External IT resources - can not (,) refuse
Welcome colleagues and readers. Today we propose to speculate on the advisability of leasing IT resources.
Imagine a situation: the company is thinking about how to implement ERP. In the place of these 3 letters there can be another abbreviation - CRM, CAD, BI, SRM, CMS, EAM, MRM, GIS. How does it all start? From the definition of functionality and the required performance, and it is necessary not only to calculate it for the current moment, but also to forecast future development for at least 3 years. It is necessary to look at the architecture of iron, basic and applied software, to think about how to ensure RTO / RPO, disaster recovery, security, to attract a highly qualified project team. In addition, to analyze in detail several solutions offered by manufacturers. Think about how much the subsequent operation will cost. And we have not done the most important thing - we did not convince investors or business owners of the need to spend the budget on this IT system.
And what will the CIO say to the business when after a couple of years everything changes so much that it will be necessary to hold similar events again? After all, the spent several million will not return. At the same time, funds to support the decision should be spent somehow.
Or another option - the company needs an IT system “just yesterday”, and there are no resources for urgent implementation tasks. The design, supply and installation of equipment, implementation, testing solutions and its commissioning in the aggregate will take about six months, and there is no time to wait.
')
Sometimes IT resources are needed for companies only for a certain period of time - six months, a year, after which they are more likely to be on the balance sheet. Of course, if in such situations you go along the classical path of building infrastructure (your own data center / colocation), in the future this can turn out to be significant problems. There is another solution - to rent IT resources.
Each path - its own data center, colocation, rental of computing resources - has its own advantages, disadvantages and pitfalls. Take a closer look at each of them.
In order to carry the title of data center owner, it is necessary to first build a data center or re-equip it with an already existing room / building. By the time it is about one and a half years, at a cost of approximately $ 2–3 million (we consider medium-sized data centers - 100–120 m2, TIER 2 reliability level, our experience shows that each m2 in it costs about 15–20 thousand dollars ). But to the impressive CAPEX you need to add OPEX - the cost of maintaining the data center (for electricity, water, etc.). It is necessary to take into account the costs of training and certification of specialists, maintaining a high level of their theoretical knowledge and practical skills in operating data center engineering systems. On the other hand, its own shirt is closer to the body, and its data center is a guarantee of the safety of confidential data and full control over the IT infrastructure in real time.
Placing iron in a colocation provider, the company removes issues related to the construction and operation of its data center. But the IT infrastructure is still behind it, respectively, design, equipment purchase, installation, launch, administration, etc. - on her side. In this case, the deployment of the computing complex will take several months. It is not possible to quickly “increase” IT resources in case of need, as well as to abandon them.
Renting computing resources means that you have production facilities at which you can deploy your business applications. In this case, one-stage serious capital costs for the purchase of equipment and software that during the development of the first release of the production environment can become outdated both physically and mentally will not be required.
You can order the architecture for the specific requirements of the application system, while seriously saving, since in the early stages of the development of the company's IT system, a simplified infrastructure configuration can be provided. In the case of a rare peak load, you can use additional capacity exclusively in the "high season".
At the same time, the project team of the partner, as they say, is already “under steam” and is ready to quickly assemble a new IT complex for various tasks. The company pays only for immediate results. This also implies “freedom from operation”: the maintenance of data centers - both engineering and computing systems - is the concern of those who provide services. As well as ensuring the required availability, reliability and security.
If you wish, you can experiment. If the development is at a standstill and does not converge with the required functionality, or in general it became clear that the implementation of the IT system in the current conditions will not provide economic benefits, the loss from stopping the implementation will be minimal. This gives you the opportunity to try what else does not have competitors, and quickly understand what can provide business benefits. And then quickly integrate the solution into the corporate IT landscape. How long will it take to introduce a new technology with the classical approach?
In the case of leasing computing resources, equipment and software are not listed on the balance sheet, respectively, there is no need for inventory and depreciation. No need to worry about technical vendor support.
Finally, last but not least, the advantage of outsourcing computing resources is a transparent and flexible financial model. Of course, subject to the choice of an adequate partner. There are no cost peaks, you only pay for what you get, as soon as there is no need for such a service, you simply refuse it.
It seems to be the perfect picture of the world. But at the same time there are moments that can not be forgotten. Outsourcing is always a certain dependence on the service provider. When replacing it, it may be difficult to migrate services. If you are just starting a collaboration, it makes sense to check a partner on simple productive projects or at the initial stage of introducing new IT services.
