Why the move to an OPEX budget model in education might be driving your business manager up the wall
For the longest time IT in education has been on a hamster wheel of improvements tied to the yearly capital bids cycle. IT managers rush to get improvement plans and strategy budgets in for their cut off, knowing all too well that 50%+ will be dropped before they even make it to governors. The other 50% won’t make it through the process.
This capital expense programme is built from the necessities of the past. IT infrastructure had typically been the second most expensive item on a schools books after the building itself. No school, college or academy in the past could afford to stretch it’s upgrades over the operational spend of the business unless they committed to long terms lease agreements or payment plans. While good intentioned, these plans often leave the organisation dragging upgrade cycles to 5 years plus rather than their natural 3 years.
With all the changes that 2020 and 2021 have brought, this model has to change, and the main reason for that is the cloud.
The Time For The Cloud Is Now
Now this is not some fantasy of a cloud lead future. This is the reality of a world leaving behind the need for a private datacentre or server room and pushing for the convenience, security and integrity of managed public cloud.
This however leaves a challenge for all of those who are in financial roles in educational establishments. The model of spend once, wait 5 years before investing again, will not and cannot continue to work. Modern IT is mostly based around the per month or per usage model. Think Microsoft 365 and Azure, one is based on your user count or usage count per month and the other is based on the real-world usage of the last 30 days.
But we used to spread the cost..?
Now on legacy, I will grant that you could have purchased Microsoft services on a campus agreement. However, that is asking you to look into your magic 8 ball and hope you guess the right amount of usage for the next 12 months and then pre purchase Azure credits to cover that. This is a massively inefficient approach and misses the key benefit of cloud services – flexibility.
In a real world example you would expect an educational providers usage on a cloud based IaaS (Infrastructure as a service) to look something like:
• September – December (Mild Usage)
• Jan – Mar (High Usage)
• April – July (Diminishing usage as students slowly drop off timetable)
• then late July – Aug (Very low usage)
Now if you are paying for this upfront you need to work out what your average monthly spend should be and then try and guess how much you need to cover this.
This just won’t work, you will either hit your campus agreement renewal needing to pay overages or hit the renewal with hundreds if not thousands of wasted pounds. With Monthly flexible billing you don’t have this issue, you get a bill for what you actually use, now if it’s a critical system you can reserve the instance and gain some savings, but you have the flexibility.
This is a new approach for us. How best to do it?
Back to the question in hand and how does your organisation cover these costs?
Well to start with, your business manager needs to change how IT is funded in the budget. Moving the value that would have been placed on an infrastructure refresh into operational spend. They then need to find a way to increase this pot by 5-15% a year to cover cost increases. Now there is still a need for the capital bid, but these should be used for laptops, switches and firewalls and not servers and server licensing. With this shift IT becomes less of a burden as the spend is predictable and you are not looking at £500k investments every 5 years, but instead £80k a year spend on cloud services.
I often get asked how we work with our education customers to move to the cloud and for me the approach is simple; it’s about understanding. So many business managers have endured years of the CAPEX process and are used to the funding model. What our job is as technical professionals is to illustrate the savings in cooling, powers, facilitates and security that a move to the operational model brings and then work from there to deliver the best experience for the organisation.
If you are an IT manager today about to enter capital bids season, then think like this; bid for the money for your big server replacement but don’t propose legacy equipment and designs. Engage with Planet IT and we can support you in submitting a CAPEX to OPEX bid a support your move to the cloud.
Need more help to get it right?
2022 will be the year that most businesses make a major jump to the cloud. Don’t allow your educational establishment to be left behind and looking for answers, we have successfully worked with a large number of educational providers over the last 18 years to modernise and improve their IT for the better, we can do that for you too.
If you want to talk to one of our educational team about how we can help you with your capital bids or moving to the cloud, then please call 01235 433900 or you can email [email protected] or if you would like to speak to me directly you can reach out to me via DM or at [email protected]