How to build IT infrastructure for your business, and how much you should spend
Written on the 29 March 2018 by Paris Faint and Scott Jones
There are now more IT infrastructure options on the market than ever before, so it's little wonder managers are finding it difficult to decide which choices to make for their business.
Finding the right balance between solutions that are either flexible or rigid and adaptable or secure has become a mammoth task, one that is often left to professionals who speak the language of computers but may not do well explaining it.
Breaking down the term 'IT infrastructure' refers to what kind of technology a business uses to operate and scale. It includes internet connectivity, data storage, workflow solutions, hardware and more.
Businesses may seek to upgrade their IT for several reasons, including when the existing infrastructure is nearing expiry or has failed in some way, when there has been a security related event or when the budget has changed.
Business News Australia spoke to the business computing experts at IT Leaders about the key things to consider when upgrading IT infrastructure. Here is their ultimate guide.
What options are available?
It's important to note that there is no single solution or configuration which suits all businesses when it comes to IT infrastructure.
Often it is an organisation's core business applications which influences or dictates the infrastructure path.
There is a strong trend towards cloud technologies in the SME sector, largely due to cost reduction, capex availability, and sometimes by collaboration features.
However, private servers that businesses own and host onsite or in local data centres are still a popular choice for security and ease-of-access reasons.
Below are the four main tech configurations that the modern business opts for according to IT Leaders, as well as their pros and cons.
1. Private Cloud or Hosted Desktop
A private cloud is unique to a business and has its own customised server software that sits within a datacentre server farm.
It's a popular solution among organisations that have legacy applications or want a high degree of control with a tighter budget.
Staff can log in from any location and device to a Windows desktop environment on the Cloud's server, and there is absolute flexibility to run any desired applications or files with controllable permissions.
Using a private cloud is easy to scale up or down as required and it involves no capital expenditure to purchase new servers. Plus, your staff aren't dependant on any tech within the head office and they each have the same user experience.
Drawbacks of using a private cloud are the fact it is a contracted service, usually for a minimum of 12 months, and it costs more per month to run than the public cloud.
2. Office 365 'Public Cloud'
The public cloud is a facility that is operated for bulk use. Thousands of people use applications like Excel and the Microsoft file servers at the same time through Office 365.
Office 365 is most often used by companies that have simple requirements such as basic file sharing needs and applications, or teams that need to collaborate on certain documents simultaneously.
Office 365 is a great solution that doesn't require a capital injection and is easy to scale. It's the lowest cost solution from an upfront infrastructure perspective.
Having said that, Office 365 is a powerful beast and requires powerful computers to run. So any cost that might be saved on the infrastructure may be picked up in replacing hardware.
The system also has quite a large learning curve for staff who may not be computer savvy or familiar with Microsoft systems.
3. On premise servers in your office
Probably the most hands-on solution is buying physical servers and installing them within your office or a nearby datacentre.
It's a favourite solution of organisations with poorer internet connections that want total control of infrastructure and suppliers.
On-premise servers mean that staff who are working onsite don't need to rely on the internet. Remote workers will still need to connect to the server via internet.
It's a solution that provides ultimate flexibility and autonomy, however it is much more expensive upfront and is more labour intensive for maintenance and support.
You'll likely be buying lower quality servers than those used for the private or public cloud and won't have the same levels of protection in case of failure.
4. Hybrid Cloud
A hybrid cloud solution is for the organisation with complex needs. The business may have one or two legacy applications that must be kept on a server for the time being, but eventually it wants to live in the cloud.
It's where Office 365 may be used for email and file management, then legacy applications will sit on a private cloud server.
The biggest strength of the hybrid cloud is its 'mix and match' approach. It uses suitable technology to meet the organisation's current needs.
Its pitfalls are the same as the three other types of tech configurations, depending on which solutions are meshed together.
So, all things considered, how much should you spend on IT infrastructure?
A common concern among almost all directors is whether they are spending too much or too little on technology products and services.
Clearly, spending too much is a waste of valuable cash resources.
However, spending too little results in increasing risks of security breaches, reduction of infrastructure reliability, and ultimately reduced productivity.
The goal of an IT budget should not be to spend as little as possible, but rather to strike a happy balance between maximising productivity, minimising risks and minimising costs.
IT Leaders has revealed the best steps to determining how much you should be spending on IT infrastructure.
1. Take stock of the required items
The following list of items are those typically purchased by SMEs and should be factored into any calculations.
- Computers and servers
2. Then calculate your spend as a percentage of revenue, or as an amount per user
After taking stock of everything you need to run your business smoothly, add it up and calculate its percentage of your revenue.
Over the past five years, the average IT expenditure has remained fairly static between 2.3 and 2.5 per cent of turnover.
Professional services industries typically opt for a higher spend around the 5 per cent mark and can add up to an average annual IT spend of $29,000 per million dollars of turnover.
Another way to calculate is through the amount of money you spend per user. On average, businesses are spending around $8,800 per person per year on IT systems.
However, the 'per user' method is gradually declining as IT systems become more efficient and productive through the transition to the cloud.
Either way, before you splurge on tech, make sure you calculate the cost beside your own income and consider these appropriate industry benchmarks.
This article was written in partnership with IT Leaders.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia
Author: Paris Faint and Scott Jones