Adopting cloud computing provides a number of challenges for organizations, but managing cloud spend may be one of the most demanding. A survey of over 750 enterprises revealed that over 30% considered their cloud spend wasteful, and 80% stated that they found managing their cloud spend challenging.

Most organizations move their system to the cloud to reduce costs. A common mistake that many enterprises make when moving to the cloud is trying to follow the fastest path. They simply lift and shift the applications they were using from their in-house data center to a cloud infrastructure.

Most of the time, they find that this has not made these applications cheaper, scalable, faster, or more flexible. In fact, many enterprises are surprised to find that their costs go up instead of down. In many cases, the users within the organization may not even realize that the company invested a large amount of time and resources to move operations to the cloud because everything works predominantly the same.

Cloud cost optimization is a new discipline that organizations need to deploy cloud computing effectively. Here is some guidance to help you create a comprehensive and standardized optimization process to improve cloud cost.

(This article is part of our IT Cost Management Guide. Use the right-hand menu to navigate.)

Challenges to cloud optimization

When it comes to lowering the cost of cloud spend, many organizations run into significant issues such as:

• Complicated and multifaceted pricing structures
• Extreme cloud bill detail
• Ease of cloud service provisioning
• Continuous modifications to cloud offerings
• Excessive alternative architectures
• Lack of coherence across cloud platforms

Many times, advice on cost management provides a list of tasks like turning off unused instances and deleting unused storage. However, these practices do not give a comprehensive view of cost management. In fact, some of these tasks (like turning off unused instances) can even lead to disruption, frustration, and shadow IT.

Instead, it’s critical to create a strategic approach to cloud cost management. A set expectation is vital to keep spending within a certain budget. Plus, tracking and organizing costs around applications and centers will provide insights that cause cloud consumers to take a proactive approach to their spending.

Organizations need to develop sound financial management processes to prevent cloud overspending and create more efficient cloud service consumption.

Developing these processes will affect multiple departments and roles within the organization, such as the Cloud Center of Excellence (CCoE), I&O, finance, and users of the cloud services. These processes will translate into concrete management requirements and involve adopting new tools.

Four aspects of cloud cost optimization

Managing and optimizing cloud costs requires a multifaceted and comprehensive approach. Here are four steps to overseeing and improving cloud spending.

Create a plan

Random tactics will not guarantee that spending remains within expectations if no one knows what the expectations are. Organizations need to forecast their consumption and create budget expectations to stay within that forecast.

Organizations need to develop this capability and run processes before deploying applications, workloads, and projects in the cloud.

CCoE needs to define requirements to identify the exact outcomes that impact cloud services design and keep from overengineering applications. They need to gain a comprehensive understanding, questions assumptions and clarify what each application is accomplishing.

This step entails collaborating with product owners and stakeholders to gain an understanding of the value each application offers the organization. They also determine the key metrics that require the utilization of specific architectural principles.

Ask questions to help determine workload requirements:

• How sensitive is the data the workload handles?
• What happens if the data remains unavailable for a certain amount of time or is lost altogether? Does this application require service-level objectives?
• What is the desired performance target?
• Does the data require compliance with any industry-specific regulations, such as HIPAA?

This step also required choosing pricing models that best suit your organization. Model prices will vary depending on factors such as data integrity, service availability, embedded license-based software, and performance targets. It’s critical to find which pricing model meets your budget and your organization’s needs.

Increase spend visibility

When you’ve established your budget, landed on your pricing model, and deployed the application, maintaining visibility is critical. Create an organized view of costs outside of the bill itself. The amount of data makes manually managing each line item most likely unsuccessful. Plus, it won’t allow you to get a daily view of spending, which is critical for optimization.

Define which metrics are critical to track for your organization. These metrics are crucial to building dashboards and reports, as well as maintaining automation workflows to optimize spending. Some metrics to track include:

• Cost of services
• Capacity
• Utilization
• Availability
• Performance

Every major cloud provider utilizes tags (or labels) as a fundamental governance construct. These tags are a critical tool for cost tracking. They allow customizable names, multilateral structures and can be implemented across multiple clouds.

While tags will appear in bills after implementation, they do not appear on previous bills, so it’s critical to implement tags as quickly as possible to enable cost tracking.

Building dashboards and reports and updating them daily are critical for staying on top of spend. These reports include:

• Top and least spenders
• Trending daily, monthly, quarterly, and annual patterns
• Actual versus planned spending
• Overall spending
• Estimated spending waste

Decrease spending

Once you’ve set goals and enabled visibility, you can better identify ways to reduce waste. Because you’ve completed the first two steps, reducing waste won’t require changing application code or architecture. Plus, it’s also easier to implement and calculate ROI with tracking already in place. Some ways to reduce spending include:

Discard unused resources. Although it may seem like an obvious measure, it is an uncommon practice for many traditional data centers. Find any resources that your organization has deployed but does not use. In particular, find allocation-based resources that accrue cost regardless of their usage. Some examples include old snapshots, unused storage volumes, idle compute instances and unassigned IP addresses. To ensure that it is truly unused, mark them first and then notify owners to solicit an action from them.

