Using Hybrid Clouds to Reduce Capex

Krzysztof Ksiazek
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It may depend on the industry, but we can tell that businesses like operational expenses. They are typically tax-deductible; they are also a place where you can easier cut costs if possible. One of the assets that generate the highest cost for the mainly web-based company is the IT infrastructure. To run your business, you need hardware - servers, network infrastructure and other things. 

If you follow “build and maintain your own datacenter” then you have to also build it or adapt it for the role of a datacenter. Redundant power supply, raised floor, precision air conditioning systems, network and power lines, racks, hardware. All of this infrastructure will be a part of capital expenses - it is a huge investment that you can’t easily get rid of should your strategy or cost structure change. Here comes the hybrid cloud - a solution to reduce your CAPEX and allow you to react better to what is happening in your business.

Rent Your Infrastructure

Public cloud providers provide you with the ability to “rent” hardware instead of owning it. For starters, this alone is a change in your organisation’s expense structure. Instead of getting expensive hardware and then amortizing it you can just rent the resources on an as-needed basis. Instead of amortization, you only pay the invoice, and you can deduct all of your costs and reduce taxation.

Pay As You Go Option

Another reason why cloud computing is good for your company is the clarity it brings to the table. Cloud providers charge you on a pay-as-you-go basis - it pretty much means that at any point in time you are aware of what your expenditures are related to the IT infrastructure. This helps you to determine if you happen to use the resources efficiently. In the “maintain your own infrastructure” case, it is not so clear. Sure, you know what you paid for the hardware but is all of it really used? Not really - you have to keep some headroom for dealing with temporary load fluctuations.

Cost and Resource Scalability

Cost-wise, on the one hand, it is good to have a stable cost structure that is predictable, and you can project it in the future. Owning infrastructure helps you with that. On the other hand, those are expenses that you don’t have much control over. What if your business will slow down? Can you easily reduce costs related to your IT infrastructure? Not really. On the other hand, with a hybrid cloud, you can easily scale down the public cloud part of your environment in a matter of seconds. You don’t need the resources? Scale down vertically or horizontally - it’s just a click or a script execution away.

Support and Maintenance

You may also consider using a hybrid approach because infrastructure requires maintenance and staff to watch over it. You need someone to make sure that everything is working properly, someone who’ll manage your network, air conditioning systems, power, security. You need someone who will set up the hardware and install it in your datacenter. Obviously, you have to pay such people and, as long as you have something running in your DC, those people are irreplaceable. You cannot reduce expenses related to them even if your needs are significantly reduced because the business is slowing down. This is not something you can really predict and plan for (has anyone predicted the COVID-19 pandemic, which is still impacting businesses across the globe?). On the other hand, the resources you use in the public cloud are not something you have to worry about. There is maintenance, but it happens under the hood. You can reduce the size of your infrastructure at any moment to any level.

Experiment with Latest Technologies

On-prem setups, as we mentioned before, maybe a significant investment. You probably want to get the most out of them for as long as it is possible. The problem with the IT world is that it changes very quickly. Hardware changes, solutions change. Top tier hardware that you bought three years ago is no longer top tier anymore. Maybe it would make sense to switch from Intel to AMD or ARM CPUs for your particular workload? Maybe you could use faster networking? This is not something you can easily (and cheaply) change when you have bought a whole batch of hardware a year or two ago. Hybrid cloud helps you to get the most out of the public cloud offerings - if you want to experiment and test some new technologies, it’s just a matter of spinning some instances or starting some services, and you are all set. Migration from one CPU type to another is a matter of starting new instances. Obviously, it’s also involved with the whole migration process, but that’s another story - you have to perform it as well if you do the migration in your own datacenter. Another difference is in the public cloud; after successful migration, you just destroy old, not used instances, and you are all set. In the “own datacenter” scenario, you end up with a pile of hardware you have paid for, but you are not using anymore.

Conclusion

What’s also very important, this is not just an accountant trick - it significantly impacts how your business can operate. An ability to quickly add hardware resources and scale up to match the demand is a huge change. Originally, you had to maintain an unused pool of resources to accommodate spikes in the load. It is not really possible to add the resources in close-to-real time if you own your data center (unless you have spare servers lying somewhere and gathering the dust, but that’s not the most efficient way of utilizing resources). You have to order the hardware, wait for it to be delivered, configure it and set it up. With a public cloud all you need to have is a set of scripts that will be able to provision the software in the way you want - that’s all. Hardware, typically, will be available in a matter of minutes. This is a huge game-changer that allows your business to operate quicker and more efficiently than before - this can help your organization create a business advantage.

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