The Dataprise Blog

How the Cloud is Changing the Capex vs. Opex Discussion

Aug 10, 2017 BY Francisco Xaviar

Public cloud solutions like Microsoft Azure are putting CIOs and CFOs in the same room earlier

When I started as a Technical Services Manager at Dataprise a decade ago, my conversations with customers about server installs were pretty straightforward. 

If they needed to deploy a new line of business app, or when hardware was nearing end-of-life, it was usually a discussion around ordering new boxes; what type of server, what size, how much computing power, etc. Most of the expense was a large, one-time capital expenditure with limited services and manpower needed. Dataprise would stand up the server, monitor it, and make sure it didn’t go down.

Then came the world of virtualization, and the conversation shifted more around procuring virtual hosts and how many VMs could be squeezed onto each. Physical boxes still made up a good chunk of an IT department’s budget, but there was more technical knowhow required to design, deploy, and optimize virtual environments. Development and test, say, wouldn’t necessarily need its own dedicated server farm in the VM age, but it was a more laborious process, not just to set up, but to maintain. While machine costs went down, there were more software and licensing costs associated with the new philosophy. Again, Dataprise would manage it all, from design to deployment to maintenance. 

Now, in the public cloud age, more and more of our customers are opting to “rent” computing power from large companies like Microsoft. With this model, they get the security and scalability of those providers’ data centers without the upfront overhead. Dataprise handles the licensing, architecture, and migration of those systems, which allows the customer to forget about IT and focus on their core business.

The public cloud advantages are obvious, but it is a shift in mindset for business leaders. And, when discussing a move to Azure, CFOs are now getting into the conversation. I see them working with their technology leaders earlier while technologies are still being vetted, rather than simply approving a budget or PO. Now that they’re able to take those big upfront hardware costs and spread them out over monthly payments, CFOs want a say in the solution. That shift in how organizations purchase compute power means a shift in how Finance budgets for and pays those bills. When we show them a total cost of ownership (TCO) model, Finance embraces the cloud model.

Services and ongoing support are a big part of the new model, and also speak towards the Opex advantages. As the hardware conversation shifts, so too does the support model. Dataprise, which has been providing support and consulting for 22 years and was recently named the Microsoft Partner of the Year, has had to change its support model accordingly. The upfront architecture and design of these migrations is often more complex than the after-shift support, with more budget and manpower moving to this phase.

It’s not just the dollars that have shifted from huge, upfront, Capex hardware costs to monthly subscriptions either. Before, a larger organization could have several Exchange engineers focused on only keeping email up and running, and a support plan could consist of having engineers onsite just to keep the lights on. With reliable and ever-green cloud productivity solutions like Office 365, that overhead workload is lowered. So, those bodies are now freed up for more strategic thinking and long-term projects, especially on the business-facing side, truly turning IT from a cost center to a revenue steam. Likewise, Dataprise has made strategic consulting more of a priority for our customers, giving them a competitive advantage over their own customers, which is something else CFOs obviously love.

While cloud technology isn’t necessarily lowering IT budgets, it is giving companies a better return on those investment dollars. And, service providers like Dataprise, which specialize in helping organizations shift workloads in that direction, more than pay for themselves in increased ROI, stability, and productivity.

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