How does one quantify the benefits of consuming technology “as a Service” when compared to traditional on-prem purchase models?
This is the quintessential question that purveyors of IT solutions, including their partners, struggle to answer.
Analyst firm ESG recently performed an economic validation that focused on the quantitative and qualitative benefits organizations can expect from shifting IT operations to Dell APEX to simplify IT, accelerate innovation, reduce costs, and increase revenue. ESG’s validation reveals that APEX addresses many of the challenges organizations face while enabling companies to focus on their key lines of business instead of IT operations.
ESG’s economic analysis
revealed that Dell APEX provides its customers with significant savings and benefits in cost predictability.
ESG found that customers not only recognized an overall lower cost for most Dell APEX deployments, but they also saw benefits by shifting to a more predictable consumption-based IT model.
In addition, ESG found that when APEX customers discussed improved costs, there were two main categories that stood out: lower overall costs and cost predictability. While both categories were strong benefits, the combination of the two was consistently called out in interviews as a highlight of APEX. Costing categories include:
· Shift to consumption-based costing – The traditional model of providing capacity looks like a large stairstep, with organizations often overprovisioning because they are attempting to predict demand for months or years. APEX has flexibility in costing. The ability to create an APEX offering that is matched to business needs means that customers pay for what they need with the assurance that capacity can be closely mapped to demand. The consumption model of APEX eliminates the large CapEx outlays that are found in traditional IT while removing the drastic overprovisioning found in the stairstep model.
· Rightsizing of capacity – APEX offerings are built with a balance among cost, capacity, and performance that best fits the needs of the customer’s specific business. The customer determines the level of capacity and support provided by Dell. APEX also helps customers identify areas of opportunity to eliminate waste. ESG estimates that APEX customers can reduce overprovisioning between 26-42%, depending on workload. With APEX, you can help your customers match IT spend with forecast use and business objectives.
· Reduced support instances – ESG found that customers shifting to APEX had substantially reduced support costs. Not only was the support burden shifted to Dell in many cases, but the new systems and best practices introduced as part of APEX “just make sense,” according to one customer. ESG found that support costs can be reduced up to 70% by moving to APEX, and the business impact of reducing support events has a direct and positive impact on profitability.
· Reduced unplanned downtime – APEX customers report between a 40-65% reduction in unplanned downtime events as well as a mean time to recover that is almost half the time as in their previous environment. The impact of this downtime savings equates to large chunks of recovered revenue due to fewer events.
· Lower TCO – APEX allows for a direct alignment between cost and need. One customer ESG interviewed shared that their IT costs have dropped 35% since moving to APEX, all while bringing a marked improvement to their ability to support business initiatives with technology.
Interested in learning more?
ESG’s Economic Validation process is a proven method for understanding, validating, quantifying, and modeling the economic value propositions of a product or solution. The process leverages ESG’s core competencies in market and industry analysis, forward-looking research, and technical/economic validation. ESG conducted in-depth interviews with end-users to better understand and quantify how Dell APEX has impacted their organizations, particularly in comparison with previously deployed and/or experienced solutions. The qualitative and quantitative findings were used as the basis for a simple economic model comparing the expected costs of traditional IT operations with Dell APEX.