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
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.