Month: April 2016

The Benefits of Cloud Computing Being an OPEX: Lower and More Manageable Costs

Cloud computing is an example of an operating expense (OPEX). There are multiple benefits of the cloud being an OPEX. These include having the power to avoid paying any significant upfront costs or making any long-term investments. And that it makes your IT costs fully tax deductible.

Business expenses come in two forms: capital expenditures (CAPEX) or operating expenses (OPEX). A capital expenditure is when you buy something that you intend to use for more than a year.

Some examples of capital expenditures include company cars, offices, and IT hardware. Operating expenses, on the other hand, are the day-to-day costs of operating your business. They include things like salaries and wages, office supplies, and software licenses.

Cloud computing is an OPEX because it’s paid for on a recurring basis, usually every month. The two main alternatives to cloud computing, in contrast—installing IT assets “locally” on the hard drives of users’ devices, or hosting IT solutions on your own onsite servers—involve mostly CAPEX.

The Advantages of Cloud Computing Being an OPEX

advantanges of cloud computing being an OPEX

No Long-Term Investments Needed

One of the benefits of cloud computing being an OPEX is that it doesn’t have the prohibitive upfront costs. Costs that come in building onsite IT infrastructures.

The cloud’s low upfront costs allow even small businesses set up their own IT infrastructure.  Even if they don’t have a lot to spend on IT. They also gain the capability to expand or improve their existing setup more quickly.

Cloud computing being an OPEX also means that you don’t have to make any long-term investments in expensive IT hardware.

Purchasing IT hardware tends to result in waste, since you are stuck with hardware that you purchased for the full extent of its lifespan, yet businesses’ IT requirements change all of the time.

If your business’s IT requirements go down between the time you bought the IT hardware and the time the hardware reaches the end of its lifespan (if you downsize your workforce or experience a decline in sales or customers, for example), then you will end up stuck with thousands of dollars’ worth of IT hardware that you don’t need, and you won’t get a full return on your initial investment in the hardware.

Getting stuck with IT assets that you don’t need wouldn’t happen with cloud computing. With the cloud you can simply cancel or scale down your IT solution at any time if your IT requirements decrease.

Fully Tax Deductible

The last advantage of cloud computing being an OPEX that I wanted to mention is that it makes your IT costs fully tax deductible. With CAPEX, in contrast, you can only deduct a fraction of the CAPEX each year that you use the purchased asset.

So if you purchased an $8,000 server and expected to use it for 4 years, instead of being able to deduct the full $8,000 the year you purchased it, you would only be able to deduct $2,000 from your taxable income for the server every year for 4 years.

How Cloud Computing Can Lower Your IT Costs

Hosting your IT solutions, including your desktops and applications, with an IT hosting provider or cloud computing provider is almost always more cost-efficient than hosting or installing these solutions “locally,” or hosting them on your own physical servers or installing them directly on users’ PCs.

Some of the main reasons that cloud computing is more cost-efficient than local IT include:

Multitenancy

Because of the multitenant architecture of the cloud, hosting providers can host solutions for several different customers on the same physical server.

This both minimizes the hosting provider’s hardware costs (savings that the provider can then pass on to its customers) and allows the customer to pay for just the portion of the physical server that it uses, not the whole physical server.

If you host an IT solution locally, in contrast, you’re always going to have to purchase full physical servers (which can cost $1,000+), even if you only need to use a portion of the server.

Advanced security, DLP, and downtime prevention

Security breaches, data loss incidents, and downtime can be extremely costly. They can result in financial losses in the millions due to lawsuits, fines, lost customers, lost sales, and lost productivity.

IT hosting companies are generally better than in-house IT departments at preventing these types of IT disasters. They can afford to employ advanced security, data loss prevention, and disaster recovery measures that in-house IT departments cannot. Such features include offsite data backups, N+1 redundancy, RAID storage arrays, next-generation firewalls, and 24x7x365 monitoring.

Higher operational efficiency

Hosting providers can manage the hosted solutions of thousands of businesses at once with a relatively small number of administrators. This is due to the fact that the management of IT solutions is mostly automated. It doesn’t require a lot of direct human oversight or interaction.

Thin client and BYOD compatibility

Hosted IT solutions can be accessed from anywhere with any Internet-connected device. These include low-cost devices such as thin clients, budget PCs, and older, ready-to-be-replaced PC workstations.

In addition, users can access their hosted solutions from personal devices that they bring with them to the office.

