Investing in IT has remained one of the major trends of the last decade, with most organizations spending 6.9% of total revenue on information technology.
During those two decades, the aspects of that IT budget have shifted dramatically, moving from largely print and server to a host of cloud, SaaS and IaaS (Software-as-a-Service and Infrastructure-as-a-Service), virtual machines, managed IT services, and much more.
While many of those are growing, cloud computing (including virtual servers and virtual computers) and managed business IT services are by far the fastest growing according to studies by McKinsey and Gartner.
Why are so many organizations investing into these technologies? In most cases, answers relate to the increasing viability of IT solutions, increasing range and affordability of managed and cloud services, and improving business logic in making those decisions.
Most organizations are changing, growing, and hopefully expanding. It’s what commerce is about, and it’s why most organizations are in business. While the business model of the 90s was to install a single solution and retain it for a decade or longer, that mindset is quickly changing. New technologies, solutions, and services quickly make old ones obsolete, and organizations that fail to adapt or keep up are left behind.
Switching to virtual computing, virtual cloud services, and managed IT services means organizations can invest in new technologies, stay with the curve, and keep up. On a lower level, it also means branches and teams can literally adapt contracts to usage and needs to ensure needs are being met, even as teams and branches grow or change.
How does that work? Sourcing virtual computers and servers means it’s easy to simply scale up available computing power as its needed, scale down a server as a department restructures, or add on new servers and solutions to meet changing needs. With in-house hardware investment, these types of changes would take months and thousands of dollars, but virtual solutions allow changes to be implemented within a few days at most.
Cloud computing and managed IT services like print, networking, or servers can be costly. However, many organizations switch to managed services and see a decrease rather than an increase in expenditure. Why?
Running hardware requires investment into electric, management, heating and cooling, repair, and storage space. Having in-house servers means having people on-hand to maintain, repair, manage, physically update, and monitor those servers.
Having physical computing solutions means maintaining, updating, delegating, distributing, and repairing expensive computers for a large number of staff. Reducing the need to do so naturally cuts costs by reducing the number of people needed to maintain services, cutting in-house management and monitoring, and reducing the severity of issues.
Security and compliance are increasingly important issues in the U.S. and in Europe, and many organizations struggle with maintaining the standards required for compliance. Outsourcing or using managed services is quickly becoming the easiest way to achieve compliance and security.
Why? Organizations have used third-party payment providers to reduce the need to handle PCI-DSS audits and compliance for nearly a decade. An organization implementing Stripe for online payments isn’t liable for payment and card compliance, only for ensuring widgets and code are properly implemented on the site.
Similarly, using cloud servers means that the responsibility for security and compliance falls into the hands of the server provider. While it’s still up to you to choose a solution that offers the compliance and security standards needed by your industry and organization, it removes much of the cost and complexity from achieving those standards.
Of course, your organization will always be responsible for some security and compliance issues. If you run virtual servers with a solution like Azure, your physical hardware is still subject to compliance and security audits.
Most businesses aren’t in business to create beautiful systems architecture, efficient print networks, or secure but scalable app hosting. IT services are a necessary support function, but they aren’t your core business. That means anything you do in-house will always be expensive, time-consuming, and lower quality than something you outsource.
Choosing cloud and managed service solutions means taking those solutions from a company that focuses on them as a core service. Those organizations have large teams dedicated to exploring technology, finding technology fit, maintaining hardware, updating software, monitoring for issues and threats, and responding quickly in case of incidents.
Managing the same at your own organization would require considerable investment that would go well-beyond the scope of what your business likely does.
Cloud, infrastructure-as-a-service, platform-as-a-service, and managed IT services are growing, and each for many of the same reasons. They allow organizations to source a valuable business service without having to create or invest in a business branch for that technology, and often do so in a way that is cheaper, faster, and better than they could do on their own.
Whether or not this is true for your organization will heavily depend on existing infrastructure, quality of connections, existing teams and hardware, and how quickly your business changes or adapts. The best way to find out is to conduct a needs and cost analysis alongside growth or change projection, to calculate total cost of ownership for needed technology, and to compare those costs with purchase versus virtual or managed solutions.
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