Why the Cloud Isn’t a ‘Capital’ Idea

Decision making in business is often a slow, sometimes laborious process. Working in IT, the decision being made is just the start. Traditionally you then had to buy the kit, deploy and finally roll it out to the community of users. Months (or more) could pass before a chosen strategy came to fruition. I imagine a number of you are already grimacing in frustration at the thought…

This is one of the major incentives of the cloud. Things can move quickly; there’s scalability in a way we’d always dreamed of having.

Imagine your typical dedicated server stack. You make the decisions about the servers, storage and networking and then use this configuration for the following three to five years. During this time, you might need to add some memory, upgrade disk drives and at some point find there’s a pressing need for a significant increase in capacity. You add more servers, and then have to juggle resources when for significant periods of time you perhaps don’t need them. It comes with the territory.

Here cloud is being hailed as a panacea for scalability concerns. It makes possible, and painless, rapid expansion and contraction of capacity for spikes in sales, web traffic or whatever other facet of the business you need to support. This much is clear to anyone following the IT industry in the last year or two.

But the benefits become particularly interesting in the murky world of financial control of IT resources. To become more OpEx than CapEx focussed is an outcome that will see most CFOs biting your hand off. The immediate cost reductions associated with cloud are often debated and it is possible that moving to the cloud may not produce savings, rather it provides a better way to manage costs and to charge uses for what they actually consume. Another consideration is that the actual process of assessing and planning the transition may itself identify areas for cost savings.

Cloud helps deliver better control of expenditure, and when it comes to future resource planning, you can strategise around the provisioning and de-provisioning of resources as required. Not every investment needs to lead to the painful sweating of equipment to recoup value.

This level of transparency and scalability enables better re-distribution of IT spend across the business. For IT teams it may mean an escape from having to go cap in hand for further projects. If nothing else, the exercise of evaluating the costs savings that could be achieved may help lead to a fuller understanding and better management of the infrastructure – be that cost-per-mailbox or the cost-per-app-user. For IT organisations that make the transition to using the cloud, or operating their internal infrastructure in a ‘cloud-like’ way, there is the opportunity to implement processes to charge their users (business units) for their services on a pay-per-use basis - further helping the move to an OpEx cost model.

Of course, out with old and in with the new requires bold steps. And you may not wish to rush down this road quickly. But the flexibility of a private cloud should certainly be appealing and the potential for a thorough cost-evaluation exercise makes absolute sense for the business.