If reducing costs has always been one of the main premises of healthful operations, at the face of a global financial crisis it becomes increasingly imperative for business continuity.
Because of this, the Covid-19 pandemic and the effects of the international economic downturn are requiring business leaders to market investments in mission-critical services, instead of initiatives dedicated to growth or innovation.
CIOs have adopted emergency price optimization, which means that investments will likely be minimized and prioritized in surgeries that keep companies running. This is going to be the top priority for most organizations in 2020.
vice president of research at Gartner
According to the institute, all segments will suffer a decline this year, with conventional data centre systems and devices viewing the biggest cuts in spending. However, as social isolation proceeds to stimulate remote work, segments like public cloud solutions will grow by 19% in 2020.
Thus, with Data Centers being increasingly required by raising traffic resulting from software that run in the cloud, what can be done to ensure the accessibility and efficiency of this construction? The way to cut costs in the face of this scenario?
Migrating the local data infrastructure into the colocation model has stood out among the very efficient efforts to reduce fixed costs of their IT budget.
Capital expenses or operating costs: how to optimize
How the”CapEx versus OpEx” version applies to Information Centers
How Colocation reduces fixed costs
Main benefits of Colocation to decrease expenses
Data centre migration during the crisis?
Capital costs or operating prices: the best way to optimize
Thinking of that the changing dynamics of the market, it has become essential for organizations to consider more efficient solutions to optimize their technology investments.
But before delving into the reasons why the migration from an on-premise infrastructure to virtualized models (such as colocation ) contributes to this market, it is worth clarifying both theories:
CapEx: a capital expense (the expression Capital Expenditure ) is a one-time expense that involves purchasing a real estate asset. Additionally, it applies to the price of repairs or updating that asset over time. Some examples of items that are normally contained in CapEx are calculating equipment, 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 fully tax-deductible at the same financial year in which they are made. Some examples of things that enter this funding are employee salaries, energy costs, rental fees and equipment leasing.
Thus, when assessing the definitions, it’s apparent that the main point of emphasis is that the tax difference of both. As the helpful life of a product allocated to CapEX normally exceeds the fiscal 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 exact same year in which they’re made, easing the management of business budgets, predictability and the release of money flow.
How the”CapEx versus OpEx” version applies to Data Centers
Therefore, it’s crucial to periodically reassess the categorization of their organization’s assets. And for many organizations, data centers represent a challenge and also a chance for assessing and reducing expenses.
That’s why, all over the world, many organizations are migrating their regional structures to more affordable versions which are compensated as an agency, such as Hosting, Cheap Colocation Uk and the different kinds of Cloud.
The Data Center as a Service (or, in English, Data Center as an agency – DCaaS ) is the provision of external facilities and everything that is involved with maintaining your infrastructure. Within this model, clients rent space from a technical supplier, using their servers, network, storage and other computing resources, paying everything on a combined basis.
And in doing so, the company will be able to convert its data center expenses into OpEx.
LEARN MORE: Checklist: when is the Ideal time to migrate your Data Center?
The Way Colocation helps decrease costs
As we have observed, while building and maintaining a personal facility significantly burdens any budget, migrating servers and IT assets into a specialized supplier’s infrastructure is among the most effective initiatives for price optimization.
One of the DCaaS alternatives, the Data Center of colocation carrier impartial stands out as one of the most efficient.
Thanks to the qualities of flexibility, control and modular scalability, colocation providers make it possible for organizations of all sizes (from small to large corporations) to access the advantages of a corporate-level Data Center. And for a fraction of what it might cost to construct and maintain its facilities.
And so, they manage to reduce operational costs in the process, saving on several Items like:
Maintenance and cleaning of facilities;
C ompras equipment to withstand the environment (UPS, air conditioning, etc.);
Staff payroll Specializing in maintenance;
Creation of electronic waste (considering that the depreciation of equipment after five years), amongst others.
Main advantages of Colocation to decrease prices
The disposition of colocation makes hiring one of the most effective IT cost reduction strategies. Thus, it helps companies that wish to advance in their digital transformation journeys to track themselves fast.
For this, it is worth highlighting a few of its main advantages:
#1. Stable, quality connectivity
Operator-neutral Server Colocation Uk Data Centers provide a rich connectivity environment for your customers. This ensures better availability to your own systems, preventing downtime occasions from influencing the operation and business continuity.