How do the costs relate to the traditional approach and the rent of IT resources? For clarity, we take the business case of a large industrial company, which is actively developing and plans to maintain a given pace over the next 5 years. According to its IT specialists, to meet the needs of the business during this period, it will require an increase in computing capacity by 5 times. At the moment there are 6 equipment racks, in a year it will take 11 racks, after two - 18, after three - 23, after four - 27 and after five years - 32 racks. The company has a choice - to build a new data center, use the services of a colocation provider, or rent IT services. We took the cost of building and maintaining the existing IT complex (6 racks) as a basis for calculations and calculated the notional cost of one finished rack. What happened:
In this case, two items of expenses - the construction of the data center and its maintenance - are included in the monthly payment for the rental of racks.
The rest remains the same:
All expenditure items are included in one monthly payment: renting a similar computing complex = ~ $ 168,000 per rack per year.
Table 1. Total costs for the first year
In subsequent years, the operating costs for your data center and colocation will be lower (CAPEX is eliminated) than for the rental of IT resources, but the total costs will still be higher (see Figure 1).
We took the average cost of maintenance of engineering systems and computer complex based on our experience. It is also necessary to take into account that the equipment becomes outdated over time and sooner or later its modernization will be required. It can be assumed that after 3 years of operation of the computing complex, 25% of the existing equipment will need to be upgraded.
Fig. 1. The cost of IT resources for 5 years
However, we did not take into account a number of financial aspects that are of high importance when considering options for the further development of the company. For example, let's take a lending rate: it shows that the $ 100 spent five years ago now "costs" about 150. As with the traditional approach, a significant part of the expenditure falls on capital expenditures at the start of the project (building a data center, purchasing equipment), actually creating its own date - a center or colocation variant will be even more costly (see fig. 2).
Fig. 2. The cost of IT resources for 5 years, taking into account the lending rate (10%)
So, in comparison with the classical approach and the use of colocation, outsourcing of computing power is in some cases more competitive - it gives a fast, high-quality and at the same time very cost-effective solution in terms of the implementation of new IT services.
Imagine a situation: the company is thinking about how to implement ERP. In the place of these 3 letters there can be another abbreviation - CRM, CAD, BI, SRM, CMS, EAM, MRM, GIS. How does it all start? From the definition of functionality and the required performance, and it is necessary not only to calculate it for the current moment, but also to forecast future development for at least 3 years. It is necessary to look at the architecture of iron, basic and applied software, to think about how to ensure RTO / RPO, disaster recovery, security, to attract a highly qualified project team. In addition, to analyze in detail several solutions offered by manufacturers. Think about how much the subsequent operation will cost. And we have not done the most important thing - we did not convince investors or business owners of the need to spend the budget on this IT system.
And what will the CIO say to the business when after a couple of years everything changes so much that it will be necessary to hold similar events again? After all, the spent several million will not return. At the same time, funds to support the decision should be spent somehow.
Or another option - the company needs an IT system “just yesterday”, and there are no resources for urgent implementation tasks. The design, supply and installation of equipment, implementation, testing solutions and its commissioning in the aggregate will take about six months, and there is no time to wait.
')
Sometimes IT resources are needed for companies only for a certain period of time - six months, a year, after which they are more likely to be on the balance sheet. Of course, if in such situations you go along the classical path of building infrastructure (your own data center / colocation), in the future this can turn out to be significant problems. There is another solution - to rent IT resources.
We do not need someone else?
Each path - its own data center, colocation, rental of computing resources - has its own advantages, disadvantages and pitfalls. Take a closer look at each of them.
In order to carry the title of data center owner, it is necessary to first build a data center or re-equip it with an already existing room / building. By the time it is about one and a half years, at a cost of approximately $ 2–3 million (we consider medium-sized data centers - 100–120 m2, TIER 2 reliability level, our experience shows that each m2 in it costs about 15–20 thousand dollars ). But to the impressive CAPEX you need to add OPEX - the cost of maintaining the data center (for electricity, water, etc.). It is necessary to take into account the costs of training and certification of specialists, maintaining a high level of their theoretical knowledge and practical skills in operating data center engineering systems. On the other hand, its own shirt is closer to the body, and its data center is a guarantee of the safety of confidential data and full control over the IT infrastructure in real time.
Placing iron in a colocation provider, the company removes issues related to the construction and operation of its data center. But the IT infrastructure is still behind it, respectively, design, equipment purchase, installation, launch, administration, etc. - on her side. In this case, the deployment of the computing complex will take several months. It is not possible to quickly “increase” IT resources in case of need, as well as to abandon them.
Renting computing resources means that you have production facilities at which you can deploy your business applications. In this case, one-stage serious capital costs for the purchase of equipment and software that during the development of the first release of the production environment can become outdated both physically and mentally will not be required.
You can order the architecture for the specific requirements of the application system, while seriously saving, since in the early stages of the development of the company's IT system, a simplified infrastructure configuration can be provided. In the case of a rare peak load, you can use additional capacity exclusively in the "high season".
