Consumerisation Hasn't Hit IT Contracts Yet

We hear endlessly about how consumerisation is impacting the way enterprise IT works. But there's one area where that change hasn't really taken effect: the length and necessity of contracts.

Contracts picture from Shutterstock

I started thinking about this at the Optus Vision customer event in Sydney today, where Optus was talking up its enterprise products and the importance of improving customer service if you don't want to go out of business. (It also offered a few updates on its 4G network plans.)

One of the themes at the media briefing following the conference keynote was the increasing popularity of enterprise-whatever-as-a-service. "There's a big demand for that opex-based, pay for what you consume, very flexible, variable approach," Optus Business managing director John Paitaridis said. "Businesses are also moving away from managing their own services. Customers are now wanting to work with a small number of trusted ICT partners." Optus launched contact centre as a service earlier this year, and is now offering unified communications as a service as well.

While as-a-service providers are always keen to talk up the flexibility, in reality it's rare for enterprise level services to be provided completely contract free. While everyone is willing to provide burst capacity for when demand goes way above normal levels, the usual scenario is that you have to pay for a minimum number of seats over a fixed period of time (often 24 months or longer).

In the consumer environment, this model is increasingly less popular. No-contract deals are much better for flexibility, and often cheaper (a point we always make about mobile phone plans, where prepaid deals generally offer far better value).

So are we really going to see that kind of no-contract deal for enterprise services? Optus' VP for product and IT David Caspair suggested that it might be possible when I asked him, but wasn't exactly whole-hearted in his endorsement.

"In actual fact, you can ramp it up and down for specific needs and specific cases," Caspair said, pointing to marketing scenarios where a call centre might put on extra workers during peak periods. Yes, fine, but want if you want to not just ramp down, but ramp off?

One disincentive is that with these more complex enterprise services, you'll typically pay an upfront charge to cover consulting and integration — something that makes it unwise to abandon the service before you've amortised that cost. And even then, the reality is you will probably be on a contract and the standard contract doesn't have particularly friendly exit terms.

"That depends on the individual contract," Caspair said. "If ultimately that is needed, we wold look to find a way to do that."

Evolve is a weekly column at Lifehacker looking at trends and technologies IT workers need to know about to stay employed and improve their careers.


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