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Technology as a Service: The New Economics of IT


The debate about whether to outsource IT infrastructure continues to dominate conversations in enterprises of all sizes throughout the country. When evaluating a decision to build or outsource through a strategic data center partner, there are two major factors enterprises should consider: economics and risk. Evaluating the economics is not simply a straightforward comparison of monthly expenses and evaluating the risk is even more complex. Enterprises of all sizes are increasingly becoming subject to compliance and regulatory guidelines – Payment Card Industry (PCI), Health Information and Portability and Accountability Act (HIPAA), Sarbanes-Oxley (SOX) and Gramm-Leach-Bliley Act (GLB) to name a few.

To complicate matters, corporate IT budgets continue to go through rounds of reduction while the regulatory guidelines continue to grow, increasing the need for additional capital investment in IT infrastructure. These dynamics are affecting all industries, primarily health care, financial and government, forcing executives to drive more value to the business with fewer resources.

A consideration to managing both the economics and the risk associated with IT infrastructure is to leverage partners with specific expertise through outsourcing. Involta works with many organizations that have a preconceived notion that outsourcing will cost more. Rarely is this the case when an evaluation of all of the operational costs is conducted. Our company, Involta, uses a model to analyze the cost differential between a customer outsourcing or operating their own facility. Here are three common costs that are included in the analysis:


Many IT organizations do not have power costs specifically allocated to their budget, as this is often included in the facilities budget. It is important to understand the direct cost of power to the organization as well as cooling costs, costs for redundant feeds and the costs to own and support UPS’s and generators.

Opportunity costs

Enterprise-owned data centers are often located in the primary facility or will be built on land owned by the organization. This space could be allocated to other revenue-generating areas of the organization. This is common in hospitals, universities and many large, growing enterprises. In addition, enterprises that are subject to regulatory audits must understand and implement the complex measures and procedures that must be taken to maintain compliance. The cost of this expertise, whether internally or through a consultant, can drain both human and financial resources.

Maintenance expenditures

This is a number that surprises decision-makers when looking back at how much capital has been spent or allocated in budgets to maintain or upgrade data center equipment. Virtually all IT systems within the data center are depreciating and need to be tested and maintained frequently. This is an ongoing cost that needs to be factored into the analysis.

– Bruce Lehrman, CEO

This blog post was originally written as a guest blog for Smart Business.

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