If you allow your employees to use their personal devices at work to access their hosted solutions (which is called having a Bring Your Own Device (BYOD) policy), you can potentially reduce your end-user hardware costs to $0, without decreasing the manageability or security of your IT.

More Reasons Cloud Computing Is Cost-Efficient: Specialization and Economies of Scale

As we explained in the article, “How Cloud Computing Can Lower Your IT Costs”, four of the main reasons that IT hosting is more cost-efficient than onsite or local IT are:

  • Multitenancy
  • Advanced security, DLP, and downtime prevention
  • Higher operational efficiency
  • Thin client and BYOD compatibility

More advantages of Cloud Computing

In today’s post, meanwhile, we’re going to be talking about how the specialization and economies of scale of hosting companies are two additional reasons that IT hosting is more cost-efficient than onsite or local IT.

As we mentioned in the previous article about IT hosting’s cost-efficiency, the multitenant architecture of the cloud allows hosting providers to host solutions for several different customers on the same physical server.

This both minimizes the hosting provider’s hardware costs (savings that the provider can then pass on to its customers) and allows the customer to pay for just the portion of the physical server that it uses, not the whole physical server.

If you host an IT solution locally, though, you’re always going to have to purchase full physical servers, even when your solution utilizes only a portion (25 percent, let’s say) of the physical server’s total resources.

Hosting companies would still be more cost-efficient than in-house IT departments at hosting IT solutions. This is  due to their higher level of specialization and economies of scale. Even if you discounted the ability of hosting companies to host IT solutions for multiple customers on a  single physical server.

Specialization

IT hosting companies are more specialized because all of their efforts and operations are focused on IT hosting. In-house IT departments, in contrast, have to concentrate more generally on managing all aspects of their companies’ IT.

Every decision a hosting provider makes (such as the staff that it hires and the hardware and software it buys) is focused on how it can maximize the performance, security, and reliability of its hosted solutions, while minimizing its overall costs.

Economies of Scale

economies of scale

In most cases, IT hosting companies can get discount bulk rates on IT hosting hardware and software. This includes servers, networking equipment, operating system licenses, and virtual machine licenses. As well as on resources like Internet bandwidth and electrical power, which in-house IT departments cannot.

In addition, IT hosting companies are more efficient because they have the capability to perform the following:

  • Buy the latest-and-greatest IT hosting software
  • Hire experienced IT hosting specialists
  • Purchase or rent large data centers that have expensive climate control systems
  • Fire suppression systems
  • And physical security measures (including biometric access panels, servers cages, and 24x7x365 onsite security guards)

Hosting companies can also offer affordable hosted solutions. They can do this since the costs of these assets are all shared amongst the IT hosting company’s clients.

Most businesses would never be able to afford to purchase these assets by themselves for their own in-house IT department. But with IT hosting, the client’s share of the costs of all of these assets ends up being a small amount per user. Let’s say $5-$10 per user per month. In my opinion, that’s a great deal with all the advantages and benefits that go with the subscription.

Why the Cloud Is More Secure than Onsite IT (and More Cost-Efficient, Too)

It’s generally more secure to host your IT assets in the cloud than installing or hosting them onsite.

This is mainly due to the fact that cloud hosting companies can afford to implement the most effective security measures and hire the most qualified IT security personnel.

Cloud providers have much larger IT budgets than the average business, and their operating costs are shared amongst their thousands or millions of customers.

These are the main advanced security measures that only cloud providers, for the most part, can afford to implement:

Custom-developed hosting platforms.

Cloud providers often develop and use their own ultra-secure or “hardened” hosting platforms (a process that can result in tens of thousands of dollars in software development costs), since many commercially-available server operating systems and hypervisors have known vulnerabilities and are well-known to hackers.

Well-protected datacenters

Most businesses won’t do much more to protect their onsite hosting hardware (servers, storage devices, networking equipment, etc.) than store it in a locked room or closet.

Cloud providers, on the other hand, protect their data centers from unauthorized access with measures such as 24x7x365 patrolling security guards, closed-circuit video surveillance systems, card readers or palm or fingerprint readers, and impenetrable steel doors.

Advanced network and system security

Cloud providers protect their networks and systems from unauthorized external access with measures that include:

  • Authentication systems
  • Firewalls
  • Network monitoring
  • DDoS mitigation software
  • Content filtering
  • Spam filtering
  • Antivirus
  • IDS/IPS
  • Patch management
  • And data encryption

While many individual businesses also protect their networks and systems with these types of measures, the ones that cloud providers use are usually more advanced, either because they’re the more expensive, top-tier versions of these products, or because they’ve been extensively customized or reprogrammed by the cloud provider in order to maximize security.

