If the question raise to name one of the most important sector of any company what will your answer be? Undoubtedly it will be the IT sector. This sector has gained a lot of importance in past two decades. You will find no office today where people work with pen and papers. Even the government offices have levelled themselves up. Need of IT services is not just in IT companies that provide services in the field of information technology but also in every big and small company, either for maintaining records or for writing a content. Even in the smallest of business you need the involvement of information technology products and services. Now suppose some computers in an office stop working. Can anyone who does not know the machine properly have the ability to fix the problem? No. This is why there is a need of an IT department in every office.
IT based consumption model ensures how any company should pay for the services it uses. According to what and how much IT services they consume, the consumers pay their bills. This consumption based model is prominently used for cloud services along with several other IT services that businesses today use. It is a very basic approach. The service providers will quantify the services and according to the use consumers have to pay for the used service. If I give you one of the daily life examples, whenever we send a message through network the vendor charges some fixed price per message. Vendors charge according to usage per minute or per second for some real time services. You can correlate it with how Internet cafes charge us, either by charging us for an hour or they charge according to the minutes for which the service was used. One can find analogy between consumption based pricing model also known as utility computing payment structure and other services we use like water, petrol, diesel, electricity etc.
Today there is a new type of pricing model also available in market called subscription based modelling. According to subscription based modelling, users sign in for the IT services with the companies providing it on annually, monthly or on daily basis. Here unit to calculate the amount becomes a fixed time instead of use. According to this, in a particular time limit, customers enjoy unlimited services by paying for them early.
Benefits of consumption based model
- It focuses on its user base- In this model you land directly into market and compete. It makes companies improve there services as the best in the market will be the most used and the most used will be a clear lead in the competition.
- Assures security- In such cases services provided to you is the responsibility of the business that is providing you the service. Hence, your data and information is carefully taken care of by the business itself as no company wants to defame its name in the market.
- Efficient and Fast at affordable costing- Users will choose the company providing fastest of the services which are efficient along with being cost effective. IT is a field where everyday a new technology comes, in such a scenario providing the fastest speed becomes the motto as well as marketing component for vendors providing people with various IT services.
- Proper Database- If you are a company heavily dependent on IT services, consumption based IT services model help you know which department of your company is consuming how much and when etc. in detailed format.
Disadvantages of consumption based model
- Too much will also hit a loss- People are trying to move all information on cloud which is again not suitable as information will be disrupted. Instead of this they should move some important functionalities step by step.
- Improper sizing – One will need to charge a lot and will not be benefited as far as cost is concerned if they do not assure proper sizing of their data.
- Right choice of vendor- There are so many companies today in the market that prove IT services in such a scenario it becomes tricky as whom to choose and whom to reject. Every company tries to keep a cost – efficiency ratio. That is if the cost is high, efficiency will be high and if cost is low there may be a compromise on efficiency. This leads to a confused approach while deciding for suitable vendor.
There is a vast scope to explore IT consumption with associated costs which is not a chargeback solution. Consumption information is on the urge of agility and scalability. Keeping an understanding about who is using what volume in what patterns filed with real costs, is how IT can provide a value added output to the overall business.