that can provide intra- or inter-net facilities.
I wonder then, when it comes to technology, should data centre businesses try to compete with the banks and equipment vendors when it comes to leasing deals? There is potentially no server software that can’t be provided as a hosted application now, once the customer office has a broadband (or equivalent) connection.
The hosting providers value-add is so much greater than that of a financial house, it would seem logical for IT Managers to consider this option when looking at their 2006 budget provisioning. Lower costs and increased service provision … win/win!:-)