Extensive internal security controls

In addition to protecting themselves from external security threats, cloud providers also implement internal security controls.

This is mandatory to ensure that all of the correct security measures are implemented in the correct way; that security incidents such as malware infections are responded to correctly; and that all employees understand their IT security responsibilities.

These controls, in the form of security policies and procedures, are more comprehensive, more clearly defined, and more strictly enforced than those of the average business.

On-staff IT security specialists

Cloud providers can afford to hire $50,000+ per year IT security specialists. This includes chief security officers, security engineers, and information security analysts. These professionals have the knowledge and experience to be able to maximize the effectiveness of the cloud provider’s crucial systems. These include security measures, policies, and procedures.

It would cost a business at least several hundreds of thousands of dollars, and sometimes millions of dollars, to set up and maintain an IT security system that’s as advanced and comprehensive as that of a cloud provider.

But businesses that can’t afford to implement their own enterprise-level IT security system has an option. They can still afford to sign up for hosted solutions from a cloud provider.

They are sharing the costs of the cloud provider’s security measures with the provider’s thousands or millions of other clients. Which means they only have to pay a small percentage of the cloud hosting company’s total security costs.

Why Law Firms Should Select Hosted Desktops: Compatibility, Accessibility, Security, and Support

The IT requirements of law firms can vary depending on the size and specialization of the firm.  There are also the priorities of the firm’s management to consider. But, some of the more common IT requirements of law firms include:

  • A flexible IT infrastructure that can support a wide variety of applications, including legacy software
  • Remote accessibility, so that the firm’s employees can access their files and applications from anywhere
  • Advanced security and reliable data backups. This is needed to protect the firm’s and its clients’ sensitive data from unauthorized access and data loss. It also helps prevent compliance violations and lawsuits

The best IT solution for law firms with some or all of these IT requirements is hosted desktops.

Hosted desktops are basically Windows desktop operating systems that you can access via the Internet.

Just as they can with locally-installed desktop OSes, users can store all of their files and install and run any Windows-compatible application on their hosted desktops.

Hosted desktops are also similar to locally-installed Windows desktops. In a way that each one is dedicated to a single user. Which also means that user retains all of the user’s applications, files, and settings even after the user logs out.

The ways in hosted desktops satisfy the IT requirements of law firms include:

They’re compatible with almost any application.

You can install any Windows-compatible application on a hosted desktop. Hosted desktops can also be configured to run legacy applications, custom-built proprietary software, and Linux and OS X applications. This allows law firm employees to access all of their files and applications from within a single online workspace.

They can be accessed from anywhere with any device.

Law firm employees can access their hosted desktops from anywhere they can get Internet access, which is pretty much anywhere these days—including courthouses, police stations, clients’ offices and homes, and other law firms.

They can be accessed even from slow Internet connections (hosted desktops usually only need about 100 kbps in bandwidth) and from 3G or 4G mobile data networks. This allows law firm employees to remain optimally productive and access all of their files and applications no matter where they are.

They’re more secure than physical desktop PCs and they’re protected and backed up by the hosting provider.

Hosted desktops are protected from the security breaches and data loss that occur when end-user devices are lost or stolen since their data remains on the hosting provider’s servers at all times.

In addition, most hosting providers protect their hosted desktops with advanced IT security measures such as enterprise-level firewalls, gateway antivirus, IDS/IPS, and enterprise-grade spam and content filtering They also regularly perform backups of their hosted desktops.

Another advantage of hosted desktops is that some hosting providers (Ironorbit among them) will include comprehensive management and support services. This applies most especially for law firms that don’t have their own in-house IT employees,

Services such as performance and security monitoring, patch management, and 24x7x365 help desk support. Hosted desktops for law firms allow employees to focus on their work, rather than on their IT.

Why Small Businesses Should Select Hosted Desktops: Increased Reliability, Security, and More

Hosted desktops are basically Windows desktop operating systems that you access via the Internet. You can do anything with them that you can do with a locally-installed desktop OS. For example, running applications, storing files, browsing the Internet, and sending and receiving email.

These desktops also retain any changes you make to them. So, when you log out and then log back into your desktop, it will still have all of the same applications, files, and settings on it as when you logged out.

