From the margins, procuring a services vision
IT Millionares ClubBy James Warren, Auckland | Friday, 10 August 2012
I’d been teetering on the edge for a while, waiting for some small thing to push me over, with no safety net. Finally, I couldn’t wait any longer, so I jumped.
I have traded in my procurement membership card and become an evangelist for hosted software. Farewell hardware margins. It feels like you left me some time ago. Goodbye lucrative server licensing agreements. It’s a services based world and just like the McDonald’s tagline says “I’m loving it”.
While the pun makes me sick, I have started to think about my job using shared buzz word language. That’s right I am looking for the silver lining of my cloudy software offerings. While I would love to make you believe that I am on the pulse of technology, an early adopter and well cooler that I will actually ever be. This has been a really long time coming.
Every day working in the IT industry has been a history lesson focused on warnings of quickly diminishing margins on hardware. Take a flashback with me to a story set in the late 70s.
I had recently been born, Woodstock had made its impact on the world and at Auckland airport, an IBM mainframe had just landed. This powerful device had been ordered purchase-price in the high hundreds of thousands of dollars with a delivery turnaround of 10 to 12 months. But the mainframe was destroyed at the airport by a courier incorrectly placing a forklift through the unit.
Years later, working for a distributor of servers and components, I saw the full effect of Moore's Law. The cyclical doubling of processing power yielded impressive numbers, but it also gave us consumers that knew about it an excuse to defer a purchase as long as possible, to leverage those exponential jumps in capability.
Now, with everything-as-a-service, customers can leverage greater efficiency - and a low fixed cost - than when they used to buy their own hardware. Why would any client hire you to support their infrastructure when the hosted services model of spreading that cost across many other clients is so attractive?
This is the final consequence of a technological commoditisation started by IBM in 1964 and continuing right through to virtualisation. Of course, hardware configuration and licensing had to keep up with the changing times, but with virtualisation utilising an additional 80 percent of active hardware, the future was now.
This future has been long in coming, of course. I worked for an anti-spam provider five years ago that had been hosting its software for over a decade. Microsoft has hosted Hotmail since 1997. Now, more often than not, entire organisational infrastructures are at least in part hosted. I am not an early adopter but I know when to leave hardware world behind.
Of course this means I have traded in margins for projects. I have always been told that sales is about getting the prospect to buy you not the product but when you are selling services this is a much more literal requirement. So of course I jumped into the clouds, the reason I am here is to help people do their jobs better supported by technology, now I just have to prove that it can be financially beneficial. Isn’t that always the hardest part?
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