BY MARK SHAW
The year 2015 will bring about a number
of changes to the IT industry.
Two items that are easy to pick off the
top are the ending of support for Windows
Server 2003 and “Capex” versus “Opex” when
choosing technology services and solutions
for your small business.
Server 2003, the Microsoft flagship server
product for almost 12 years, finally comes to an
end. In an unprecedented move, we have
seen two major platforms for businesses
(Windows XP and Server 2003) both come
to end of life within a year of each other.
This will push business to decide on the best
replacement path for them for the hardware
and software they are using.
Many small businesses for the first time
in a decade will have real choices in how to
spend their IT capital. This is why Capex
and Opex were picked as the second largest
economic outlook indicators in 2015.
So what is Capex and Opex as it pertains
to technology solutions? Simply put, it is
the ability to take what used to be a capital
expense like buying new servers, software
and networking infrastructure that have to
be depreciated over a set about of time, and
convert it to an expense item that can be
seen as a monthly service fee and deducted
fully in the period in which they occurred.
Small businesses in the past have simply
replaced older servers for new servers and
upgraded software and solutions to make
them compliant, add new features or provide
better productivity. These capital upgrades
often require a “rip and replace” of the old
hardware and applications.
Since the introduction of the “cloud,” a
term often overused but whose value is never
understated, businesses are able to stop the
cycle of replacing hardware and software at
set times and move the costs to an expense
model where they can pay for the services
and the hardware as a service fee.
This removes the need for much of the
server and storage hardware and places
the applications and services with a vendor
who takes responsibility for the upgrades,
updates, all the hardware and maintenance
for the line of business application.
An easy example of how this can save
your company capital and provide a better
ROI would be the most basic service most
organizations have moved to Opex and that
is email.
If you had an Exchange 2003 server running
on Windows 2003 that was end of life
you have two options.
1: Buy a new server, pay for new software
licenses for the email and the operating
system, hire a consultant or pay staff to upgrade
and rip/replace the old servers. This
is a capital expense for many companies and
will require a similar exercise in 5-7 years.
2: Move to a cloud-based email system
like Microsoft Office 365 or Google`s Business
Apps and pay a monthly fee for the services.
This becomes an operational expense
item. Many times less than the maintenance
required for the systems purchased in Option
1 alone. Many ROI calculators exists
to show the value in moving your email to
the cloud.
Option 2 has become the norm for many
of people today. They remove the hardware,
reduce their technology footprint and all
that it entails (think power, cooling, service
and support) and in return simply let
someone else handle all the back end work
required to run the email service for them.
They use the service, enjoy the upgrades
that come as part of the package without
any additional costs and it works anywhere.
This Capex vs Opex experience will drive
the economics of IT in 2015. Organizations
today are working hard to reduce the
amount of overhead it takes to run their
networks, allowing their technology staff
to work on driving the business forward by
solving technology problems and not working
hard on the non-value added back end
maintenance. Productivity gains and end
user/client satisfaction increases are also
side effects of this Opex model.
This year will hold all of its normal surprises
for the technology sector, but from
an economic impact nothing will be driving
businesses to new ways of thinking more
than the forced end of life to their servers
and the new options for cloud-based solutions
to the old standard of hardware and
software refreshes. Small businesses in
particular are the biggest winners as the
costs of these services continue to drop and
the number of players continue to increase.
As a small business owner, it’s worth
understanding and considering any and all
options when making a needed change to
your technology systems.