Finally Getting the OpEx Model Right

by | Jun 27, 2017 | Business Optimization, Cloud

The cloud revolution is forcing companies to rethink how traditional offerings can be re-spun to fit the new ways of thinking in the front offices of enterprises. Capacity on Demand has long been a great concept, yet it has struggled with success. The technology has been there but the financing models had not yet caught up. But NetApp’s new approach with NetApp OnDemand addresses and eradicates this problem by simply delivering what’s needed. The customer pays for capacity of service levels, rather than simple terabytes of storage, making an integrated solution easier to budget for as there is no need to cross the CapEx/OpEx boundary within the project.
Ever since the Dot-Com Boom, enterprise storage vendors have had “Capacity on Demand” programs that promised a pay-as-you-use consumption model for storage. Most of these programs met with very limited success, as the realities of the back-end financial models meant that the customers didn’t get the financial and operational flexibility to match the marketing terms.
The main cause of the strain was the requirement for some sort of leasing instrument to implement the program; meaning that there was always some baseline minimum consumption commitment, as well as some late-stage penalty payment if the customer failed to use as much storage as was estimated in the beginning of the agreement. This wasn’t “pay-as-you-use” as much as it was “just-pay-us-no-matter-what”.
NetApp has recently taken a novel approach to this problem, by eliminating the need for equipment title to change from NetApp to the financial entity backing the agreement. With NetApp’s new NetApp OnDemand, NetApp retains title of the equipment, and simply delivers what’s needed.
An even more interesting feature of this program is that the customer pays NOT for storage, but for capacity within three distinct performance service levels, each defined by a guaranteed amount of IOPS/TB, and each of these service levels has a $/GB/Mo associated with it.
This new consumption methodology creates all sorts of new project options. The cloud revolution is forcing companies such as NetApp to rethink how traditional offerings can be re-spun to fit the new ways of thinking in the front offices of enterprises. In my opinion, NetApp has gotten something very right here.
To *read more on my perspective on the economics of NetApp’s OnDemand Storage, and the vast potential that consumption methodology of software sold on subscription creates, read my entire article *here or reach out to me at to discuss how this new offering can help your organization.
*All opinions expressed on my personal blog are those of my own and do not directly represent Red8 or their leadership