Payments are adjusted to meet
changing demand for online storage, writes Claire
Hack.
Go deeper with GlobalData
The takeover by Hewlett-Packard
(HP) of virtualised storage provider 3Par paves the way for it to
develop new, flexible financing models.
A fierce bidding war between
Hewlett-Packard and Dell to acquire 3Par drove the price of the
company up to $2.35bn (€1.83bn) at its close on 2 September, a sum
underlining the significance of the purchase. A Hewlett-Packard
Financial Services (HPFS) spokesman would say only that “new
opportunities for HP translate to new financing/leasing
opportunities with HP’s customers”.
However, the innovation by other
funders financing similar software and storage services indicates
what might be ahead for HPFS.
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By GlobalData
A technology in
demand
Companies likes ECS and IBM Global
Financing have been rapidly developing solutions to keep up with
demand from customers, as well as the ever-changing nature of
virtualised storage. As the technology develops, so too does the
need for flexible financing.
Chris Labrey, UK and Ireland sales
director at IT lessor ECS, said: “In cloud computing, the end user
is not in the loop at any point because they’re ‘through the
cloud’. It’s the application provider that needs to invest in
infrastructure to meet the needs of the user, who could be anywhere
in the world.”
The solution in terms of providing
finance for this kind of project is not always straightforward. By
and large, the simplest way for an end user to pay for virtualised
storage is with a ‘pay-per-use’ model direct to the supplier,
depending on the amount of storage required. Suppliers of the
storage can arrange financing via a funder like ECS, and payments
can then be adjusted to meet increasing demand.
The point at which demand decreases
is where the difficulty lies. “We’re pretty unique in that we can
accommodate that. The key to the whole ‘pay-per-use’ model is to
try to match revenues from the customer with lease repayments. If
you were to charge straight line rates, then of course the
repayments at the start will be grossly larger than income. You
need to start off small with incremental payments,” Labrey
says.
It is therefore necessary to use a
‘capacity on demand’ model, which involves working collaboratively
with the storage provider to come up with a solution matching
anticipated usage, yet flexible enough to cope with fluctuation in
demand.
Labrey says: “It’s very desirable
for the application provider and it’s something we’ve developed at
ECS.”
Focusing on the right
factors
Numerous factors need to be taken
into consideration in terms of determining charges.
“There are many different
currencies that can be used in terms of defining usage – per day,
per hour, per minute. That gives the application provider a
projected income and the leasing company needs to match that and
have flexibility for variation in income,” Labrey says.
There is also a division between
“public” and “private” cloud computing, says Nick Gallop,
international marketing manager for Europe at IBM Global Financing
(IGF).
The division is between a supplier
offering storage to a business where the amount required will be
relatively easy to gauge, as opposed to the general public on a
pay-per-use basis.
“The public cloud proposition is
distinct from the private. Sticking to the private cloud, it’s an
efficient way of offering IT services and reducing costs. It still
needs hardware to make it run, so if an organisation is setting up
a new cloud service, getting new technology to go with it would be
through the most traditional form of IGF business, which is
financing hardware with a lease, and software services with a
loan,” Gallop says.
Storage can then be increased as
required.
“We could construct a model where
there’s room for a decrease but with storage, I don’t know anybody
whose needs have decreased – storage seems to be growing
exponentially,” he says.
IGF offers upgrades or capacity
increases at the end of a contract, and also takes care of asset
disposal at the end of an agreement, including managing data
disposal to avoid legal complications.
“We take care of asset disposal
right through to erasing disks to make sure there are no data
security breaches. That’s one of the benefits of financing – we
take care of risk and recycling and make sure it’s secure,” Gallop
says. To avoid disruption it is possible to run the upgraded
hardware side by side with the older model for up to 60 days.
HPFS now has the perfect reason to
develop similar such funding products.
HP executive vice president and
general manager of enterprise servers, storage and networking Dave
Donatelli says of the merger: “HP and 3PAR is a winning combination
that will accelerate HP’s converged infrastructure strategy and
bolster our ability to provide customers with the industry’s
highest levels of performance, efficiency and reliability.
“We intend to invest in 3PAR’s technology to create long-term
value for our stakeholders.”
