COVID-19 implications on IT – We love Opex

Traditional IT and especially its technology procurement wing love Capex i.e. perpetual licensing and HW ownership. This enables more control. For example it enables to substitute the original software product vendor with 3rd party software support (leading example of a firm in the industry of 3rd party maintenance is Rimini Street. If you don’t now this firm, you should look at it). When technology procurement got a proposal based on renting software they would fight to change the license method to perpetual.

However, COVID-19 changed this abruptly. Perpetual licensing does not support drastic change in business capacity.

In a recent technology procurement virtual meetup we found that many technology procurement organization feel they are stuck with extra software licenses and extra hardware.

“Our branches were 80% closed in the last two months but still we need to pay 100% software maintenance to the supplier of the branches software” said procurement manager from a leading bank.

A flexible Opex based software license model (rental) would be much more appropriate in these uncertain days and so we see technology procurement managers negotiate in order to get this kind of deals.

This is 180° change from the reality we had 3 months ago.

We will talk more about COVID-19 implications and IT in our annual summit (hopefully) on the 13th of July.

EVP & Senior Analyst at STKI

 

COVID-19 implications on IT – We love Opex