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Lease, Rent, or RideShare? Azure Consumption Models Explained

Cloud | Posted on September 7, 2018

Azure public cloud services are among the most important we deliver. But no two Azure customers are alike.  Each comes to us with specific motivations for adopting public cloud.

Some want to lower costs. Others want to enable innovation and competitive advantage.

Some expect to adopt the public cloud with predictable, year-round usage. Others may need to consume Azure services in short bursts. While the specifics may vary, our clients turn to us to help them use Azure to meet their over-arching transformation objectives.

We’ve found the ways customers engage us for Azure services are analogous to personal travel: The car may be the method of choice for many. But some rent, while others prefer to own. Some may lease or own a vehicle at home but use other methods when traveling.

In the article below, we use the analogy of the car to illustrate the three most common usage models for our Azure services and the customer preferences that motivate them.

The “Lease” – Server Cloud Enrollment (SCE)

For many drivers, most day-to-day travel takes place within a 45-to-60-mile radius from home. Routine trips to the office, the grocery store and driving the kids to school travel along fixed routes and yield a predictable annual mileage.

In this scenario, leasing a vehicle yields the best overall cost and convenience. There are some drawbacks – the leaseholder is responsible for fuel, insurance payments and ongoing maintenance. But the lease covers maintenance and warranty coverage direct from the dealer.

For our Azure customers, this pattern of usage aligns with the Server Cloud Enrollment (SCE) model. Here, the client makes an upfront commitment to spend $12,000 per year. Microsoft ensures the functionality of Azure’s underlying data centers and services. Like the vehicle leaseholder, the client leases that infrastructure with a predictable amount of usage in mind.

The “lease” model works to the best advantage of organizations with common, repeatable patterns of IT spend and usage. As such, many of our Microsoft enterprise agreement (EA) customers fit this model. Just as the leaseholder may choose where and from whom to buy vehicle maintenance services, SCE customers may acquire managed services as needed. For example, migration services of managed services as their needs or strategy dictate.

The “Rental” – Pay-As-You-Go

Let’s imagine our hypothetical driver travels to other cities in North America on a regular basis. In this scenario, driving a leased vehicle across the continent would be impractical. Instead, they choose to fly and rent a vehicle when they arrive.

In this case, they find similar traffic laws and patterns to those in the city where they live. They still drive the car themselves and cover insurance payments. They need to provide fuel and know the route to their destination. But they don’t have to take care of maintenance, cleaning, repairs or other responsibilities of owning a car.

The rental scenario is analogous to a Pay-As-You-Go model of Azure procurement. Under a pay-as-you-go engagement, a customer will pay for public cloud services only for the time they’re needed. Just like renting a car, the client only needs to have the credit or cash on hand to pay for the services used in a given term.

This type of Azure engagement appeals to customers with less predictable usage patterns or those who need to support burst consumption for shorter periods of time. These include customers with smaller levels of public cloud consumption or those experimenting with new applications and services. Committing to $1,000 in cloud spend per month to cover a short period would be just as impractical as buying a new car for a week’s worth of business meetings in another city.

The “Ride-Share” – Cloud Solution Provider (CSP)

In the last scenario, our driver travels overseas once or twice a year. In this case, unfamiliar geography and traffic laws mean renting is less-than-ideal. Instead, the driver uses a ride-sharing app such as Uber to get to each destination.

Here, the destination is the only concern. Someone else – the Uber driver – worries about fuel, navigation, the rules of the road, insurance and repairs. The overall cost may be higher than renting or owning a vehicle. But the gains in convenience and peace-of-mind that comes with someone else worrying about the details are often worthwhile.

The ride-share scenario aligns with the Cloud Solution Provider (CSP) model of Azure procurement. The CSP builds on the Pay-As-You-Go model with value-added services provided by Softchoice. These include dedicated support to identify and remediate issues, unlimited mentorship for guidance on configuring cloud services or migrating actual workloads as well as monitoring and cost-optimization services. These services help customers reduce the learning curve and achieve their cloud objectives faster.

This type of engagement appeals to customers who may have predictable multi-year workloads as well as a need for rapid scaling based on hours, minutes or seconds of usage. We provide managed services while Microsoft delivers the actual Azure services. In the ride-share analogy, this is akin to the way an individual vendor provides driver services while Uber provides the app and payment system.

You Can Drive My Car

A driver may lease, rent and use ridesharing apps depending on specific needs and scenarios. In the same way, there is no set limit to the ways they consume Azure services.

For many organizations, scaling the purchase of cloud services in direct correlation with the income they earn from them is the ideal. Although there are customers who fit all three usage models, the Azure CSP model is fast gaining momentum among our customers – including those already on SCE or Pay-As-You-Go plans.

This is no surprise, as the Azure CSP provides customers with an affordable way to achieve their business goals while reducing the risk of the unknown.  Just like the ride-share model, when they need a ride they get one – and let us worry about the details.

Want to Learn More?

Softchoice, North America’s #1 Azure Partner, can help accelerate your Azure cloud strategy. Check out our Azure services and deliver an effective Azure implementation, reduce risk and receive expert mentorship every step of the way.

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