Schedule services. It is common for organizations to have resources idle at specific hours or days. Reduce waste by scheduling cloud services based on these expected patterns. Do this by describing it with a “duty schedule” tag. Any cron-like scheduler can then read that tag value and schedule services correspondingly.

Optimize allocation-based services. These types of services require users to request particular allocation when provisioning. Instead, adjust the size of your allocation to fit the actual workload demand to reduce costs. Container, compute, storage, database, and application services are all good places to start.

Utilize discounts. Pay-as-you-go (PAYG) models don’t work for every organization. If your workload is relatively stable and your utilization in the future is predictable, you might be able to get discounted prices. Some cloud providers offer discounts that you can purchase programmatically. You can also contact your sales rep to negotiate a deal by committing to a minimum spend.

Upgrade instance generation. Cloud providers have refreshed their computer platforms over the years to provide renewed power to certain use cases. These instances are also often less expensive because they are more efficient than previous generations. As a result, you will want to optimize across instance families with these updates. You may be able to opt for a new instance generation and get the same performance with a smaller size.

Optimize resources

Reducing spending is only part of the strategic techniques to lower cloud costs. Organizations also need to optimize their processes to reduce their need for certain resources.

Find preemptible instances. Particular cloud providers offer a much lower price point for compute instances instead of the PAYG model. However, preemptible are riskier in that providers can terminate them at any time based on demand. Identify components and use cases in your application’s architecture that may be suitable in the case of suddenly unavailable infrastructure. Batch workloads, for example, can simply be put on pause if infrastructure becomes unavailable and resume when it’s available again.

Adjust data storage. Not all data is equally important, and some require less access as it ages. For example, social media data becomes less important as time goes on. Optimize costs by storing old or less important data in a less expensive service or tier.

(Explore data storage types & storage temperatures.)

Utilize serverless. Serverless computing requires organizations to give up ownership of their application infrastructure to a third-party cloud provider. However, they get to experience zero-touch autoscaling, dynamic deployment, and enhanced efficiencies in resource utilization.

While serverless computing services can seem cost-effective, there is a certain point where it does become cost-prohibitive and offers a diminishing return. As a result, organizations should aim to leverage serverless technology for the right use cases.

Utilize horizontal autoscaling. Autoscaling, or enabling applications to increase or decrease in response to events, can significantly optimize costs. However, autoscaling is either “vertical,” making one instance bigger, or “horizontal,” adding more instances of a similar type and distributing them across.

Both forms of autoscaling can reduce costs and have their place in optimizing. Horizontal autoscaling needs certain design principles built into the application architecture. Applications must be allowed to run multiple instances in parallel. Plus, it needs to be to start and shutdown seamlessly and not rely on local dependencies. It’s an effective practice that makes the application more resilient and must be used alongside optimizing allocation-based services because they apply to different sets of applications.

While the initial process requires following each step, this process is iterative. Lowering cloud costs is not a one-step process and does not always require following the steps in order. Instead, it requires going back over each aspect of optimization to find areas to reduce spending.

Best practices for cloud cost optimization

Let’s review some tips for how to optimize cloud cost.

Identify stakeholders

Optimization is not limited to your finance team. Successfully optimizing costs requires everyone’s buy-in and should be spread across your organization. Some stakeholders to consider include:

• Managers
• Product owners
• DevOps
• Finance department
• CCoE

Implement accountability

Keeping costs down is a part of everyone’s job. The IT and financial departments have long had separate goals. However, IT needs to be accountable for its budget. Chargeback models that calculate and charge based on unit costs can help increase accountability. It can also make costs a part of every department.

Implementing a fair chargeback model can increase awareness and help lower costs.

Utilize tools

The right tools can help your organizations gain visibility and critical insights to increase optimizations. Some tools to consider include:

• Dashboard visualization
• Heat maps
• Cloud cost intelligence
• Container cost optimization

Summing up cloud costs

As IT and cloud operations teams start to work on optimizing their cloud implementations, many find that the efforts required are more complicated than they anticipated. By applying the principles above, you can start to control spending, establish realistic cloud operations budgets, and ultimately reduce costs and waste.

