When it comes to IT infrastructure, one of the long-standing debates is between cost and control. CFOs are re-evaluating the costs of continuous investment on on-premises infrastructure, while CIOs want more control on how the company’s data assets are being stored and accessed.
Whether on-prem or on public cloud, data storage has accompanying risks and rewards. As enterprises become more inclined to speed up their digital transformation, in light of the pandemic, is there a middle ground for IT infrastructure that addresses both cost and control issues?
In a webinar titled “Having and Eating the IT Infra Cake— Balancing Cost and Control”, sponsored by Dell Technologies and VMware, experts offered their take on the changing landscape of IT infrastructure, and whether C-suite executives will ever find that sweet spot for compromise.
For digital technology solutions providers like Dell Technologies, companies’ hesitations on outsourcing their data requirements are perfectly understandable, although they are not impossible to overcome.
“We recognise that (your) applications (and) workload has to stay on site, because of the control you need to put onto your critical data sets, (and) the regulatory compliances you have to observe in specific industries,” noted Phillip Wu, Dell Technologies Sales Director for APEX, Singapore.
“What we actually did, through the last couple of quarters at Dell Technologies is to actually revamp and revolutionise how we actually take IT infrastructure to the market, to Mr. Customer yourself,” Wu said.
Promising enterprise agility and scalability to IT infrastructure, Dell introduced its APEX as-a-service portfolio, described as “a flexible consumption model, with integrated support services, secured through an e-commerce portal.”
“It covers data storage, (it) has the clouds in a hybrid cloud environment, it allows our customers to leverage our software IP, on public cloud providers, and also, gives (the) customer a lot of flexibility to consume IT infrastructure as you go,” Wu expounded.
For end-users, such as Sourabh Chitrachar, the Regional VP (Asia) for IT Transformation and Strategy at Liberty Insurance, the promising features of the infrastructure-as-a-service (IaaS) model make it increasingly appealing to enterprises.
“Infrastructure as a service is definitely something which is coming to the forefront. More and more of the enterprises have started going into that, because it’s a commodity. And at the end of the day, I would like to ensure that my infrastructure is scalable, modular—but again, it depends on the needs of the business,” Chitrachar said.
Every problem has a solution
Since spending priorities among enterprises changed during the last two years, technologies that promise to cut costs will always find an audience, shared Anirban Kumar Ghosh, Asia Pacific Controller for global real estate services firm JLL.
“As we are moving to the subscription-based thing, I think the mindset and change of capital allocation will also come into (the) picture. When you go for an infrastructure development, you have to invest a huge sum of money. Not every big organisation has the appetite for that,” he said.
“Nowadays, the CEOs and the CFOs globally are paid on how much cash you generate,” Ghosh continued. “So cash is sort of king, especially in this type of uncertain market. So that’s where I believe this subscription-based modeling has an opportunity to sort of survive and blossom in this type of environment.”
In their industry, logistical delays brought by pandemic restrictions remain one of the most pressing issues that needed to be dealt with immediately, Ghosh said.
“For example, if we have to import certain materials—we do construction management, and some of the items need to be imported from other parts of the world. And now, the logistical delays are playing a part in our financing. We have one part of our business, which is brokerage, which is cash rich, and the other part is facility management, which is cash starved. So, we have to always balance that out. And COVID has sort of changed or disrupted the industry in a big way. So cost now is a very major factor in all the conversations,” he explained.
Due to limited mobility, they had to take advantage of what technology has to offer.
“Technology is a big disrupter, the way IoT (internet of things) has changed our industry in the past. We will do a valuation—going to a place, going to a building, and (then) do the valuation. Now we can do that valuation sitting from Singapore, in a building, and do a valuation of another building in London,” Ghosh said.
Across industries, Wu observed that businesses are seeing the light about as-a-service offerings.
