Cisco UK & Ireland Blog

Have your cake and eat it – why data centre financing should always be flexible

January 16, 2017

We’d all love to see into the future. But back in the real world we have to accept that nothing is 100% predictable.

As businesses house an exponentially expanding amount of data, knowing how much storage and aompute they’re going to need for the coming year, or even the next few months, is becoming increasingly difficult.

And so organisations inevitably pay for data centre space they don’t need rather than risk having too little of it at a business-critical time.

But with the kind of technology we have at our disposal today, surely there’s a better way?

Don’t pay for what you don’t use

The key answer here is flexibility without limitations, but what does that actually mean and how can organisations acquire such a holy grail?

The most obvious target for flexibility is around expenditure. As I said above, companies have historically overcompensated on data centre storage as it’s one way to guarantee you won’t fall short of space when you need it most.

But this is an unnecessarily expensive option and inevitably leads to paying for something you’ll never use. And given the increasing pressure on costs for many businesses, this approach makes little economic sense.

What if you only had to pay for extra space when you used it?

Sounds too good to be true, perhaps. But this is exactly the type of flexible financing we offer our Cisco Open Pay customers: variable ‘buffer’ assets in your data centre that you only pay for after you’ve used them.

Why flexibility matters

When we talk about giving companies greater flexibility, it’s not just a soundbite. There are tangible, powerful business benefits to removing the barriers that come with an inflexible funding model.

For businesses seeking high growth (that’s most of us, isn’t it?), this heightened flexibility allows them to quickly respond to opportunities that require extra capacity in their data centres.

And what about fluctuations in demand? They can come at any time, particularly in seasonal industries. Coping with those rapidly changing requirements can be costly and difficult if you have to commit up-front to a specific usage level.

But ultimately this all comes down to peace of mind – being secure in the knowledge that you have a contingency plan in place that will only cost you if and when you fall back on it. And being able to plan ahead with confidence as your organisation grows.

Take Open Line, a disaster recovery firm we recently worked with. In order to have a high-quality disaster recovery service that operates 24/7, they historically had to invest heavily to cope with unpredictable data centre demand.

But by switching to a usage-based approach they were able to accommodate that demand while dramatically reducing their up-front costs.

A major European outsourcer had a similar problem, except their situation arose when the number of customers switching from SAP to HANA began to snowball and created a need for quick access to extra data centre capacity.

An inability to meet that demand meant the company was wasting resources and losing out on customers. Had the business been operating a consumption-based model in the first place this problem would never have arisen.

Freeing up resources

Because you tend to save on up-front fees, financing your data centre through a consumption-based model frees up funds in the short-term. This can have a hugely positive impact on cash flow.

The biggest benefit in using this option, then, is that by saving money on data centre costs you have more resource to spend on other parts of the business.

And those other areas will likely be more strategic and provide greater long-term value than putting money into data centre assets you may never use.

Only one question remains, then: what would you do with all that extra cash?

Check out our Open Pay financing model if you want to know more about flexible data centre funding without limitations.

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