Recently BMW set the proverbial cat amongst the pigeons with the announcement of its new subscription-based features set. It is a concept core to SaaS, DRaaS, and every other modern technology offering today – the pay-per-use principle – but as many organisations are now finding out, customers saddled with unacted bills in perpetuity will soon look for alternatives, explains Andrew Cruise, Chief Executive of Routed, one of South Africa’s pioneer cloud hosting providers.
Backed by solid logic and a business model that many technology companies are familiar with, BMW could not have expected the kind of reaction it received to the announcement that its upcoming products will be feature-rich, with the ability for drivers to simply activate and pay for the services that they will use. So, you live in a hot climate with seven months plus of temperate weather? No problem. Don’t activate the heated seat subscription until winter. Going away on an extended vacation while the car stays at home? Sure, turn all the services off.
The underlying logic is sensible. Users are able to switch features on and off as they see fit, tailoring their ownership experience to their needs, but over time questions arise when the technology begins to feel outdated, and the hardware nears end-of-life. How does the subscription cover repairs and faults? Does it cover them at all? What does the subscription fee actually achieve, aside from a few minor software updates and annuity revenue for the brand?
Similar questions pop up time and again when discussing migration to the cloud. Subscription models are not new to our industry, but many IT managers will relate how they have been burnt, many by the hyperscalers with complicated contracts and hidden fees for even the most basic of services.
Technology in cloud-based offerings is easier to keep updated, but as several-hundred customers of a well-known hyperscaler have found out, it’s not a guarantee. There is added frustration when customers trying to remediate problems find out that their particular support package does not include phone support. “Sorry for the inconvenience Ms CTO, if you logged a ticket via our help channel, one of our associates will be in touch in the next 72 hours”. The thing is, 72-hours is a long time when your business is down. It could be a race for survival with no other choice than to slug down the bitter pill of escalated fees for priority support. Or worse still paying for infrastructure no longer needed due to contractual terms.
What are the subscriptions providing if not the technology that was expected or the support required in times of need? It’s a question often left unanswered.
This is where other companies step in to take over ailing relationships with disgruntled customers.
If BMW does not execute a carefully planned communications campaign OR an about-turn on its positioning, it will lose current customers to other brands. Those who may have been considering a premium upgrade might have second thoughts.
The same holds true for cloud: There is always the alure of a large name solution; sometimes even an attractive contractual offer to sweeten the deal; but when the honeymoon is over, customers are left locked into contracts with expensive exit clauses and a lack of service delivery and support. So, they reach out to us.
We built our business, and indeed our pioneer cloud infrastructure, on the basis that customers will always get the latest technology, fit for their application, co-created by our partners with a vested interest in seeing the project succeed. And if support is required it is not an added-cost option that takes days to turn around. We understand this service aspect implicitly.
Deciding to invest in a cloud-based environment is not something that a technology team takes lightly, yet it can result in expensive lock-ins and unplanned paid-for add-ons if not evaluated holistically and with care. The big names have built a great deal of equity in their brands, but as is so commented on today, they then begin to lack the agility and customer connection that got them to that place. We guard the principles that have built us into one of Africa’s leading cloud providers tightly, remaining true to our customers.
Our customers value our approach because while we might not be a big-name brand like BMW, they get a solid reliable engine, heated seats, and a motor plan, without having to pay extra for them. In the long term, this is true cloud-infrastructure success.