Related reading

• BMC Multi-Cloud Blog
• How to Accurately Estimate the Cost of Cloud Migrations
• How Multi-Cloud Can Enable Cost Savings
• Cloud Compliance: Best Practices for Success

The rise in popularity of DevOps practices and tools comes as no surprise to those who have already utilize the new techniques centered around maximizing the efficiency of software enterprises. Similar to the way Agile quickly proved its capabilities, DevOps has taken its cue from that and built off of Agile to create tools and techniques that help organizations adapt to the rapid pace of development today’s customers have come to expect.

As DevOps is an extension of Agile methodology, DevOps itself calls for extension beyond its basic form as well.

Collaboration between development and operations team members in an Agile work environment is a core DevOps concept, but there is an assortment of tools that fall under the purview of DevOps that empower your teams to:

• Maximize their efficiency
• Increase the speed of development
• Improve the quality of your products

DevOps is both a set of tools and practices as well as a mentality of collaboration and communication. Tools built for DevOps teams are tools meant to enhance communication capabilities and create improved information visibility throughout the organization.

DevOps specifically looks to increase the frequency of updates by reducing the scope of changes being made. Focusing on smaller tasks at a time allows for teams to dedicate their attention to truly fixing an issue or adding robust functionality without stretching themselves thin across multiple tasks.

This means DevOps practices provide faster updates that also tend to be much more successful. Not only does the increased rate of change please customers as they can consistently see the product getting better over time, but it also trains DevOps teams to get better at making, testing, and deploying those changes. Over time, as teams adapt to the new formula, the rate of change becomes:

• Faster
• More efficient
• More reliable

In addition to new tools and techniques being created, older roles and systems are also finding themselves in need of revamping to fit into these new structures. Release management is one of those roles that has found the need to change in response to the new world DevOps has heralded.

(This article is part of our DevOps Guide. Use the right-hand menu to navigate.)

What is Release Management?

Release management is the process of overseeing the planning, scheduling, and controlling of software builds throughout each stage of development and across various environments. Release management typically included the testing and deployment of software releases as well.

Release management has had an important role in the software development lifecycle since before it was known as release management. Deciding when and how to release updates was its own unique problem even when software saw physical disc releases with updates occurring as seldom as every few years.

Now that most software has moved from hard and fast release dates to the software as a service (SaaS) business model, release management has become a constant process that works alongside development. This is especially true for businesses that have converted to utilizing continuous delivery pipelines that see new releases occurring at blistering rates. DevOps now plays a large role in many of the duties that were originally considered to be under the purview of release management roles; however, DevOps has not resulted in the obsolescence of release management.

Advantages of Release Management for DevOps

With the transition to DevOps practices, deployment duties have shifted onto the shoulders of the DevOps teams. This doesn’t remove the need for release management; instead, it modifies the data points that matter most to the new role release management performs.

Release management acts as a method for filling the data gap in DevOps. The planning of implementation and rollback safety nets is part of the DevOps world, but release management still needs to keep tabs on applications, its components, and the promotion schedule as part of change orders. The key to managing software releases in a way that keeps pace with DevOps deployment schedules is through automated management tools.

Aligning business & IT goals

The modern business is under more pressure than ever to continuously deliver new features and boost their value to customers. Buyers have come to expect that their software evolves and continues to develop innovative ways to meet their needs. Businesses create an outside perspective to glean insights into their customer needs. However, IT has to have an inside perspective to develop these features.

Release management provides a critical bridge between these two gaps in perspective. It coordinates between IT work and business goals to maximize the success of each release. Release management balances customer desires with development work to deliver the greatest value to users.

(Learn more about IT/business alignment.)

Minimizes organizational risk

Software products contain millions of interconnected parts that create an enormous risk of failure. Users are often affected differently by bugs depending on their other software, applications, and tools. Plus, faster deployments to production increase the overall risk that faulty code and bugs slip through the cracks.

Release management minimizes the risk of failure by employing various strategies. Testing and governance can catch critical faulty sections of code before they reach the customer. Deployment plans ensure there are enough team members and resources to address any potential issues before affecting users. All dependencies between the millions of interconnected parts are recognized and understood.

Direct accelerating change

Release management is foundational to the discipline and skill of continuously producing enterprise-quality software. The rate of software delivery continues to accelerate and is unlikely to slow down anytime soon. The speed of changes makes release management more necessary than ever.

The move towards CI/CD and increases in automation ensure that the acceleration will only increase. However, it also means increased risk, unmet governance requirements, and potential disorder. Release management helps promote a culture of excellence to scale DevOps to an organizational level.

Release management best practices

As DevOps increases and changes accelerate, it is critical to have best practices in place to ensure that it moves as quickly as possible. Well-refined processes enable DevOps teams to more effectively and efficiently. Some best practices to improve your processes include:

Define clear criteria for success

Well-defined requirements in releases and testing will create more dependable releases. Everyone should clearly understand when things are actually ready to ship.

