by Joe Gleinser
1. September 2009 20:52
In today's post on the CIO.com blog, Michael Hugos raises several interesting points about transitioning IT asset costs from fixed costs to variable costs. He boldly predicts that doing so will herald a rapid economic expansion. Though I'm not willing to go so far as he is, I am a big proponent of emphasizing variable costs. The justification is simple dollars and cents.
Even in small organizations IT asset acquisition is well into the tens or hundreds of thousands of dollars per year. Dollar for dollar it is hard to beat rolling your own virtualized environment. Do-it-yourself, if you're able, is the cheapest method. There are several mitigating factors to this:
1) The competition for those budgeted dollars is diverse. Instead of spending $100,000 this year on assets, what if you spent $35,000 on cloud-based offers and moved $65k into a marketing program, new sales reps or other projects that increase top line revenues.
2) The opportunity cost of building and maintaining that system interferes with other IT projects. By migrating routine and time-consuming tasks into optimized environments that are designed for those tasks IT departments can focus on projects that require highly specialized knowledge.
3) New cloud offerings from Terremark, Amazon and 3Tera (among others) are radically altering the scale at which IT exists in small and mid-sized businesses. The cost savings that come from purchasing a small piece of a big pie are significant when compared to your home baked pie.
Many organizations would do well to investigate methods that take IT assets off the books and put those capital dollars into more revenue generating tasks. In any economy that is just good sense.