Cutting Capex by Rethinking IT
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowAs companies have become increasingly dependent on IT to accomplish their business objectives, they’ve had to dig deeper into their capital budgets to keep up with rapid advances. No matter when you buy a new laptop, a tablet, or a rack full of servers, you make that investment knowing something newer and more powerful will reach the marketplace the next day or month.
That quick obsolescence means that while most companies continue to view technology investments as capital outlays, savvy company leaders realize those dollars are essentially funding short-term costs. One lesson most of us have learned — whether it was in a college accounting class or over a cup of coffee with a mentor — is that it’s rarely a good idea to use long-term funding sources for short-term costs. That’s why we don’t take out 15-year mortgages to buy cars.
Still, most companies continue to invest in technology assets the same way they buy production equipment. That production equipment may be chugging along for a decade or more, long after those shiny new laptops are tucked away in some landfill, but the companies use the same strategy.
If your company is typical, IT represents a significant amount of your capital spending. You may approach it in any number of ways — perhaps replacing a specific percentage of existing technology annually, or updating everything every three or four years — but no matter how you make the investment, it keeps you from deploying capital for other core needs like production equipment or facilities.
Have you wished there was a better alternative? There is, and it starts with looking at your IT needs through the lens of operating costs instead of capital investments. By treating IT as an operating expense, you can use your limited capital for more pressing needs.
If you think that sounds too good or too simple to be true, you need to know that other companies are doing exactly that. One of the best ways we’ve seen to accomplish shifting IT from capital to operations is by using a platform called CompleteCloud, powered by Avatara.
CompleteCloud is a solution that provides your company’s complete IT infrastructure from the data center to the devices each employee brings home. It addresses everything your company needs to efficiently and confidently operate your IT, with local internet access, comprehensive maintenance and ongoing updates, a full productivity suite for your team, remarkably robust security, and U.S.-based support.
By transitioning to a platform like this, your leadership team can concentrate more time and energy on running the business instead of being distracted by IT issues. Your team will be able to devote their decision-making to strategic initiatives instead of trying to figure out which servers or laptops to buy or how frequently you need to update them.
From an operations standpoint, transitioning your IT to a digital cloud-based solution will also make it much easier for you to empower your team to be able to work safely and securely from anywhere.
Nor will you lose sleep wondering whether your data is safe from cybercriminals, because a key component of cloud-based platforms like this is superior security. For example, Avatara’s managed security suite includes a private data center environment, DNS and content filtering, host-based intrusion detection, log archives, 24/7 security operations center, multi-factor authentication, secure email protection, and cybersecurity awareness training for your team. In fact, the security is so robust and in compliance with key industry protocols that moving to CompleteCloud automatically allows companies to meet the requirements of stringent regulations such as CMMC, HIPAA, DFARS, and NIST.
Let’s go back to what’s really important: dollars and cents. When you treat IT as a capital cost, you have to estimate your future needs, budget accordingly, and hope that nothing like a trade war crops up between budget approval and cutting a purchase order, putting a crimp in your plans and limiting what you can accomplish this year.
With a platform such as CompleteCloud, you’ll instead have a predictable monthly expense that’s scalable. If a new business opportunity means adding 300 employees, you’ll accurately be able to project what the additional expense will be. Conversely, if market conditions force you to downsize operations, your IT expenses will decrease proportionally. In addition, because a platform such as this is all-inclusive, you’re likely to spend less overall than when buying services such as support and monitoring separately.
We see the transition from typical capital-based approaches to solutions such as this becoming more common over the next several years, but the sooner your leadership changes its thinking about IT, the sooner you can begin to realize the savings and reap the rewards.
Doug Miller is CEO/CTO of Brightworks Group, a best in class Technology Success Provider (TSP) primarily serving Midwest-based companies in industries such as manufacturing, distribution, healthcare, financial services, and engineering.