Johannesburg, 31 Oct 2016
The cost of the cloud has come down significantly over the past few years, making it one of the most popular solutions for companies that want to optimise budgets and reduce risks, says Lydiah Kalane, product specialist at Neotel.
"That drive towards the cloud is the mechanism to avoid being locked into capital expenditure, optimising cost and focusing on your core function by moving the risk and cost of always training your people when there's a new technology," she says.
Kalane says that there has been a marked migration towards the pay-as-you-use option in cloud product offerings, because companies are not locked into outdated technology and it gives them greater flexibility.
The pay-as-you-use option allows companies that are currently very budget-conscious because of the economic downturn and challenging local and international markets, to mitigate the impact of technology cost while still staying scalable and capable. There is no need to invest a large amount of capital into an IT infrastructure, because with pay-as-you-use everything is on demand, she says. The business can assess when it needs to upscale and grow, and the cloud provides a level of elasticity which gives them the flexibility to do so on their terms.
"With this model, clients can optimise cost and performance on demand," explains Kalane. "For example, they may realise that there is a need to upscale their bandwidth. With the pay-as-you-use model, they can scale up and down as they need. This ensures planning and budgets are far more flexible, which are both very relevant concerns in the current climate."
Most companies prefer the service and pricing elasticity offered by the cloud and pricing models such as pay-as-you-use, Kalane says. This is particularly true for small to medium enterprises (SMEs) and the burgeoning start-up market. These businesses don't usually have a large amount of capital to spend on IT infrastructure and yet want to compete on the enterprise level. The cloud has become the great equaliser, allowing SMEs access to software- and hardware-as-a-service solutions, which gives them solutions that would previously have been out of their price range. Now they are using infrastructure which is as advanced and dynamic as that of larger corporates, without the high costs.
Selecting the right pricing model is far simpler than in the past, says Kalane. Organisations can opt for a payment option that fits their budgets or specific requirements. They can select pay-as-you-use or rent-to-own, among others, with each model offering different benefits over the long and the short term.
"Pay-as-you-use tends to be cheaper per month, whereas rent-to-own can allow a business to invest in core infrastructure without the initial big payment," says Kalane. "Both options provide customers with the ability to save money and enjoy the benefits of streamlined, secure and scalable technology."
Cloud operational expense (opex) models (such as pay-as-you-use) give organisations of all shapes, sizes and budgets the freedom to move into IT at their own pace, and are particularly relevant to SMEs. Technology evolves so quickly that those opting for a capital expense (capex) model will be out of date within a year, Kalane says.
"Many businesses have been caught by this trend, spending a fortune on infrastructure and suddenly it is out of date," says Kalane. "With rental in the cloud, they can go for the latest and greatest technology without spending significant sums of money. Capex is risky, because it is based on the estimations and assumptions as the future would always remain uncertain. Whereas the opex model ensures that your investment is not locked into one solution."
Kalane adds that the skills component of the solution cannot be overstated - if the business is in the cloud, it doesn't have to worry about employing dedicated resources to maintain infrastructure.
"It is far better for the business to opt for the cloud services," says Kalane. "They can focus on their core business without having to spread resources thin over the management and maintenance of their IT infrastructure. In addition to this, the transition allows them to free up cash for other projects which drive revenue and growth. They can put their money where it is needed the most."
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