Dell has announced three payment methods for corporates and CSP’s (Cloud Service Provider’s) to help with the financing of cloud computing. There are three new methods that help with deployment finance : Pay As You Grow, Provision and Pay and Scale On Demand
Pay as you Grow is designed to help companies that want to fully populate their data centre or racks with the servers that they will require in a single hit, but they do not wish to start paying for them straight away, This means that installing the servers can be achieved in single hit and when data centres are harder to access due to geographical locations companies can install the equipment with the capital expenditure outlay.
CSP’s will like this as they will be able to turn on new servers as they bring clients on board without the risk of having to wait for sufficient servers to be there for them. It will reduce the risk of turning business away.
The press release and information sheets do not reveal what happens if the expected growth does not materialise and the servers are not used. From Dell’s point of view they will be shipping more servers faster and while the payments are deferred one assumes that they will be received at some point. It certainly sounds attractive at first glance and for some companies it will be welcome.
Provision and Pay is the second new option and is more of a call off process. A level of expenditure is committed to, but the installation and payment schedule flexes as the equipment is installed and provisioned.
Dell see this as a cycle where payments can be synchronised with chargebacks and lead times are eliminated. The cycle has five phases:
- Analyze and forecast
- Order the equipment
- Install the equipment
- Deploy workloads
- Begin payments (this begins after deployment rather than delivery)
- Analyze and forecast again (Phase 1)
Scale on demand allows companies to bring in cloud solutions and make payments based on actual usage. While this may seem the best solution the total costs may be higher, depending on the utilisation.
Hybrid Cloud more important?
According to Dell it is. According to a flash poll carried out by Dell that reached 1050 IT Decision markers globally, 90% of responses confirm that Hybrid is important for a “Future Ready Enterprise”. While the research appears to show that there is a retreat away from Public cloud towards a model of Hybrid cloud that includes a mix of private and public cloud.
In the UK 43% of the ITDM(IT Decision makers) responded that their business uses such a mix but 46% believe that hybrid cloud is the future. It is this latter figure that is surprisingly low compared to the first figure, as one would have expected to be a lot higher if 43% are already using hybrid cloud. One wonders what Dell’s and the ITDM’s definition of hybrid cloud is.
Globally Dell are seeing what they call Cloud Repatriation, where enterprises are seeing that the cost of Private cloud is often less than that of public cloud services. There is therefore a trend to move back towards a Private cloud model, the reasons given are security, cost and complexity. According to the Dell Flash poll 78% of ITDM’s are planning to return applications to private clouds from public clouds.
This was backed up by a Forrester report in June entitled The Total Economic Impact™ of Private Cloud – Cost Savings and Business Benefits Enabled by Private Cloud. The perceived benefits included a greater ability to innovate, more cost effective delivery model. Higher utilisation of assets and retention of skills and knowledge that had been diluted by the move to public cloud. One assumes this last point is because less work was required on internal systems there was a loss of staff and knowledge.
A third reason and one much more likely that the issue of cost is data privacy. European companies in particular are sensitive to governments wanting data geo locked to the country. While the cloud vendors are all rushing to build in-country options to accommodate customers, there appears to be an increasing number of customers who see Private Cloud as giving them the flexibility of cloud and a lower risk of upsetting regulators. Ironically, there is no evidence that data is safer under enterprise control than in the hands of cloud providers.
The challenge for Dell was summarised by Michelle Bailey, Senior Vice President, Digital Infrastructure & Data Strategy, 451 Research, who said “As cloud services become a larger and increasingly more important part of organizations overall IT portfolio, financing emerges as a critical success factor for implementation. For many organizations, a multi-cloud strategy will be the norm including on-premises and off-premises capabilities. Dells new financing services addresses the needs of customers looking for a more flexible approach to both fund and pay for computing resources, particularly as IT budgets continue to shift from capital to operational models.”
These options do allow companies to be more flexible with their payments and will certainly help with the cash flow for certain companies, especially those experiencing growth. These new pricing structures will certainly be welcomed by some but ITDM’s need to be cautious and calculate the TCO carefully and consider the risks associated with their choices.
Jim Ganthier, vice president and general manager for engineered solutions and cloud at Dell commenting on the new payment options commented: “Only Dell can offer the global programs and expertise to customers no matter where they are on their cloud journey, and we are now putting in place flexible payment solutions, cloud solutions and services offerings to make hybrid cloud a reality for businesses.
“The majority of customers have declared hybrid cloud as their ultimate end state to control IT costs, gain flexibility and agility, and to deliver new services to meet business requirements. Dell offers the full range of infrastructure, management software, services and payment solutions to help customers realise this strategy.”
As Ganthier stated payment terms are but one element of the portfolio that Dell will need to provide for customers. Hybrid Cloud is clearly not just here to stay but will grow in popularity. It will be interesting to see what new announcements are made by Dell at Dell World in Austin, Texas between 20-22 October.