If reducing costs has always been among the main assumptions of healthy surgeries, at the face of a worldwide financial crisis it becomes increasingly imperative for business continuity.
In 2020, IT spending will drop 8% compared to 2019, according to the latest Gartner forecast. Because of this, the Covid-19 pandemic and the impacts of the international economic downturn are requiring company leaders to prioritize investments in mission-critical services, rather than initiatives specializing in growth or innovation.
CIOs have adopted emergency price optimization, meaning that investments will be minimized and prioritized in operations that keep companies running. This will be the top priority for most businesses in 2020.
According to the institute, all sections will suffer a decline this year, with conventional data centre devices and systems seeing the largest cuts . However, because social isolation proceeds to provoke remote function, segments like public cloud services will grow by 19% in 2020.
So, with Data Centers being increasingly demanded by increasing traffic resulting from applications that operate in the cloud, what can be done to ensure the accessibility and efficiency of the structure? The way to cut expenses in the face of this situation?
Migrating that the local data infrastructure into the Server Colocation Uk version has stood out among the very effective efforts to decrease fixed costs of the IT budget.
Capital expenses or operating costs: how to optimize
The way the”CapEx versus OpEx” model applies to Data Centers
The Way Colocation reduces fixed prices
Main advantages of Cheap Colocation Uk to decrease expenses
Data center migration throughout the crisis?
Capital expenses or operating costs: how to optimize
Thinking of the changing dynamics of the market, it has become essential for companies to consider more effective solutions to optimize their technology investments. And among the most effective ways would be to convert capital expenditures (CapEx) into operating costs (OpEx).
However, before delving into the reasons why the migration from an on-premise infrastructure into virtualized models (such as colocation ) contributes to this economy, it is worth clarifying both theories:
CapEx: a capital expenditure (the expression Capital Expenditure ) is a one-time investment which involves the purchase of a tangible asset. Additionally, it applies to the price of repairs or updating that asset over time. Some examples of items Which Are normally contained in CapEx are computing gear, physical data centre infrastructure, cables to provide access to connectivity, etc;
OpEx: a working cost (in English, Operational Expenditure ) covers some cost incurred to keep businesses running on an everyday basis. Since OpEx expenses are based on the”pay as you go” strategy, there aren’t any long-term assets involved. This usually means that such investments are wholly tax-deductible in the exact same fiscal year in which they’re made. A few examples of things that enter this budget are employee salaries, energy costs, leasing fees and equipment leasing.
Therefore, when assessing the definitions, it’s clear that the main point of emphasis is the tax difference of both. As the helpful life of a product allocated to CapEX generally exceeds the financial year, resources such as amortization and depreciation has to be used to redistribute this cost.
On the other hand, operating expenditures are deductible from charges (such as Income Tax) at the same year in which they are made, easing the management of corporate budgets, predictability and the release of cash flow.
The way the”CapEx versus OpEx” version applies to Information Centers
Investments in Information Technology are complex. For this reason, it’s crucial to periodically reassess the categorization of the organization’s assets. And for many businesses, data facilities represent a challenge and also a chance for analyzing and decreasing expenses.
That is why, all around the world, many organizations are migrating their local structures to more affordable versions that are compensated as an agency, including Hosting, Server Colocation Uk and the different kinds of Cloud.
The Data Center as an Agency (or, in English, Data Center as an agency – DCaaS ) is the supply of outside amenities and everything that’s involved with maintaining your physical infrastructure. In this model, clients rent space from a technical provider, using their servers, network, storage and other computing tools, paying everything on a consolidated basis.
And in doing this, the company will be able to convert its data centre expenses into OpEx.
How Colocation helps decrease prices
As we’ve seen, while constructing and maintaining a private facility significantly burdens any budget, migrating servers and IT assets into a technical supplier’s infrastructure is among the most effective initiatives for price optimization.
Among the DCaaS options, the Data Center of colocation carrier neutral stands out among the most efficient.
Thanks to the characteristics of flexibility, management and modular scalability, colocation providers allow organizations of all sizes (from small to large corporations) to get the advantages of a corporate-level Data Center. And for a fraction of what it might cost to construct and maintain its facilities.
Upkeep and cleaning of amenities;
C ompras equipment to withstand the surroundings (UPS, ac, etc.);
Staff payroll Specializing in maintenance;
Creation of electronics (considering the depreciation of equipment after five years), among others.
