Purchase a product or opt for product-as-a-service: which is the best decision?

Have you ever been offered a product that met your needs but found it difficult to evaluate whether it was worth the investment? Or, on the other hand, have you been offered a product as a service and didn’t know if it was the right choice? Nowadays, deciding between acquiring products or contracting them as a service (PaaS) is a crucial strategic decision. In this article, we’ll explore the advantages and disadvantages of these two models, helping you make an informed decision about which approach best suits your organization’s unique needs.

 

When considering contracting products as a service, it’s important to weigh the benefits, such as lower upfront costs and continuous access to technology. But as with everything in life, there are pros and cons, like potentially higher costs in the long term.

 

Acquiring products offers ownership freedom and full control, but it may involve higher initial costs and require self-management for maintenance and support. By carefully considering these factors, you can determine which model aligns better with your business strategy and long-term goals.

 

Contracting Products as a Service:

 

Advantages:

 

• Reduced Initial Costs: Typically, PaaS services involve monthly or annual payments, making them more accessible than a significant upfront investment in acquiring a product.

 

• Included Updates and Maintenance: PaaS providers often handle software updates and maintenance, alleviating the burden on your organization’s team.

 

• Flexible Scaling: PaaS services allow companies to scale resources as needed, which is particularly useful in reducing concerns and financial strain related to infrastructure.

 

• Access to Cutting-Edge Technology: By contracting services like PaaS, companies can leverage advanced technologies without the costs associated with purchasing equipment and licenses. This ensures your business stays up-to-date with the best technological solutions available.

 

Disadvantages:

 

• Long-Term Costs: While initial costs may be lower, ongoing payments can result in higher total expenses compared to traditional acquisition. This can be mitigated with the provider’s technical expertise and the applied knowledge of the product.

 

• Limited Customization: Some PaaS solutions may have restrictions regarding customization to meet the company’s specific needs. This is a key disadvantage for companies that treat the service as a commodity, failing to understand the unique requirements and scenarios of their clients.

Product Acquisition:

 

Advantages:

 

• Complete Ownership: The primary advantage of acquiring a product is full ownership. The company has total control over it, including customizations and integrations.

 

• Potentially Lower Long-Term Costs: While the initial investment is typically higher, over time, total costs can be lower than subscription-based services.

Disadvantages:

 

• High Upfront Costs: As mentioned earlier, acquiring products requires a significant initial investment. Factors such as licenses, hardware, implementation, and support can increase the expense. However, hiring a specialized company for the product being acquired can help mitigate these challenges.

 

• Maintenance and Updates: The company is responsible for maintaining and updating the product, which requires additional IT resources and expertise.

 

• Risk of Technological Obsolescence: Purchased products may become outdated more quickly than service-based solutions, necessitating additional investments in updates or replacements.

Ultimately, the choice between contracting services and acquiring products depends on your organization’s specific needs, financial considerations, and strategic goals. When evaluating each model, remember to factor in not only current requirements but also future scalability and adaptability. At iT.eam, our diverse and specialized team has the expertise to understand your organization’s nuances and context. We’re ready to maximize the advantages and minimize the disadvantages of your choice.

Written by: Guilherme Couto