“I think this high cost is actually one of the driving forces for current companies to actually adopt as-a-service or cloud spending on infrastructure. I’m not surprised, to be honest, that with everything going on the supply chain, challenges (such as) the continuous increase of material costing. We all know that these ICT vendors or especially component vendors, they’re struggling to pump out enough CPUs, memories, and hard drives into the growing demand. Of course, when you have less materials, the cost will go up. I think we are all going through this kind of cycle. It’s applicable across the board, but this is where I think a serious rethink of how you consume IT will come into play,” Wu said.
Another competitive advantage offered by as-a-service models, like Dell’s APEX portfolio, is the pay-as-you-consume functionality, shared Koh Yong Seng, Regional Sales Director for Southeast Asia and India, Dell Financial Services.
“Anything that’s not going to be utilised, they (companies) shouldn’t be paying for it. And yet, they must be ready— the technology infrastructure must be ready to meet these sudden requirements to allow the business to capitalise on their competitive advantage, or the speed to go to market,” Koh said.
Any new change merits its own set of challenges, and for the IaaS model, experts have laid out quite a few.
“As we are moving into this as a service environment, there is a lot of complexity associated in terms of the mindset of the teams, the people, (and) the skill sets that you need. Because here, you’re talking about your knowledge to be able to do things rather than actually doing things on your own, and also being able to manage and understand the cloud environment and the overall setup,” Chitrachar said.
“Now, where you’re going is basically you’re looking at expertise, and you don’t need so many numbers— you probably need few experts on your side, who would be able to manage and communicate your requirements to the service provider very clearly. And this is where I think the dynamic changes in terms of the personnel needs. It reduces to a great extent from what we had in the past,” he added.
From a financial standpoint, the OPEX (operating expense) versus CAPEX (capital expenditure) debate is also one of the dilemmas for enterprises when it comes to the as-a-service model.
“Here you’re talking about (the) as-a-service model, you’re talking more often about OPEX or your running expenses, rather than your upfront expenses coming up. And then how do you manage it? I mean, if you are in an annual planning cycle, moving into a quarterly business financial cycle, this is a huge shift. And not a lot of organisations, including the ones in the insurance industry, are very much geared to go towards that,” Chitrachar pointed out.
“I think we all recognise that cost is always one of the largest barriers, that’s really prohibiting some of the organisations moving towards a digital transformation,” Koh admitted.
“And (for this) reason, Dell has actually set up Dell Financial Services within Singapore. So we are able to provide alternative procurement acquisition models for all of our customers to consider. Shifting from a CAPEX to OPEX model, or you want to keep leveraging on your balance sheet— these are some of the payment solutions that Dell Financial Services has to offer to our customers,” he said.
Koh also believes that there is indeed a middle ground for CFOs and CIOs, who both want what’s best for the company.
“There were lots (of things) the CIO wants to have the full control (of) in view of the concerns that we just touched on— security, data retention, performance, mission creep, criticality— to be kept on-prem. So these are workloads that’s very close to the heart of the organisation. And it only makes sense to keep them on-prem. On the other hand, the CFO is really wanting control on the budget, in terms of the cost transparency,” Koh explained.
“We allow our customers to combine the best features of cloud and on-prem, (so that) organisations can now get a custom experience on-prem to meet both the CIO objectives as well as the CFO objectives in that aspect, ” he added.
Addressing CIO concerns, Chitrachar remarked that giving up some control over the IT infrastructure is one of the ways to remain in control.
“To be able to configure and control the system, you will need to let go of the control of that system. But you will still need to have the knowledge to be able to guide and communicate your requirements to the service provider. So that you get the maximum value,” he said.
Ghosh also echoed the views of the other experts, emphasising the need to make a compromise in order to move forward.
“Plan it in detail. What is the business need? And then move towards that. There is no ideal solution, but it’s like, have a balanced solution where you know these are the risks, but you take a calculated risk, and you also have a financial exposure, which you are aware of. You make informed decisions, rather than being completely in the dark. That’s what we are trying to achieve,” he said.