Is the cloud about CAPEX or OPEX ?

Is the cloud  about OPEX or CAPEX ?

As many of you will think it's of course about CAPEX. One of the basic principles about cloud computing is that cloud-services are typically monthly based per user or another unit and avoid for an organization capital expenditure. A welcome gift in difficult economic times for an organization.

Imagine you can use an enterprise ERP system including all functionality in no matter of time and only paying a small amount per user per month ? Before an organization needed to invest heavily in software licenses and server infrastructure before it could. Even start using the solution. So for small organization with limited financial. Means the cloud is definitely about reduction of CAPEX.

But what about large organization, which have the proper means to invest in software licenses and Datacenter infrastructure ? Why would they benefit from the cloud ?

Well large organization are interested in reducing their recurring (operational) costs. they want to optimize their costs as much as possible and they are also looking towards cloud solutions for that. Not to avoid capital expenditure but to optimize their daily support by using standardized and automated Ict services from the cloud with self-service capabilities for their employees. So for large organizations the cloud is about reducing OPEX !

Conclusion is that the cloud is about OPEX AND CAPEX ! And shows that it can be a benefit for all types of organizations.

Everyone is equal !

The cloud changes the way we do business… One or two decennia ago, it was almost impossible to think that a small company could compete against his major competitors in the market, simply because information access was limited an the small company did not have the financial means comparable to his big competitor.

Today this gap is as good as vanished, thanks to the Internet and the cloud !

Information Access

Via the Internet everyone has access to almost unlimited resources of information at no cost. I remember the days that we need to login into Bulleting Board systems (BBS) using analogue modems to download a manual or software patch. Now you find the most divers information about a topic with dozens of people sharing the same experience, saving you lost of time and allow you to learn new stuff in hours instead of weeks.

Unlimited resources !

Another phenomenon of the last years is the upcoming cloud industry, delivering the powerful collaborative tools, applications and computing power without the need of large CAPEX investments, but rather pay for what you are consuming. This means that you can setup a complete professional business with limited financial means with comparable infrastructure as you biggest competitor in the market !

For young entrepreneurs, these evolutions are maybe the most important democratic events happened in the last years. It allows creative people with smart ideas to compete with the same means into the real world. Your background or culture do not matter anymore.

As Information Technology is getting more and more dominant, I see the evolution of the Internet and Cloud industry as a very positive evolution for the world we live in.

Just look at some recent success stories such as facebook, twitter but also what happened in Tunisia and Egypt where young people found each other via the Internet and cloud tools to came up for their rights.

If I look to my children, I know they will be able to compete with the same means into this competitive world, this makes me very confident !

The cloud is there to stay !

Besides the fact that since beginning 2010, each day, a number of articles and press releases are published about the cloud we can expect that the cloud is here and will stay.

So what makes ‘the cloud’ to stay ?

The cloud is not about the technology but it’s about the way we do business today and how we (will) use IT.

Today we live in a global world where distances are becoming relative due to the internet and by that, cultures get mixed. Business do not have to compete anymore with their neighbors but with every competitor around the globe.

Speed to deliver is everything in this economics and IT needs to adapt. The ‘IT cloud’ plays an important role in this change.

"Braking the circle"

IT departments where used to each 3 or 4 years roll out massively a new version of a desktop towards their employees. Depending the size of the organization this job could take weeks or even months, not mentioning the preparation and aftercare of such a rollout. As a result IT departments don’t have time left for new tools applications which are needed to support the organization through the globalization…

Organizations are realizing that they need to break this circle and look for better solutions. Using an IT Cloud solution is one of them. An IT Cloud solution allow organizations to roll-out an IT service in a fraction of time they are used to, at a know cost and without overloading their IT department. Instead the IT department can again take the time to select the proper business tools and Apps to support their business and it’s expansion.

"OPEX instead of CAPEX"

Another important reason for the success of the ‘IT Cloud’ is that organization do not need to invest in purchasing hard- and software to be able to use new tools or Apps. Using an IT Cloud solution organizations have an alternative to use the same tools and Apps, typically based on a price per month per user. This is certainly a benefit in difficult economic times for organizations but also a perfect solution for small organizations that now have the opportunity to use the same tools as their bigger competitors without the need for large investments.

"Speed of Delivery"

As mentioned before, the way we do business is changing rapidly. Organizations need to adopt quick to be able to compete, and therefore IT needs to follow… The classic way of doing IT is not capable to achieve this demand.

Last i had one of our customers saying the need to be able to boot-up a large number of servers for a calculation job during a demo at one of their clients, just to convince them they can handle the job. Without an IT Cloud solution that customer would be unable to give this demo and convince his client...

These arguments are just some examples why the cloud will stay... As you see it’s not about technology, but about the way we deliver IT.

If ‘the cloud’ as we know it today is also ‘The Cloud of tomorrow’, I am not sure, in fact I doubt it. It’s like the clouds in nature, you look at the sky and see a cloud pattern at the horizon, if you look up 15 minutes later, the cloud pattern looks completely different. It’s maybe the best comparison between the ‘IT cloud’ and natural clouds I can make for the moment…

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As a Survivor and firm believer in the cloud industry, my expertise in the Server-based-Computing industry and later on in the Cloud industry are a great asset in my current position.

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