How to reduce capital and operating expenses through hyperconvergence
In 2021, the global IT market grew by 9.5%, and in 2022, spending growth in this area was only 4%. According to analysts, the growth rate slowed down due to the delayed effects of the pandemic and foreign policy events. In any case, the general trend this year is to optimize budgets. Companies have two ways to cut costs: cut capital or operating expenses. And modern technology helps to ensure that savings do not lead to loss of productivity. In this article, we will talk about one of these technologies, hyperconvergence, and how it helps businesses cut costs.
What are CAPEX and OPEX
There are two types of costs: capital expenditures (CAPEX) and operating expenditures (OPEX).
OPEX or OPerating EXpenditure are operating costs that appear in the course of a company’s operations. The company does not need to take money out of circulation for a long time. The amounts spent will be earned over the course of a single production cycle. In IT, OPEX includes developer salaries, management costs, marketing costs, rent for the use of various services, etc.
The task of the head of an IT company is to control operating expenses and look for ways to reduce them while increasing revenues. It is believed that for a successful business, the ratio of IT costs to annual revenue should be between 0.4% and 4.5%. However, it is important to ensure that saving on OPEX does not lead to the fact that the company cannot properly perform its tasks. For example, if downsizing would result in an increased workload on the remaining employees, disruption of deadlines, and lower quality of work, such savings would do more harm than good.
CAPEX or CAPital EXpenditure are capital expenditures that can only be earned in subsequent production cycles. They are not deducted from the profits of the current period, but spread over several years. With CAPEX, a company creates an asset for years to come. This includes the purchase of hardware and software and the creation of the company’s own IT infrastructure.
From CAPEX to OPEX
Some executives believe that capital expenditures create a safety cushion for business. For example, it is enough to invest once in buying your own servers, and the company will not have to depend on rising rental prices. However, in practice, hardware and software quickly become obsolete and need constant maintenance and upgrades. All this leads to additional costs. In addition, with CAPEX, funds are withdrawn from circulation for a long time.
Hence, one of the main trends in the IT sphere is the transfer of costs from capital to operating costs. For example, instead of buying servers, it is possible to use cloud services to deploy and run your own projects. With this approach, the company can reduce the cost of creating, maintaining and supporting IT infrastructure, as well as optimize the cost of taxation.
Hyperconvergence – Simplification and Economy
Hyperconvergence is a software-defined IT infrastructure that integrates layers of compute, storage and network resources into components without dedicated roles. A feature of hyperconvergence is the simplification of IT infrastructure. High-performance hyperconverged solutions without being tied to a particular vendor, with the ability to choose budget servers and SSDs and pay only for the resources used help reduce costs. First and foremost, it’s about reducing CAPEX by lowering the cost of purchasing hardware. OPEX can be reduced by reducing headcount and paying only for resources you use. Some capital expenditures can be shifted to operating expenditures by leasing resources instead of buying them.
In Russia, there is a solution that fully fits these characteristics, allows the use of consumer and consumable level equipment, and does not require a whole staff of specialists. This is the vStack hyperconverged platform.
How the vStack hyperconverged platform helps reduce capital and operating costs
The Russian vStack hyperconverged platform allows you to create a virtual data center of the enterprise level with minimal costs. The high performance of the solution is due to the lightweight nature of the platform and absence of legacy. The cost efficiency is achieved due to the ability to operate at up to 900% overcommit CPU and the low difference between the performance of physical and virtual server CPUs. CPU overhead in computing can be 2-5% with an average of 10-15%.
With this solution, the company will be able to reduce both capital and operating costs.
vStack helps reduce personnel costs by reducing the number of highly specialized employees. Due to the fact that all platform nodes are the same and all roles are united, the company does not need to maintain a large staff of engineers to operate the IT infrastructure. A solution of Russian developers may be administered by a single specialist through a single interface. This helps significantly reduce the salary costs of a large number of highly qualified employees, while maintaining the quality and security.
In addition, with vStack, a company can reduce software and licensing costs. The customer pays only for the resources they use in their work.
Another saving is the reduction of rental costs due to the reduced space occupied by the data center and the reduction of electricity costs. Thanks to the ability to use any equipment, including those with low energy consumption, the company can significantly reduce the cost of the bills.
vStack allows the customer to shape the outline and properties of the designed infrastructure by selecting the equipment as precisely suited to his tasks as possible. Therefore, it is possible to reduce the capital cost of buying enterprise level servers replacing them with the standard, consumer and, in some cases, expendable equipment.
The company does not need to buy expensive servers and SSD-drives, because horizontal scaling combined with redundancy provides
proper reliability of the IT-infrastructure operation on any equipment. If one component fails, the load is distributed among the remaining components and the system continues to work steadily while engineers replace the failed equipment. The replacement itself in this case can be reduced to rearranging disks from the failed server into the zip package. There is no point in opening service requests and waiting for an RMA or service engineer.
Modern solutions reduce capital and operating costs by using new technologies and approaches rather than by reducing productivity. At the same time, the manager makes the decision independently, without manufacturer-imposed schemes and attachment to specific equipment.