READ MORE: Everything you Want to know about Carrier Neutral Data Centers
#2. More efficient electricity generation and cooling system
Powerful processors generate more heat, which in turn takes a solid cooling system to regulate its temperature.
Colocation structures not only use economies of scale to reduce electricity and cooling costs, but also modern tracking tools to ensure the equipment is functioning efficiently. Additionally, it enables customers to manage their infrastructure ensuring they pay only for that which has been used in their operation.
You will find suppliers like ODATA, that have invested in the construction of their own electricity generation stations. This greatly lessens the risk of eventual distribution spikes interrupting the functioning of the Data Center.
# 3. Disaster Recovery
There is also the challenge of creating a back-up and redundancy strategy capable of protecting the organization’s data and software in the event of a disaster. A good disaster recovery plan keeps crucial systems and information available to employees and clients, even when primary network systems are disabled.
But configuring network and physical redundancies can be very costly with no Data Center service partner. Colocation facilitates disaster recovery direction, not only supplying a much more reliable infrastructure, but also allowing critical data to be backed up off.
Compliance and Certifications
Managing a personal data centre can bring compliance and certificate headaches. Even though the migration of assets to colocation does not mean complete coverage of compliance standards, the agency provides the very best way to construct a community in keeping with regulatory standards.
Compliance violations can lead to costly fines. Thus, devoting yourself to fulfilling the correct compliance levels should be seen as one of the most critical strategies for decreasing IT costs in the long run.
Similarly, the absence of certificates commonly requested within this current market, can diminish competitiveness or even exclude your business from engaging in a job.
READ HERE: LGPD: how data security will drive business development
Less payroll expenses, higher operational efficiency
When it comes to reducing IT costs, the gift mix is crucial.
By outsourcing functions not related to its core business, the company is able to direct its focus and energy towards more strategic investments. Therefore, it allows internal teams to focus on their core businesses, dedicating themselves to scaling up earnings growth.
Uninterrupted support in crisis situations
In crisis events like Covid-19, data centers will need to ensure exactly the same (or even larger ) accessibility than in normal times. However, just how to do it throughout the quarantine decree?
It is the disposition of colocation providers to be well prepared to operate in crisis situations. Using state-of-the-art engineering and highly trained teams, it includes specialized interventions and maintains the performance of the systems, together with powerful support 24 hours a day, 7 days a week.
Thus, the migration from on-premise info centers to uk colocation structures still greatly reduces the threat of contamination by internal teams.
LEARN MORE: Remote & Smart Hands: distant assistance in crisis situations
Data centre migration during the catastrophe? Yes, It’s possible
If your company maintains an inner Data Center, by now you ought to be doing the’saving’ accounts you can achieve by reducing prices together with the migration of this structure to a specialized supplier. And you probably are wondering:
“But is it possible to perform an operation in this level of complexity during the pandemic?”
The information centers were included one of the vital services and, consequently, the operations of the specialized suppliers are fully operational.
Following all the prevention guidelines, it’s likely to prepare and put to practice the migration plan for the partner structure in a safe manner, ensuring all levels of compliance and quality.
And due to the criticality of this situation, ODATA has been in a position to execute the procedure in less time, according to the urgency of the client.
The hunt for efficient steps to reduce costs is a recurring job for the fiscal health of organizations. On the other hand, the Covid-19 disaster made it an emergency action.
In this scenario, keeping internal information centers has become even more costly. And with cuts in IT budgets, migrating it into structures preserved by technical suppliers, for example Colocation providers, has become one of the most assertive steps.
For this, it is likely to allocate CapEx expenses in OpEx, freeing up cash flow for smarter investments.
The demand for Colocation services is expected to continue to grow within this circumstance, as more companies recognize the benefits of outsourcing their IT operations. Many already understand the need to rely on shared Data Center infrastructures to give their companies the necessary advantage, in terms of agility, competitiveness and flexibility.
The future depends on the interconnection of everything. And, as the reliance on technological inventions increases, Information Centers will be at the center.
Wish to find out more about reducing your IT infrastructure costs?
ODATA specialists are ready to support you in your digital transformation challenges.