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Subscription! good for me or not?

Updated: Aug 26, 2022

OK let’s have a think about it, in a transfer of title business model you buy an appliance for £360K, and depreciate them over 3 years, easy maths £10K per month. However, the life expectancy of the appliance is 5 years so in reality those servers have cost you £6K per month.

Every vendor that I have worked with over the years has looked for a product refresh every 3 years, so you hanging on to the appliance for 5 years is a disaster for their financial model.

We have all seen the hike in 4 year maintenance costs, and getting imaginative with a buyback on your old tin, but in reality the vendor will do whatever they can to ensure that you refresh your estate to fit in with their financial model.

Alternatively, what happens if we switch everything to a subscription?

...guess what that guarantees a refresh for the vendor without any of the hassle of the future negotiation.

Now we love a good subscription, and if you are cash poor, it is a great way to obtain a bunch of resources without the upfront capital expenditure, much better to use somebody else’s cash.

The issue really comes if you are cash rich, you know you are going to pay more for your subscription, you know that you will be forced into the vendor refresh cycle as opposed to your own depreciation cycle, the question is how much more.

Just look at the profits of the vendors you are working with since they have shifted their business to a subscription model, and you will see how much it is really costing you.

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