Our Thoughts

Why you don’t need to make enormous capital expenditures for a next-generation infrastructure

28 Jun 2017

We all know the perils of securing large capital expenditure (Capex) budgets – particularly when it’s for a far-reaching IT project. The problem, of course, is that it’s incredibly difficult to convince line-of-business heads that large investments are needed for IT systems that, on the surface at least, seem to work just fine. Indeed, many IT managers find that it takes a catastrophic incident (a major outage or a security breach) to galvanize line-of-business heads into approving upgrades.

Naturally, there are exceptions to this rule – many technology-dependent companies will happily swallow the expenses of big upgrades as and when there’s a business case for them. But even then, we’d suggest that there is a way to get the technology you need without having to set aside enormous sums for capital expenditure. As you may have guessed, the answer lies in the cloud. Indeed, we find that it’s the forward-thinking, technology-based companies that are getting the most out of cloud computing.

Part of what makes the cloud so attractive is that you are paying on an operational expenses (Opex) basis, rather than a Capex basis. This means regular, monthly payments which can be figured into ongoing expenses. Naturally, such a model is particularly attractive to lean, internet start-up businesses, which neither have the budget or inclination to invest in the costly and time-intensive build-out of an on-premise infrastructure. Instead, they’ll sign up to contracts with cloud providers and opt for an infrastructure-as-a-service (IaaS) – paying for what they need on a monthly basis.

But what many large enterprises don’t realize is that the benefits of IaaS, and cloud computing in general, can also apply to them, too. What CFO doesn’t prefer plannable monthly expenses over big-budget projects that need to be negotiated for months on end?

The other reason why cloud computing is more budget-friendly is that, when you outsource all or parts of your infrastructure, you simply pay for the parts that you use. There’s no need to invest in your own data center (as nice as that may be) at great expense if you’re only going to use a part of its capacity. Instead, you’re better off opting for a cloud-based infrastructure that you can scale as and when you need it. The cost for the added capacity will simply be reflected in your next monthly bill. And you can bet it’ll be a whole lot cheaper, overall, than the cost in both man-hours and funds to build out your own architecture.

Of course, there are businesses that simply need to have on-premise infrastructures. But with local clouds now becoming more and more advanced, the list of businesses that can’t benefit at all from the cloud is getting short. And when opting for cloud computing makes so much financial, as well as technological, sense, it’s little surprise that companies new and old are flocking to local cloud providers.

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