They can be accessed from any Internet-connected device, including the following:

  • Windows, Mac OS X, and Linux PCs
  • Android and iOS tablets
  • Smartphones
  • and Thin Clients

Why You Need a Hosted Desktop Provider

To sign up for hosted desktops, you just have to contact an IT hosting company (like IronOrbit) and ask them to deploy hosted desktops for your business.

The desktop provider will install and host the desktop OSes on its servers. You’ll be billed for these desktops on a monthly, per-user basis.

Some hosting companies, including IronOrbit, include management and support services.  This includes monitoring, security, disaster recovery, and technical support with their hosted desktops by default. Other hosting companies leave it to the customer to manage and support their own desktops.

Why Hosted Desktops Are Perfect For Small Businesses

Many small businesses don’t have a centralized IT infrastructure—they just have some unlinked PCs, a WiFi router, and a printer. And they may also make use of cloud-based solutions such as SaaS CRMs, project management software, PoS systems, and online data storage services.

They do this mainly because they don’t see the point of having a formal, centralized IT infrastructure, especially if they are struggling just to stay in business, or because they can’t afford to set one up.

Small businesses that have their own centralized IT infrastructures, meanwhile, usually have a few servers for locally-hosted applications, email, and file storage. And also one or more IT employees to manage and support it all.

An onsite, centralized IT infrastructure like this can make a small business’s IT easier to manage and increase the security of its data and the reliability of its applications, but it can also add tens of thousands of dollars per year in IT hardware and personnel costs.

Here are the main advantages for small businesses of signing up for hosted desktops and using it as their primary, centralized IT infrastructure, instead of either not having a centralized IT infrastructure or maintaining an onsite IT infrastructure:

The main benefits for small businesses signing up for hosted desktops include:

Increased reliability

With hosted desktops, you should be able to access your applications and files at all times. They usually have less downtime than IT assets that small businesses manage or host themselves since most hosting companies have their engineers monitor and maintain them 24x7x365.

Increased security

Hosted desktops are highly secure since they remain on the hosting company’s servers at all times. Which prevents security breaches from occurring as a result of end-user devices that have been lost, stolen, or hacked.

In addition,  the hosting company protects them with advanced security measures such as enterprise-level firewalls, IDS/IPS, gateway antivirus, enterprise-level spam, and content filters, and 24x7x365 security monitoring.

Compliance with data security and records management regulations

Many hosting companies offer customized hosted desktops that are designed to comply with regulations such as HIPAA, PCI DSS, and SOX.

If you need to comply with one or more of these regulations, it’s usually much easier to just sign up for a customized, compliant hosted desktop. This is better than to attempt to implement the necessary security or records management measures yourself.  That’s whether an onsite or self-managed IT infrastructure.

Increased accessibility

Hosted desktops can be accessed from anywhere with any Internet-connected computer, tablet, smartphone, or thin client.

Among other things, this allows small business employees to access their application and files as they move about their workplace.

Employees at a small retailer, for example, can access their ERP or PoS from a tablet as they assist customers in the aisles of the store. There’s no need to run over to a cash register.

And to access their applications and files from anywhere outside the office, including from home or when they’re traveling or performing services “in the field.”

Increased scalability

Hosted desktops can be deployed, scaled up and down, and decommissioned more easily, quickly, and cost-efficiently. It’s the better choice to physical PCs and servers.

You can add or delete hosted desktops to or from an existing hosted desktop deployment. Moreover, you can increase or decrease the amount of vCPUs and RAM. And also manage data storage of each hosted desktop at any time.

The scalability of hosted desktops allows small businesses to quickly add new desktops as they grow and hire new employees. Plus, if the growth turns out to be temporary, they can just delete the desktop. It means you don’t have to remain stuck with unused hardware and software.

Lower IT costs

Hosted desktops cost less than the typical IT setups of small businesses because they don’t require any long-term investments in expensive hardware or the hiring of any additional IT employees.

They can be accessed from low-cost devices such as thin clients and old or refurbished PCs. They’re also easy to access using employees’ personal devices. Also, they’re better protected from expensive security breaches and downtime and data loss incidents.

Less IT management hassles

If your hosted desktop provider includes management and support services with its desktops by default then you obviously don’t have to worry about managing and supporting your hosted desktops yourself.

The hosting company will maintain the performance, security, and reliability of your desktops for you; regularly back up all of your data; and help you troubleshoot any problems that you have with your desktops.