We have seen a significant shift in various sectors of the economy, especially regarding investment. Until recently, companies have shown a certain predilection for having their balance sheet full of goods and assets, however, in recent years we have seen companies seeking to meet their demand, consuming the capital strictly necessary for such a solution. Before going further into this topic, I believe it is valid to share the concept of CAPEX and OPEX briefly.
In summary CAPEX is an acronym for Capital Expenditure and refers to capital invested in assets. In reality, it is the resource that a company uses to acquire an asset, such as a server, a switch or a router. OPEX is an acronym for Operational Expenditure and refers to operating expenses, that is, that monthly investment that the company makes to consume a certain service, such as a Cloud Computing service.
Based on this concept we can draw a realistic conclusion: When the investment is made through the acquisition of the assets, the company will have to disburse capital before having their problem solved, that is, first pay and then receive the goods/asset that will solve their need.
In the OPEX perspective the scenario is exactly the opposite. In practice the company will initially have a downgrade (often equal to zero) and will first have its demand met to then effectively pay. The payment is usually recurring and is accounted for as an expense in the company balance sheet.
Looking superficially at the subject seems to be an accounting question, but in practice it consists of something much more important: Paying only for what the company actually consumes or uses, having at its disposal the latest technology, keeping up to date, guarantying improved processes and end-user experience. If we look at the perspective of IT infrastructure a common practice is the purchase of super-sized servers, in the expectation of not running the risk of not being able to support the volume of services demanded by the business areas, however, there is no lack of cases where even after the acquisition of hardware the company has a positive surprise with the expansion of its sales, reflecting in the greater use of computational resources, but even with the expected surplus there is no resource available, demanding even more investment. Initially this seems to be the right move, because the initial hardware was fully used before it was necessary to acquire a new one, but if we consider that the demand could be something punctual or seasonal, we will then have a high expenditure and one again underused.
This is where new IT-based service models come in. In this article, we talk more in detail about the models of cloud solutions, which in summary are: IaaS or Infrastructure as a Service, PaaS or Platform as a Service and SaaS or Software as a Service. Each model offers a delivery, so for every need it is necessary to validate the most adherent model. In general, what they all have in common is the term "as a service." In practice when hiring a Cloud Computing service your company will not have to anticipate investment in the CAPEX model, rather, it will preserve its resources and IT budget.
Practically speaking, by keeping capital resources, the company will have greater liquidity to invest in what is actually needed to support its growth, i.e. if the demand for new software arises, it will have the resource to obtain the license without compromising its margin, or if you need a greater number of virtual servers, you can, by paying only for the period you need.
An important fact to consider is that when choosing to invest in computing or network resources to build a data center of your own, we often do not consider indirect costs, such as the construction of an uninterrupted power grid or the contracting of two or three internet links to have redundancy, and duplicate all appliances and hardware to have high availability. Regarding sustainability, it is essential to have a multidisciplinary team, with knowledge in all the areas that involve this type of environment. In this article, we talk a little more about the differences between a Traditional Data Center and Cloud Computing.
In general, the message we have to share is: Before undertaking high investment in IT infrastructure or solutions, seek to know the alternatives available in the "as a service" model, as there will certainly be a solution to your problem with some additional benefits such as:
With the flexibility to contract the solution in the service model, speaking more specifically of Cloud Computing, the possibility of consuming computational resources (vCPU and vRAM) according to the demand, allows the possibility of more resources to be available during times of peak of consumption as well how to parameterize your application so that it will automatically provision more resources when needed and delete them when they cease to be needed. This way you will have better performance in your applications, offering a better user experience.
Binario Cloud is a company made up of experts in Cloud Computing and helps companies of all sizes to use cloud technologies efficiently, ensuring a better use of computing resources. We are one of the few companies in Brazil to develop Public, Private and Hybrid Cloud solutions that we provide to our customers along with a complete service of sizing, migration, support, monitoring and environmental sustainability.
To know a little more about our solutions or to talk to our team of experts about the demands, just contact us.