The Buying Models Helping You “Do More With Less”
The economic uncertainty of early 2023 has presented IT teams with a challenge: how can they make the most of the new and promising enterprise technologies with tightening budgets?
written by: Rachael Pugh, Partner Marketing & Enablement Panasonic TOUGHBOOK
IT teams are always grappling with the ongoing challenge of how to make the most of new and promising enterprise technologies when budgets are being squeezed. This ethos has been summarised in one well-used mantra “do more with less”.
Thankfully, the financial forecasts have brightened over the last six months, and businesses are once again able to invest in solutions and strategies that will help them to pursue growth, gain a competitive edge, and streamline their workforces.
Recent Panasonic research highlighted that European mobile workforces in a wide range of industries, from emergency services to manufacturing, operate on a device refresh lifecycle of 4.2 years. We’ve written before about the ways in which decision makers can extend this lifecycle at the purchasing stage, including properly piloting devices with their intended workforce and investing in more modular, flexible devices, and these shifts in process can extend the ROI of a device significantly. However, there is a secondary consideration at the buying stage for businesses looking to make the most out of their investments: what buying model works best for my company?
Decision makers looking to make their next mobile computing investment have a wealth of buying models to choose from. To support your business in its next purchasing decision, we have outlined each below:
CAPEX vs. OPEX
The Traditional Approach – Capital Expenditure
The typical method of IT investment for businesses has been seen as a one-off capital expenditure, or CAPEX. This approach involves one upfront cost and relies on the replacement cycle outlined in our Sustainability Gap Research.
Under CAPEX, significant money is invested into infrastructure, software licenses, and equipment. These investments are recorded on the balance sheet and depreciate over time. While CAPEX was previously the go-to model, it can be challenging for companies with tight or tentative budgets, such as start-ups and not-for-profit organisations, to justify this level of upfront investment. Furthermore, organisations are slow to benefit from rapid technology adoption under this model.
Shifting Perspectives – Operational Expenditure:
The growing importance of modern IT systems to business success has led businesses towards classifying IT investment as operational expenditure, or OPEX. This approach allows companies to spread the cost of vital or emerging technologies over a longer period, effectively using available cash for revenue-generating activities.
This is particularly common in software and services, but the adoption of subscription or "as-a-service" models, applied to hardware such as mobile computing, PCs, or data centres, enables businesses to maintain their competitive edge and boost efficiency whilst operating with greater financial flexibility. Furthermore, the OPEX model allows organisations to scale their investment up and down as required.
In line with the growing emphasis on the circular economy, the second-hand technology market is offering a third buying model for smaller businesses with more limited budgets.
A variation on CAPEX, refurbishing and reselling once-used hardware makes it easier for small or underfunded organisations to justify the spend for bigger investments. There are a lot of reasons why a more specialist technology would be a great fit for a business. For example, the extreme modularity and rugged build of a TOUGHBOOK 40 makes it a long-lasting, reliable partner for charitable organisations operating on the frontline of a conflict. The cost savings of buying these products second-hand allows businesses to benefit from high-performance devices, for less.
This isn’t the only benefit of second-hand technology. By participating in programs that refurbish and recycle used devices, businesses contribute to the circular economy, aligning with a growing emphasis on device longevity and reducing e-waste.
Seek the right partner for your investment objectives
The type of IT investment can determine the success and operational capabilities of a business. This is especially true of organisations with a truly mobile workforce; mobile computing devices are an enabler through which employees in the field can experience the efficiency and business intelligence promised by digital transformation.
Whichever buying model best fits your business, ensure you partner with a supplier that understands your needs and can support your ROI targets. To maximise investment, seek out devices that are flexible enough to meet evolving workflows, ruggedised to your environments to remain reliable and operational for at least five years, piloted with your workforce and offer lifecycle-long support.
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