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New ways to buy IT, keeping cloud under control

Buying enterprise technology used to be like buying a car. You either paid up front or paid extra for some sort of hire purchase, or just straight rental, agreement.

By John Oates

But now you can hire a car by the hour or via a bewildering range of finance agreements. Equally there are now dozens of different ways to buy technology services.

Today the majority of the typical enterprise IT budget is spent on operational expenses, not on big capital purchases of hardware.

This seems like a brilliant deal for hard-pressed IT directors. You no longer have to go through agonising purchasing decisions and convince finance staff that the best decisions have been made.

If a wrong decision is made, or the business environment changes, you can quickly change technology infrastructure to match.

But the reality is that paying per month for cloud services is often not the best value for your business.

To start with you need to specify cloud contracts just as carefully as you once specced up hardware and data centre design decisions. Although cloud providers do offer flexibility the customer always pays for that flexibility.

You will get a far better deal if you can be precise about what services you want in advance.

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Past performance can help guide the maths here but you will also need to make predictions about future requirements. Buying in extra capacity at the last minute can be seriously expensive.

Once you’ve got the clearest possible idea of what you need then you can look at how the different offerings are paid for. Many providers offer quite serious discounts if services are paid for, or at least reserved, in advance.

There are dozens of different business models based on usage, on potential savings or just a straight monthly fee.

But be aware that this wide choice brings its own issues.

You will need systems in place to monitor your various cloud deals in order to ensure you continue to get value for money.

That management overhead is a cost in its own right.

That’s why for at least parts of your infrastructure doing it the old way can still make sense. Running your own hardware is not always the most expensive option.

It can give you more flexibility for less spending than can be offered by many cloud providers.

This is why most businesses run some sort of hybrid architecture which gives you the best of both world’s – cost savings allied to control

Keeping key applications running on your own hardware makes development and testing easier too.

There might come a time when the cloud is really the answer to every question, but for now finding the right mix is the right place for most companies.

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