Blog

17th April 2019

Managing IT costs through colocation’s OpEx model

All companies share essentially the same aspirations – increasing revenue and profits – and a key element of this is managing business expenditure. IT spend, specifically, is challenging to control in an ever-changing and increasingly complex IT landscape; a landscape characterised by the pursuit of digital transformation to improve efficiency and remain competitive in an increasingly digital economy. Most companies don’t have the luxury of bottomless financial resources to allocate to the modernisation of IT infrastructure, so decisions around the procurement, maintenance and storage of new equipment, capabilities, software and workloads will inevitably be affected by cost. The choice between IT investment as a capital expense (CapEx) or as an operating expense (OpEx) is an important part of this decision. 

CapEx and OpEx – why choose one over the other?

Many businesses prefer the OpEx model because it allows for ongoing operating expenditures that can be planned for month on month. This makes them easier to budget, which is also why many companies are moving from a model of hardware and software ownership to a software as a service (SaaS) model. OpEx expenditures are also attractive because ‘leasing’ costs paid as part of daily business operations are tax deductible, whilst not all up-front purchases are. 

Increasingly, companies are faced with a combination of static and fluctuating IT costs, a significant proportion of which can be easily mitigated through colocation. Colocation can provide a good balance between CapEx and OpEx because it allows companies to choose to retain ownership of some IT infrastructure whilst benefiting from everything colocation has to offer (security; power and cooling; secure, low-latency connectivity; greater network redundancy; access to multiple carriers, etc.) without the enormous capital expenditure required for a scalable in-house IT storage facility.

The (hybrid) cloud within the CapEx/OpEx model

Cloud computing shifts IT spend to a pay-as-you-go model and has obvious financial benefits (reduced hardware costs) and operational advantages (agility). Companies using the public cloud pay only OpEx for ongoing services (the service provider made the original CapEx investment), whilst those using the private cloud have made the initial CapEx investment and can potentially pass resources to users and departments on an OpEx basis. 

Datum’s hybrid cloud solution allows companies to house business-critical IT real estate, applications and workloads in their own private clouds and our highly secure facility, whilst choosing to store other workloads in the public cloud. And because our services are run on an OpEx basis, and we have already made a significant investment in a highly secure data centre, our clients are spared the CapEx outlay. Furthermore, in addition to the CapEx savings, our clients can benefit from the excellent relationships we have formed with partners listed in our Datum Connect partner directory who offer services to augment our colocation offering, including connectivity, cloud and managed services. 

Datum’s colocation offering - an ideal OpEx solution

Setting up and running in-house data centres is a very costly proposition comprising high set-up and infrastructure costs and significant ongoing costs (e.g. power, cooling, security). In order to ensure that these CapEx investments are worthwhile, predictions need to be made about the potential need for more space further down the line. If growth targets are not met, companies can find themselves with more space than they need and if they are exceeded, companies may find that they have under-invested and have insufficient room to flex. Benefiting from our colocation services and additional services as an OpEx expense allows our clients to scale their solutions month-by-month based on business requirements.

But don’t just take our word for it …

We are proud of the relationships with have with our clients; relationships that are based on flexibility, partnership and collaboration. Here are just some of the comments our clients have made about us:

A specialist in business recovery services: “Good partnerships are based on the strength of the working relationship that is established. Some of the key reasons that we contract with Datum are that we have found Datum to be flexible, supportive and easy to deal with. Such attributes are not that easy to find but are key to a successful, long-term partnership.”

Feedback from a global asset management firm: "Datum stood out because of the way they engaged with us from the start. They made it clear that each and every client was important to them and when your organisation’s core business systems are at risk, it is important to be able to trust that your provider will work with you to ensure its physical security and resilience." 

Would you like to find out how we can support your business growth and digital transformation plans? Get in touch to speak to a member of our team, or book a tour of our facility.

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