THE OUTLOOK : CONTRACTUAL MODELS
What Happens at the End of Ownership ? The Dawn of Partnership
Christoph Schell , HP ’ s Chief Commercial Officer , on how the new contractual model allows businesses to buy what they need when they need it , assuring successful outcomes for themselves and their customers .
CONOMICALLY , TECHNOLOGICALLY , and culturally , COVID-19 has ushered in an incredible number
E of innovations and behaviors that have changed how we live — from social distancing and mask wearing to hybrid work and virtual learning .
It has also changed the ways we do business . During this time of trial and error , some of the best solutions have highlighted the power of partnership . We recognize that partnership is not simply the by-product of people working toward the same goal , but a principle that is core to the survival of our society and its institutions .
For years , we ’ ve witnessed the trend of partnership and collectivism within the tech industry , including right here at HP . Our strategic shift from transactional sales to contractual , subscription-based models has brought us closer to partners and allowed us to capitalize on shifting customer preferences , both B2B and B2C . Now the concept of “ ownership ” over technology solutions is fading , while subscription-based services continue to accelerate . An immense opportunity and responsibility sit on the horizon for vendors and partners — to foster tangible business outcomes , anticipate customers ’ needs , and build stronger and longer-term relationships that can be renewed again and again .
How COVID-19 tipped the scales for subscription services Pre-pandemic , the subscription economy had significant momentum . Between January 2012 and June 2019 , subscription-based companies grew at five times the rate of companies that relied on transactional sales ,
according to subscription-management company Zuora . Looking ahead , the subscription market is anticipated to reach nearly $ 500 billion in five years .
The pandemic has fueled this market even further . As workforces become increasingly distributed and digitally driven , business leaders are considering , “ How much of our organization ’ s technology do we really need to own ?” and they are looking for flexible and
“PARTNERSHIP IS NOT SIMPLY THE BY-PRODUCT OF PEOPLE WORKING TOWARD THE SAME GOAL , BUT A PRINCIPLE THAT IS CORE TO THE SURVIVAL OF OUR SOCIETY AND ITS INSTITUTIONS .”
scalable solutions to address the rapid acceleration of change .
Despite economic contraction ,
70 % of businesses plan to sustain or increase their 2020 investments in digital transformation . We ’ re seeing examples around the world , in every sector . In the United States , between
40 % and 50 % of manufacturing assets will require upgrading for digital readiness . In Europe , many of the continent ’ s biggest utility providers plan to
invest billions in cloud migration . And in the Asia-Pacific region , digital transformation , the cloud , and AI were cited as the
PHOTOGRAPH BY JOE PUGLIESE
HP / INNOVATION / FALL 2020 6