Significant IT expenditures, such as servers, storage arrays, networking equipment and critical software systems have historically found themselves squarely in the CapEx expenditure pile. Capital expenses take longer to get approval, are generally larger and riskier expenditures, and essentially lock the company into a particular IT infrastructure, at least until the lifecycle of the expense is complete and the investment has delivered its expected ROI. But what if all that changed? What if many (potentially all) of those IT investments could be shifted to the OpEx side of the ledger? That’s precisely what is happening now. Common “as-a-Service” offerings are IT solutions (both hardware and software, and occasionally a nice mixture of the two) are served up as cost-effective, pay-as-you-go alternatives to large, risky IT expenditures. So, why is there this industry-wide shift to OpEx?
Why are Businesses Moving IT Purchases to OpEx?
‘As a Service’ products cost less, and you only pay for what you need, when you need it. These expenses work beautifully into your operational expenses, like the power bill or telephone services, eliminating the need for a lengthy process of approving a capital expense and conducting a risk analysis.
What are the advantages of today’s ‘Everything as a Service’ business model? To the IT vendors, it’s a huge adjustment, because they have historically survived on huge, though infrequent, purchases. Let’s take a look at some use cases everyone can identify with: new operating systems. Some companies release a brand new OS version every few years. Others do so annually. But the point is that when it’s time for a company to upgrade to a new OS, there is an enormous investment of time, money, and effort. First, they have to evaluate how many licenses they need. Then they have to purchase the software, followed by a costly and usually frustrating installation and troubleshooting process. After this is all said and done, the company has to carefully manage the number of licenses they’re using and hope that the vendor doesn’t come knocking with a software licensing audit.
When you move to an aaS model, all that goes away. You buy only what you need, and pay for it only when you need it. Additionally, you can pay really small sums when you only need a single-use. For example, say you are developing a mobile app for your business. You will temporarily need a development environment with lots of storage and processing power, but you’ll only need this for a few months while building the app. With IaaS, you can get access to the development infrastructure you need and ditch it when you’re done. No capital investments, hence no lengthy and cumbersome process of begging and pleading for the storage and compute power you need to build the mobile app. This is just one example of how the pay-as-you-go model serves the IT department so well.
The OpEx model also gives IT lots more flexibility. Say you’ve always done things one way, but it’s time to see if another way will work. Instead of making scary capital investments to find out if the new way is better, you can test the waters with aaS, go all in if it works, and pull out if it’s a flop. For example, say you’re ready to try out the cloud or virtual desktops. You can utilize the necessary hardware and virtualization software (either on premises or within the cloud), decide what works, and make an informed decision based on a real-world practical test instead of a vendor’s worksheet.
When are Businesses Moving IT Purchases to OpEx?
Businesses are already benefiting from moving IT expenses to the OpEx side of the ledger. The trend is expected to widen, especially as on-premises solutions are made readily available to the enterprise.
The answer is: now. In a business world that constantly seeks cost savings while demanding the most bang for every IT buck spent, lower cost as-you-go services are the ideal solution.
Are you ready to test the waters of low-cost pay-as-you-go IT solutions that fit nicely on your OpEx sheet? Zadara Storage can put you on the track for savings now and into the future. Learn more: Download our TCO Report.