“There is now an extreme expectation” for IT teams, Russell Branzell, president and CEO of the College of Healthcare Information Management Executives, said in a recent interview with HealthTech. “Their full plates are getting fuller with less resources, and maybe less money.”
Consumption-based IT solutions — services or infrastructure billed directly based on a customer’s usage — allow healthcare teams to focus on present-day and forward-looking projects without overspending or long-term commitments.
Savings can be significant. Measures with flexibility built into the cost base can eliminate up to 30 percent of IT spending, according to an April report from McKinsey. Likewise, gaining a clearer picture of expenses and usage patterns in real time can empower organizations that increasingly must make every dollar count.
A consumption-based model can reduce the cost and complexity of infrastructure operations, deliver consistent performance metrics and accelerate business transformation, an IDC report on the subject notes.
IDC also surveyed businesses on why they would switch to this model; key reasons were to improve existing services, plan for growth and reduce capital expenditures.
Why a ‘Pay-What-You-Use’ IT Model Can Benefit Healthcare Teams
Unlike IT managed services, which may offer savings by outsourcing key duties — typically for a flat monthly fee — a consumption-based model is tied directly to the amount of what’s being consumed at a given time.
The concept, also known as metered consumption, involves onsite hardware owned by technology providers combined with per-use billing of compute and storage services. A customer needn’t own any existing equipment, and regular checkpoints are established to monitor usage and growth.
READ MORE: 5 Ways Health IT Teams Can Save Money During COVID-19
Although it can often involve a fixed term and minimum-use commitment, a consumption-based option helps healthcare systems easily manage fluctuations.
“With [owned] on-premises storage infrastructure, you can’t get money back if you have purchased too much storage space,” says CDW Healthcare CTO Tom Stafford.
Gaining a deeper flexibility, then, is critical as organizations of all kinds face new and evolving demands on their resources — a challenge that predates the pandemic. A 2019 Futurum Research report on consumption-based IT underscores this divide:
- 78 percent of businesses say their capacity needs are unpredictable
- 67 percent have overprovisioned to avoid running out of capacity
- 38 percent have lost $100,000 or more due to poor planning
Agility is a key supporting component. Consumption-based solutions enable the speed and flexibility of the public cloud, while retaining the peace of mind and control of data maintained on-premises.
A 2018 Forrester survey conducted on behalf of Infrastructure as a Service provider HPE GreenLake revealed more benefits for organizations that have made the switch: Two-thirds of respondents spend less time on global IT projects. Teams also report a 40 percent increase in IT productivity due to fewer support-related demands.
Barriers to Implementing Metered Consumption in Healthcare
Healthcare organizations accustomed to decades of traditional models — on-premises data centers, extended device lifecycles and flat subscription fees, among other things — may at first give pause to the notion of a usage-based payment model.
In fact, unfamiliarity with consumption-based solutions is a key hurdle to making the transition, the Futurum report found. So are concerns about costs and contractual issues.
