75pc of firms moving to cloud-based app purchasing

8 Sep 2011

Some 75pc of businesses are in the process of moving to a subscription-based purchasing model for key applications, a move that ties in well with Apple’s launch of the Mac App Store and the likelihood of a Windows 8 App Store.

The rise of the subscription economy is driving changes in businesses’ back office systems, says CloudSense.

This fits well with the emergence of downloadable apps markets for platforms like the Mac OS X Lion as well as the imminent arrival of Windows 8, which is also going to have its own app store.

Carried out by research specialists Vanson Bourne, the survey polled 100 senior IT managers in UK enterprises (minimum 1,000 employees) on their thoughts about purchasing business applications via subscription rather than through capital investments.

The survey highlighted that 75pc of UK businesses have either deployed, or are in the process of deploying, a subscription-based purchasing model for some or all of their business applications.

For CloudSense, this reflects a requirement for businesses to adapt to changing consumer purchasing habits linked to a market-wide rise in subscription services for consumers.

The rise of a subscription economy

“The survey results back up what we have observed in the market,” said Richard Britton, managing director of CloudSense.

“We are currently seeing the rise of a subscription economy, where consumers buy goods and services via subscription, rather than as one-off capital expenditures. The popularity of services such as Spotify, Zipcars and even the ‘Boris bikes’ underlines this trend.

“This is largely driven by the greater choice, reduced cost and flexibility that subscription services can provide to consumers. The subscription economy is growing fast and those businesses that cannot react quickly enough to take advantage of it will be left behind.

“A new consumer purchasing model, however, requires a new approach to back-office systems in order to provide the flexibility and scalability required. Here, businesses should look to implement subscription-based business applications that mirror the consumer purchasing model.

“For the first time we are here seeing businesses taking the lead from the consumer environment,” Britton said.

CloudSense’s survey demonstrated that IT managers are aware of the benefits moving to a subscription-based purchasing model will afford. For the respondents, the key benefits of the subscription model include more tightly controlled costs (59pc), faster speed of implementation (50pc) and avoiding costly infrastructure so they can focus on innovation and value-added IT (50pc).

The survey also revealed a high degree of optimism about the extent of cost savings that such a purchasing model can bring about, with 71pc of respondents envisioning annual savings of £10,000 or more (24pc thought that savings could, in fact, exceed £100,000 per year).

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years