At the same time, the project team of the partner, as they say, is already “under steam” and is ready to quickly assemble a new IT complex for various tasks. The company pays only for immediate results. This also implies “freedom from operation”: the maintenance of data centers - both engineering and computing systems - is the concern of those who provide services. As well as ensuring the required availability, reliability and security.
If you wish, you can experiment. If the development is at a standstill and does not converge with the required functionality, or in general it became clear that the implementation of the IT system in the current conditions will not provide economic benefits, the loss from stopping the implementation will be minimal. This gives you the opportunity to try what else does not have competitors, and quickly understand what can provide business benefits. And then quickly integrate the solution into the corporate IT landscape. How long will it take to introduce a new technology with the classical approach?
Leasing of computing resources is most relevant for the banking sector, retail companies and telecom operators. The funds saved on the long-term construction of IT infrastructure, here and now, are pouring into circulation and starting to work for the business. Another point: the lease allows companies to quickly launch new services to the market, outpacing competitors. No need to wait a few months, or even half a year, until the service “takes off”, and lose precious time. For example, the marketing of a telecom operator offers to launch a new “All Inclusive” tariff, for this it is necessary to change the billing part - to introduce a separate specialized application. The expansion of its IT infrastructure is losing out on the outsourcing of computing resources in terms of speed of support for business ideas.
In the case of leasing computing resources, equipment and software are not listed on the balance sheet, respectively, there is no need for inventory and depreciation. No need to worry about technical vendor support.
Finally, last but not least, the advantage of outsourcing computing resources is a transparent and flexible financial model. Of course, subject to the choice of an adequate partner. There are no cost peaks, you only pay for what you get, as soon as there is no need for such a service, you simply refuse it.
It seems to be the perfect picture of the world. But at the same time there are moments that can not be forgotten. Outsourcing is always a certain dependence on the service provider. When replacing it, it may be difficult to migrate services. If you are just starting a collaboration, it makes sense to check a partner on simple productive projects or at the initial stage of introducing new IT services.
To pay the bills
How do the costs relate to the traditional approach and the rent of IT resources? For clarity, we take the business case of a large industrial company, which is actively developing and plans to maintain a given pace over the next 5 years. According to its IT specialists, to meet the needs of the business during this period, it will require an increase in computing capacity by 5 times. At the moment there are 6 equipment racks, in a year it will take 11 racks, after two - 18, after three - 23, after four - 27 and after five years - 32 racks. The company has a choice - to build a new data center, use the services of a colocation provider, or rent IT services. We took the cost of building and maintaining the existing IT complex (6 racks) as a basis for calculations and calculated the notional cost of one finished rack. What happened:
1. Own data center
- Data center construction = ~ $ 3 000 000
- Purchase of IT equipment for the computing complex (VC) = ~ $ 285,000 per rack, taking into account support for manufacturers' solutions for 1 year
- Operation of data center engineering systems = ~ $ 150,000 per year
- VK operation = ~ $ 35,000 per rack per year
2. Rent a data center (colocation)
In this case, two items of expenses - the construction of the data center and its maintenance - are included in the monthly payment for the rental of racks.
The rest remains the same:
- Purchase of IT equipment = ~ $ 285,000 per rack
- VK operation = ~ $ 35,000 per rack per year
- Rent racks = ~ $ 48,000 per rack per year (average figure for the market)
3. Rental of ready-made IT services on the example of our ITC
All expenditure items are included in one monthly payment: renting a similar computing complex = ~ $ 168,000 per rack per year.
Table 1. Total costs for the first year
| Format | 6 racks, million dollars |
|---|---|
| Own data center | five |
| Colocation | 2.2 |
| IT resource rental | one |
In subsequent years, the operating costs for your data center and colocation will be lower (CAPEX is eliminated) than for the rental of IT resources, but the total costs will still be higher (see Figure 1).
We took the average cost of maintenance of engineering systems and computer complex based on our experience. It is also necessary to take into account that the equipment becomes outdated over time and sooner or later its modernization will be required. It can be assumed that after 3 years of operation of the computing complex, 25% of the existing equipment will need to be upgraded.
Fig. 1. The cost of IT resources for 5 years
However, we did not take into account a number of financial aspects that are of high importance when considering options for the further development of the company. For example, let's take a lending rate: it shows that the $ 100 spent five years ago now "costs" about 150. As with the traditional approach, a significant part of the expenditure falls on capital expenditures at the start of the project (building a data center, purchasing equipment), actually creating its own date - a center or colocation variant will be even more costly (see fig. 2).
Fig. 2. The cost of IT resources for 5 years, taking into account the lending rate (10%)
So, in comparison with the classical approach and the use of colocation, outsourcing of computing power is in some cases more competitive - it gives a fast, high-quality and at the same time very cost-effective solution in terms of the implementation of new IT services.
Source: https://habr.com/ru/post/248555/
All Articles