Hardware refresh vs. cloud? Where are you looking for the savings?

Written by Marc Shelley, Sr. Product Marketing Manager (mshelley@egenera.com) 

I’m sitting in my office contemplating a request I just received from one of our partners for data points/facts for why someone would want to migrate to cloud instead of just performing a hardware refresh.

Stop me if you’ve seen this movie before.

To start, I need to understand why businesses perform hardware refreshes to begin with. Granted, most system refreshes occur on a 3-4 year cycle so it isn’t a frequent disruption. Most businesses simply chug along until it’s time to rip and replace – here are some common events when you know it’s time:

  • Compatibility issues with new applications, virus/ransomware patches, etc.:
    • If a system can no longer be patched or is incompatible with current software versions it can pose a serious security threat and can be rendered useless.
  • Reliability issues:
    • Systems consist of many parts. These parts typically have a mean time between failure (MTBF) measurement which basically implies that components will eventually fail. Granted, components have become very reliable over the years but failure is still inevitable — and systems never pick a good time to fail.
  • Serviceability issues:
    • When components do fail in aging systems, replacement parts are oftentimes not available or are very expensive to replace. And, compatibility issues can arise.
  • Power/cooling inefficiency of aging systems:
    • CPU, memory, storage and I/O vendors are constantly delivering “greener” products to the market which can save on utility consumption and costs.
  • Performance issues compared to current generation systems:
    • Software products seem to operate with a never ending diet of processor and memory consumption. Legacy hardware oftentimes can’t deliver acceptable performance.

There’s no debate that IT is the lifeblood of most businesses, so it’s easy to understand how hardware refresh projects are justified as a cost of doing business and part of broader strategy a business employs to avoid the high cost of downtime. It’s also “business as usual” and most companies have gotten used to planning and budgeting for refreshes.

On one hand this all makes perfect sense, but on the other hand I’m wondering why businesses put themselves through this disruptive and expensive exercise when cloud is a terrific option?

The fact is that every business is unique in terms of IT support costs, configurations and requirements, so trying to come up with a (hard) cost savings calculation is futile. But, let’s look at some benefits every business can realize by moving to the cloud vs performing yet another hardware refresh.

Hardware Refresh Cloud
Power / cooling costs Cost savings are configuration specific and will improve with new hardware but will never = $0 Cloud uses a shared infrastructure model with end user costs being minimized (spread) across a broad customer base
Real estate costs Cost savings are configuration (footprint) specific and a refresh may possibly provide a little cost relief, but not much Cloud uses a shared infrastructure model with end user costs being minimized (spread) across a broad customer base
Over-provisioning costs Businesses will still over-provision costly hardware to ensure the ability to scale up or down depending upon performance requirements Cloud provides on-demand bi-directional performance scalability which eliminates over-provisioning costs and concerns
Under provisioning risks After a costly refresh, some businesses will accept the risk of under-provisioning hardware to save money Cloud provides on-demand bi-directional performance scalability which eliminates this risk
Capital expenses Still exist The cloud services provider (CSP) procures all hardware: costs are minimized (spread) across a broad customer base
Upgrade
challenges
Still exist The CSP manages all hardware lifecycle tasks
Maintenance challenges Still exist The CSP manages all hardware lifecycle tasks
Compatibility challenges Still exist The CSP manages all hardware lifecycle tasks

When we work with our partners to help overcome end user resistance to cloud, we always emphasize that it’s the intangible benefits that really make the case. Sure, there are financial benefits and rewards as well – you don’t need to look any further than the CAPex vs. OPex discussion to drive the point home — but the fact is that cloud eliminates the costly IT heavy lifting that can be a roadblock to success for many businesses.

By moving to the cloud end users never again have to face the budgetary challenges of a hardware refresh. Cloud makes hardware refresh time-sink and costly activities such as data migration and data  protection a thing of the past. With cloud, migration is one and done!

For more pointers in how to handle end user objections, click here to download our paper “Selling Cloud – Objection Handling“.

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