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5 important questions you should ask consumption IT vendors

No two consumption models are the same. Before you choose a vendor to work with, find out whose offering best suits your needs.

Many IT organizations have a problem: They’re so bogged down with mundane tasks affiliated with maintaining legacy infrastructure that they have little time to spend on strategic priorities. Indeed, about 80 percent of IT staff time is spent on “undifferentiated heavy lifting” rather than on innovation that might make their employers more competitive, an IDC survey found. 

That’s why we are seeing an increasing number of vendors pitching a modern approach where IT organizations pay as they go for consumption-based IT solutions, with the promise of making their lives easier.

Only one problem: Not every IT-as-a-service vendor offering is the same. Indeed, some aren’t even real consumption-based IT solutions—at least not in the truest sense of the term.

So, how can you tell the difference? Start by asking vendors seeking your business these five questions:

1. What is your real business model?

When someone tells you they’re going to improve your IT operations, it’s important to discern what they mean by that. What does “improvement” mean in their business model?

Consumption-based IT models are supposed to help you plan and provision more effectively, leading to better efficiency and lower costs. But as IDC notes, there are numerous consumption models that often get mixed up with one another. These include pay-per-use, multiyear leasing, hardware ownership with outsourced operation, IT equipment transition options, and Capex ownership with internal management and maintenance.

Modern pay-per-use models should take a hybrid approach, combining the agility and economics of public cloud with the security and performance of on-premises infrastructure. That hybrid approach helps organizations simplify operations and allows them to pay for IT services and resources only when they are needed. As such, organizations can reduce or even eliminate heavy upfront investments in capital.

The other approaches are different animals. While some vendors may dress up their offerings to resemble an IT-as-a-service model, they’re often just putting lipstick on some other beast.

For example, with some vendors, it’s entirely possible you’ll still be asked to buy hardware or software in the traditional model. That’s a totally different approach from consumption, with its own cash flow, ROI, and commitment implications. The downside of this model is that customers don’t buy this equipment very often—maybe once every few years. So, as a result, customers are forced to guess what they’ll need. More often than not, this causes them to overbuy and ultimately waste money.

Similarly, with leasing, while there are no upfront purchase costs, you’re still spreading payments over a fixed period of time. This means committing to a level of provisioning without knowing if it will be needed. Once again, that means overprovisioning. And neither delivers on the usage-based economics promise of consumption-based services.

HPE GreenLake Flex Capacity Estimator: Get a high-level estimate of the economic impact on your specific business environment.

2. Do you offer metering?

According to Gartner, “through 2020, 80 percent of organizations will overshoot their cloud infrastructure as a service (IaaS) budgets, due to lack of cost optimization approaches.” The report goes on to state, “through 2020, 45 percent of organizations that perform lift-and-shift to cloud IaaS without optimization will be overprovisioned by as much as 55 percent, and will overspend by 70 percent during the first 18 months.”1

 One of the key approaches for keeping such costs in check is metering, which allows you to know what you’re using and analyze the data to glean deep and actionable insights from it. (This is true for on-premises or public cloud-based IT as well.)

Surprisingly, though, at least one vendor has been known to ask customers to guess how much capacity they expect to consume in a given month. Customers are rewarded with lower per-unit-of-capacity charges if they come close to hitting their estimates, and they pay more if they guess too low.

With strong metering tools, such absurdity becomes unnecessary. The tools enable you to limit costs by providing visibility into exactly who is using what, what they’re doing with those services, and whether their purchases are being fully utilized. Metering eliminates any guesswork.

For instance, a customer might say they’re using only about half of their storage capacity and they’d love to boost that to 70 percent. But with metering, it’s possible to determine exact usage, pay for only what’s needed, and achieve 100 percent economic utilization.

Consumption planning and payment really depend on a solid metering approach. So insist that vendors show you exactly what they’re offering. You may be surprised to find some tools are very primitive. Prioritize rich capabilities for tracking usage—in a very granular way—and a mature consumption analytics portal for visualizing what’s really happening, spotting trends, and forecasting IT needs.

3. How deep is your portfolio?

There’s more to consumption-based IT than some vendors would have you believe.

Vendors that are new to the space often jump in focusing on one or two things they’ve always done. A storage or virtualization vendor, for example, might offer a few pay-per-use solutions and nothing else.

But for pay-per-use IT to be effective, customers need access to a wide array of services to help them achieve any outcome they have in mind. Without that, these offerings are essentially useless.

If an organization, for example, wants to run a high-performance computing infrastructure, that's a fairly specific workload. The IT team needs to understand how that workload is going to perform and how a vendor can help accomplish that. Likewise, if it wants to run an Azure stack as a private cloud, that's a totally different architecture suggesting separate workload requirements. If the customer wants to run containers or grow its virtual machine environment, it needs purpose-built infrastructure specific to those workloads.

Those are the types of priorities vendors should be able to support and the types of customer outcomes they need to make happen. It’s not about products but rather a vendor’s ability to support workloads that matter. When a vendor comes your way, spend time sniffing out its ability to meet these needs.

4. How long have you been doing this?

While companies that are late to the game can sometimes compete with “good enough” or even strong offerings, it doesn’t happen very often in the consumption IT space.

Veteran players have the advantage of working with IT staffs long enough to understand their needs. They’ve built robust and broad solution portfolios as a direct result of what customers told them. They’ve refined those products over time, eliminating annoying flaws. And they’ve amassed incomparable levels of expertise and experience by virtue of their ongoing work.

In addition, these mature organizations have likely built extensive partner ecosystems, which means they have the support to help customers with even the most specialized workload requirements. Some veteran pay-per-use vendors have in-house financing, or banks, to help customers achieve their goals faster. They deliver a complete package, one that most Johnny-come-latelies could not possibly approach.

Nothing comes together overnight; it takes years to put into place. It’s important, therefore, to ask any IT consumption vendor which of these capabilities it offers before agreeing to do business with the company.

5. Do I get the right services with that?

The point of consumption IT models isn’t to cede control of your on-premises operations but to ease the burden by partnering with a trusted outside adviser. Part of that should involve experienced service providers that understand how to meet and fit your needs.

The service experience is essential for the as-a-service experience. Unfortunately, some vendors look at consumption IT as just another way to sell hardware. They minimize the level of professional services model because it cuts into their profits. As a result, customers get less value out of these offerings.

Not having access to such services can also lead to unanticipated costs and wasted time. The customer often must learn new skills, invest in training employees, and give them support for menial tasks. Doesn’t that defeat the whole purpose of the as-a-service model?

A capable and mature vendor should be willing to assume much of this responsibility for the customer and even manage all of it (most likely for an additional fee), if that fits the way the customer wants to operate IT. Most customers are trying to simplify, to remove the "heavy lifting." Make sure to understand exactly what services the vendor includes with your purchase and what costs extra.

Consumption-based IT marks a paradigm in how enterprise organizations will operate. It focuses on outcome-based consumption and radically simplifies IT while freeing up resources for other priorities. More important, it delivers the best of both public cloud and on-premises IT.

That said, always keep in mind that no two consumption models are the same. It is critical, therefore, to ask the right questions to determine whose offering best suits your needs.

Gartner, "Ten moves to lower your AWS IaaS costs," originally published on April 25, 2017, refreshed Oct.15, 2018.

Related links:

GreenLake: Pay-as-you-go consumption options that deliver cost, control, and business agility

Consumption-based IT: A primer for your business

3 ways consumption IT makes your business smarter

IT consumption: 5 questions you must ask yourself

This article/content was written by the individual writer identified and does not necessarily reflect the view of Hewlett Packard Enterprise Company.