Main advantages of Colocation to reduce prices
The nature of colocation makes hiring among the most effective IT cost reduction plans. Thus, it helps firms that wish to advance in their electronic transformation journeys to reposition themselves quickly.
For this, it is worth highlighting a few of its Most Important advantages:
#1. Stable, quality connectivity
Operator-neutral Colocation Data Centers provide a comfortable connectivity environment for your customers. This ensures greater availability to your systems, preventing downtime events from influencing the functioning and business continuity.
READ MORE: What you need to know about Carrier Neutral Data Centers
#2. More efficient power generation and cooling system
Strong chips produce more heat, which in turn takes a robust cooling infrastructure to regulate its own temperature.
Colocation structures not only utilize economies of scale to decrease electricity and cooling costs, but also modern monitoring tools to ensure that the equipment is functioning efficiently. Additionally, it allows customers to handle their infrastructure remotely, ensuring that they pay only for what has been used in their performance.
There are suppliers such as ODATA, that have invested in the building of their own electricity generation stations. This greatly lessens the danger of eventual distribution spikes interrupting the functioning of the Data Center.
# 3. Disaster Recovery
There’s also the challenge of creating a backup and redundancy strategy capable of protecting the organization’s information and software in the event of a disaster. A fantastic disaster recovery plan keeps key systems and data available to employees and customers, even when primary network systems are disabled.
However, configuring physical and network redundancies can be quite expensive with no Data Center service spouse. Colocation eases disaster recovery management, not only supplying a much more reliable infrastructure, but also allowing critical data to be backed up off-site.
# 4. Compliance and Certifications
Managing a private data center can bring compliance and certification headaches. Even though the migration of resources to colocation does not mean complete policy of compliance standards, the service provides the very best way to build a community in line with regulatory standards.
Compliance violations could lead to expensive fines. Therefore, dedicating yourself to fulfilling the right compliance levels should be viewed among the most critical strategies for decreasing IT costs in the long run.
Similarly, the absence of certificates generally requested within this current market, can diminish competitiveness or even exclude your company from engaging in a job.
READ HERE: LGPD: how data security will drive company development
Less payroll expenses, higher operational efficiency
In regards to reducing IT costs, the talent mix is crucial.
By outsourcing functions not associated with its core business, the business is able to direct its focus and energy towards greater strategic investments. Thus, it enables internal teams to concentrate on their core businesses, devoting themselves to scaling up revenue growth.
# 6. Uninterrupted aid in crisis situations
In emergency events like Covid-19, info centers need to guarantee exactly the same (or even greater) availability than in normal times. But just how to do it through the quarantine decree?
It is the nature of colocation services to be well prepared to operate in emergency situations. Employing state-of-the-art technology and highly trained teams, it carries out technical interventions and keeps the functioning of the systems, with effective support 24 hours a day, 7 days per week.
Thus, the migration from on-premise data centers to colocation structures still greatly lessens the threat of contamination by internal teams.
LEARN MORE: Remote & Smart Hands: remote support in crisis situations
Data center migration during the catastrophe? Yes, it is possible
If your company maintains an internal Data Center, by now you ought to be doing the’saving’ account you can achieve by reducing prices with the migration of the structure to a specialized supplier. And you are wondering:
“However, is it possible to perform an operation at this level of complexity during the pandemic?”
The information centers were included one of the vital services and, therefore, the operations of these technical suppliers are fully operational.
Following all of the prevention guidelines, it’s likely to prepare and put to practice the migration strategy for the partner structure in a safe manner, ensuring all levels of quality and compliance.
And on account of the criticality of this scenario, ODATA has been in a position to execute the procedure in less time, even according to the urgency of their customer.
The hunt for efficient steps to cut back prices is a recurring job for the financial health of organizations. On the other hand, the Covid-19 crisis made it a crisis action.
In this scenario, keeping internal information centers has come to be even more expensive. With cuts in IT budgets, migrating it into constructions maintained by specialized suppliers, for example Colocation services, has grown into among the most assertive steps.
For this, it is likely to allocate CapEx costs in OpEx, freeing up cash flow for investments that are smarter.
The demand for Colocation services is predicted to keep growing within this context, as more businesses recognize the benefits of outsourcing their IT operations. Many already understand the necessity to rely on shared Data Center infrastructures to give their businesses the essential advantage, concerning agility, flexibility and competitiveness.
And, as the reliance on technological inventions increases, Information Centers will be at the middle.
Wish to learn more about reducing your IT infrastructure costs?
ODATA specialists are prepared to support you in your digital transformation challenges.