October 2012 Issue 26
CapEx-to-OpEx has become a trend in government spending. IT dollars are moving from product or capital expenditures ⎯ buying things ⎯ towards paying for the output of those things as operational expenses ⎯ that is, services.
Your federal customers want more predictable expenditures and insurance against product obsolescence. Buying products as services gives them both. Plus, by establishing service level agreements with contractual terms, the government can shift some risk away from itself and on to contractors. Even in cases where the government is buying products, it’s trying to do so in a way that brings cost predictability and hassle-free provisioning.
In essence, the government wants to acquire technology in a way that virtualizes the technology itself, rendering it as a service which the government pays for over time.
Download this issue of the Public Sector Business Alert to learn how to adjust your sales model in light of this phenomenon.