Like most technology providers today, Lenovo have embraced the MSP market place to benefit from a more flexible approach to changing hardware requirements. Despite being better known for its end-consumer hardware, Lenovo are not just a hardware provider anymore (and haven’t been for some time). There have been a number of interesting developments that have arisen, namely their Rent and Grow scheme, to which we will take a closer look.
The idea of Rent and Grow schemes isn’t something new – in fact many industries have used them successfully for years: the retail industry with mobile phone tariffs or ‘buy now, pay later’ on household goods; the entertainment industry with the emergence of Netflix and Spotify; and even healthcare with dental plans. If anything, you could argue that the IT industry has been a slow adopter, but we are now beginning to see the shift to subscription models.
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In my opinion, the over-riding benefit of these models is the ability for companies to be able to map out their Customer Lifetime Value (and to be able to increase that value as customers grow their packages). Understanding the value of your customer is crucial to forecasting and budgeting, managing cash flow and changing the attitudes of how we service that customer. You could make a lump sum off one customer one month, but think of the value you could achieve by maintaining a relationship with that customer over a number of years, earning steady revenue. Suddenly, the attitude of how sales, marketing, and accounts view that customer is extremely different.
The idea of Rent and Grow schemes isn’t something new
With this in mind, Lenovo’s model offers a dedicated track for cloud and managed service providers by allowing them to pay as they provision more Virtual Machines. This ‘rental model’ minimises burn rates whilst also giving you the option to return the kit after 12 months or upgrade to a replacement.
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Although there are a number of organisations offering similar packages in the market, Lenovo have built in additional benefits, making the model more tailored to the providers’ needs, and essentially more desirable than other offerings in the market. These additional benefits include:
- Co-marketing funding in partnership with Intel – this will support providers to generate new prospects
- Trade-in value for ageing equipment – this is particularly attractive for those operating in high-growth environments, where hardware will frequently need a refreshes
- 120 days deferred payments – having capped quarterly payments reduces your risk, helps to manage cash flow and gives you the choice of a contract end date if you choose to return the equipment
- Leveraging one of the most reputable tech brands – incorporating you into Lenovo’s ecosystem, and providing the added benefit of technical support courses.
As with Cloud environments today, it is difficult to gauge which tech, services or even client acquiring will be achieved, but with flexible options that offer all the above, the risk of capital is vastly minimised. We now see businesses accepting joint risk with their partners. Being able to leverage an ecosystem of trusted business partners on the platform of the Rent and Grow scheme, coupled with an amazing tech offering, has put Lenovo in good stead for 2016.
Neil Cattermull, Director of Cloud Practice, Compare the Cloud
Neil's focus is on developing cloud technology and big data. You can often find him advising CXOs on cloud strategy.