Wingspan

Unlocking New Business Models with New Procurements Models

by John.McHugh on ‎10-12-2011 04:20 PM (473 Views)

When we announced Brocade Network Subscription at VMworld Las Vegas, it created a tremendous amount of industry stir. Many people in networking began thinking about this new model and were a little confused about how it would work. This was not a surprise to us. Cloud computing and IT transformation are creating new business models that are stretching peoples’ imagination. Brocade Network Subscription is something so innovative that many people are evaluating it, without understanding what the ultimate value is going to be.

With the Brocade Network Subscription model, Brocade essentially becomes a partner in sharing the business risk with prospective customers. It allows them to easily buy the exact amount of network infrastructure equipment they need to generate immediate business month-to-month, while delivering the flexibility to scale up and down as needed. This is an enormously powerful benefit for customers in a dynamic business environment.

Brocade Network Subscription is a significantly different business model from the way most enterprise customers acquire networking equipment today.  The customers that are most attracted to this procurement model tend to have highly variable or dynamic infrastructure and capacity requirements. These can be event driven companies where network usage may be driven by online purchases around a given holiday or due to global sporting events where capacity requirements will need to rapidly scale up and down within a very short period of time. This  allows these customers to buy the infrastructure they need for those peak times and scale it back when demand subsides making their infrastructure overhead more cost-effective.

Other ideal customers are organizations that are selling Infrastructure as a Service (IaaS). In other words, their income stream is coming from a customer paying them regular fees for some sort of IT functionality, and as part of the delivery of that IT functionality, they need to provide the infrastructure. In most cases, IaaS customers need to build capacity for their service before they can actually start generating revenue. These types of businesses have to make massive capital purchases in order to turn on their first revenue generating port or their first megabit per second of bandwidth. They incur all the upfront risk with the assumption that their business model is going to come to fruition with this big capital investment.

It is important to highlight these cases because there are customer cases today where this fits like a key in a lock and opens up business models and business opportunities. For very small companies with limited capital budget, for companies with very dynamic requirements, and for those companies who provision infrastructure, Brocade Network Subscription is a perfect fit and we’re finding a great deal of resonance and excitement about it.