Information Technology is a Service – And that’s Great News!

The old days, those of the famous “MS Office box”

I am sure most of you still remember when we used to go to a software shop and buy a dozen licenses of, say, Microsoft Office, each in a box with a CD or DVD for the code and a fancy hologram meant to materialize the actual license to use said software.

Back then, in order to gain access to a desired set of functionalities, there was a stiff one-time fee to be paid upfront and we used to call it “purchase price”. And, by the way, because many different functionalities were bundled together (for packaging/product line purposes) you ended up with a bunch that you didn’t really need.

This approach was not a good match for “intellectual property” products. It was in fact derived from the “material” world. Indeed when you buy a table, you pay the purchase price upfront, take delivery of a physical item and you own it free and clear, with no further expectations from the vendor (I will skip here the notion of warranty, which only delays the process by a year or two). This table will be used as it is for years.

Now, software services as a subscription

Now, in order to gain access to a set of functionalities, you first subscribe to a service that is deemed to provide what you want. Sometimes (but less and less so over time…) you download a piece of software that you then have to regularly update.

As you see, you no longer purchase a piece of software but rather you subscribe to a set of functions/services that sometimes require that you download some software.

Not quite the same thing indeed! Mind you, this is much more consistent not only with your needs (did you ever feel like you needed to own a piece of software, really?) but also with the nature of what is being offered. You are expecting something that will work whenever you need it, even if your need changes slightly (new phone, new computer) and the value it will bring to you will also materialize every time you use it.

Notion of life cycle and updates

It used to be that the “Microsoft Word” code you were purchasing remained the same for as long as you owned it. And, because of the stiff cost of acquiring the newer version, you would typically stick to the old one for way longer than reasonable, thus depriving yourself from very important new features.

These days, hardly a week goes by without any not-insignificant update to the tools we use. Just look at your smartphone and how often it gets updates for any given application.

Seeing information technology as a service that you subscribe to and that you have available whenever you need it is the new norm.

Software shops will invest in developing the initial product and will then recoup their investment through subscriptions that will cover amortizing the initial investment, providing technical support and updating the software solution in order to keep it up to date.

This business model lines up your interests and theirs: they stand to benefit from offering you constant high-quality services and updating their platform to keep it current with respects to the market. If they manage to do that, they will have a large number of customers who will help them recoup their investment quickly.

It’s a new way of looking at Information Technology

But this business model is also lined up with your interests!

Indeed, you now need to think about it as “cost of doing business”, “recurring cost”, NOT as “investment” and “amortization”.

The good news is that more and more donors are aware of how critical proper information technology infrastructure is, not just to the success of your projects but also to the impact and to the lessons learned. So, just like you charge the fuel costs associated to the project to its budget, you can now include the cost of having the required information technology infrastructure to best run your project.

So not only won’t you have to look for investment funds (typically very hard to find) but you will more and more be able to factor the recurring costs of this infrastructure into the project’s budget.