In one of our previous blogs on things to consider when moving to the cloud, we briefly talked about the traditional on-premise model of your server and computer network physically onsite, at your place of work. While there are some clear advantages to this, like having complete control over your data, hardware, software, configurations, and upgrades, the disadvantages can undeniably outweigh the pros for some companies, especially in terms of your ROI. Let’s discuss how a company could benefit from a cloud-based solution so you can see if those benefits apply to you.
Opex Costs vs Capex Costs
Like everything in business, you want to know the bottom line, how will the cloud affect your ROI? To help sort this out, let’s go back to the basics:
• Operating or reoccurring costs (Opex) are expenses that run the day-to-day operations of a business.
• Capital costs (Capex) are expenses incurred to create long-term benefits in the future.
The on-premise IT infrastructure is a capital cost. It’s a one-time large cost intended to provide long-term benefits, but figuring out what these long-term benefits are is easier said than done. It can be daunting to determine how much ROI you’ll get from it. The on-premise model is less flexible for your company to evolve or regress. I’m sure you’ll agree, the future is unpredictable. Businesses must adapt to industry and market changes, and sometimes at a moment’s notice (as we all experienced in 2020 and beyond). When this happens, the on-site model is less accommodating.
If you want to avoid the hassle of a capital expenditure, plus have more flexibility to scale your business when needed, you may want to look to the cloud. Whether it’s the public cloud that’s shared across multiple businesses, the private cloud that is dedicated entirely to your business, or the hybrid cloud that uses both public and private, a cloud-based solution is the lower-risk approach. It’s a pay-as-you-go model, much like your home’s electricity bill, that allows more opportunity to grow or shrink your usage on an as-needed basis. Additionally, since the cloud is a monthly expense, it’s claimed as a Opex, and the icing on the cake when it’s claimed as a Opex is it’s 100% tax deductible. Therefore, freeing up cash for other needed business expenses.
If you’re not completely sold on the idea of moving 100% of your IT infrastructure to Opex, you could put a toe in the water instead of diving in headfirst all at once. For example, Microsoft Office 365 is an operational expenditure because it’s a subscription-based software (SaaS). So, you could start with Microsoft 365 and shift expenses over to balance between Opex and Capex. As solutions need upgraded, you can shift things to the cloud and slowly transition off the on premise solutions - that way you don’t have to budget for those high priced capital expenses every five years!
Let’s Get Resilient
The cloud’s infrastructure and applications have a remarkable capability to anticipate, readapt, and swiftly recover from crisis situations or events, like unforeseen and disruptive equipment failure or power outages.
In addition to these critical features, cloud computing uses “virtual servers”, so it’s not geographically restricted. This means you and your staff can access it across multiple platforms and at multiple locations giving your business a competitive edge. For example, if an employee loses a company’s laptop that contains important files, you won’t lose much sleep because you can still access the information since it’s backed up & protected in the cloud.
The cloud has a high level of resiliency and agility that is guaranteed by the service provider. Of course, this resiliency needs to be managed. We talked more in-depth about this in our previous blog, ‘Considerations for Moving to the Cloud’.
How Secure Is the Cloud?
Security continues to be paramount, especially as more and more people move their systems to the cloud. Every day, we’re surprised at how much cybercriminals continue to evolve the sophistication of their cyber-attacks. Just because you’re in the cloud does not mean you’re immune to these threats.
Contrary to some opinions out there, the cloud offers an enhanced level of security when compared to the traditional on-premise model. Let us break it down for you. With the on-premise model physically located on-site, there is the risk of potential loss of data due to break-ins, fires, or weather disasters. Since the cloud is virtually located and managed by a third-party service provider, these types of disastrous events significantly reduce any impact on your data. As well, (and as mentioned earlier) because the cloud is highly adaptable, you can get the right level of security needed for your business. Cloud computing is not a one size fits all and this type of model works well for businesses trying to reduce costs and increase ROI.
Another feature you may be familiar with is multi-factor authentication or MFA. Similar to the on-premise model, the cloud solution also offers this. One example of MFA is an SMS code. According to Google, a SMS code sent to a recovery phone number helped blocked 100% of automated bots, 96% of bulk phishing attacks, and 75% of targeted attacks. The bonus with a cloud-based system employing MFA, particularly with small / mid sized organizations, is the setup doesn’t require as many resources including the on-site equipment. The cloud MFA is set and ready to go, fresh out the box.
Little Guys Don’t Always Finish Last
There are numerous benefits of the cloud, besides a hassle-free MFA setup, that enable small to mid-size enterprises (SMEs) to operate more efficiently. The importance of IT development and innovation for a company to not only survive but thrive is an undeniable fact. In early 2020, prior to the massive market shifts we saw later that same year, Cisco Chairman, John Chambers stated “At least 40% of all businesses will die in the next 10 years if they don’t figure out how to accommodate new technologies”. This can be a fatal disadvantage to organizations of a smaller size as access to technology solutions is typically very limited to them. Some barriers include increased competition, the ability to quickly adapt to an ever-changing world, and lack of resources, including IT knowledge and finances. A cloud or hybrid cloud solution can counteract these challenges by providing access to better technology solutions that a SME might not normally be able to afford.
The up-front significant costs required for the on-premise model, plus the on-going resources to manage and maintain the infrastructure is a huge financial burden on SMEs. The cloud is a subscription service that can be fitted to a company’s needs at much more reasonable price point. It offers a way for SMEs to leverage themselves up to a level playing field with other larger organizations, or at least get enough ROI from the solutions to justify the cost.
While it’s obvious a cloud-based solution offers many benefits, it still may not be the best fit for you and your company. A full assessment of your company’s current state and future goals should be completed with a well-informed and neutral managed services partner, like BT Partners. We provide full system assessments and our expert team can help you with product selection or recommendations as needed.