Well-defined means that the criteria cannot be subjective. Any subjective criteria will keep you from learning from mistakes and refining your release management process to identify what works best. It also needs to be defined for every team member. Release managers, quality supervisors, product vendors, and product owners must all have an agreed-upon set of criteria before starting a project.

Minimize downtime

DevOps is about creating an ideal customer experience. Likewise, the goal of release management is to minimize the amount of disruption that customers feel with updates.

Strive to consistently reduce customer impact and downtime with active monitoring, proactive testing, and real-time collaborative alerts that enable you to quickly notify you of issues during a release. A good release manager will be able to identify any problems before the customer.

The team can resolve incidents quickly and experience a successful release when proactive efforts are combined with a collaborative response plan.

Optimize your staging environment

The staging environment requires constant upkeep. Maintaining an environment that is as close as possible to your production one ensures smoother and more successful releases. From QA to product owners, the whole team must maintain the staging environment by running tests and combing through staging to find potential issues with deployment. Identifying problems in staging before deploying to production is only possible with the right staging environment.

Maintaining a staging environment that is as close as possible to production will enable DevOps teams to confirm that all releases will meet acceptance criteria more quickly.

Strive for immutable

Whenever possible, aim to create new updates as opposed to modifying new ones. Immutable programming drives teams to build entirely new configurations instead of changing existing structures. These new updates reduce the risk of bugs and errors that typically happen when modifying current configurations.

The inherently reliable releases will result in more satisfied customers and employees.

Keep detailed records

Good records management on any release/deployment artifacts is critical. From release notes to binaries to compilation of known errors, records are vital for reproducing entire sets of assets. In most cases, tacit knowledge is required.

Focus on the team

Well-defined and implemented DevOps procedures will usually create a more effective release management structure. They enable best practices for testing and cooperation during the complete delivery lifecycle.

Although automation is a critical aspect of DevOps and release management, it aims to enhance team productivity. The more that release management and DevOps focus on decreasing human error and improving operational efficiency, the more they’ll start to quickly release dependable services.

Automation & release management tools

Release managers working with continuous delivery pipeline systems can quickly become overwhelmed by the volume of work necessary to keep up with deployment schedules. This means enterprises are left with the options of either hiring more release management staff or employing automated release management tools. Not only is staff the more expensive option in most cases but adding more chefs in the kitchen is not always the greatest way to get dinner ready faster. More hands working in the process creates more opportunities for miscommunication and over-complication.

Automated release management tools provide end-to-end visibility for tracking application development, quality assurance, and production from a central hub. Release managers can monitor how everything within the system fits together which provides a deeper insight into the changes made and the reasons behind them. This empowers collaboration by providing everyone with detailed updates on the software’s position in the current lifecycle which allows for the constant improvement of processes. The strength of automated release management tools is in their visibility and usability—many of which can be accessed through web-based portals.

Powerful release management tools make use of smart automation that ensures continuous integration which enhances the efficiency of continuous delivery pipelines. This allows for the steady deployment of stable and complex applications. Utilizing intuitive web-based interfaces provides enterprises with tools for centralized management and troubleshooting that helps them plan and coordinate deployments across multiple teams and environments. The ability to create a single application package and deploy it across multiple environments from one location expedites the processes involved in continuous delivery pipelines and makes the management of them much more simplified.

Related reading

• BMC DevOps Blog
• DevOps Metrics for Optimizing CI/CD Pipelines
• Containers & DevOps: Containers Fit in DevOps Delivery Pipelines
• ITIL® Release and Deployment Management
• Today’s Top Trends in Software Development

The latest trends in IT Operations are changing the very assumptions about IT Ops and its role within organizations.

IT Operations have long described themselves as maintenance structures, overseeing data centers, delivering infrastructure projects, running business-critical systems. However, it is increasingly taking steps to become the leaders of innovation within organizations. The latest trends in IT Ops are now driving changes instead of simply absorbing them.

Business organizations are increasingly challenged to operate highly-scalable IT infrastructure—all while maintaining:

• Low costs
• High performance
• Minimal security risks

Both IT operations personnel and technology solutions are critical to achieving these goals. Maturing cloud infrastructure strategies gives rise to trends in the IT Operations domain that require organizations to invest in new technology trends and skills.

Here are some of the trends that will enable leaders to lay out pathways for creating a more robust, faster, and secure future.

Cloud-native platforms to keep up with disruptors

Companies that built their business on the public cloud from the ground up have become some of the biggest names today: over the last five years, the 15 largest unicorn IPOs were all digital natives. These companies are popping up across all industries, from banking to insurance to retail, and challenging the established businesses to catch up.

As a result, the latest trend across organizations is shifting to keep up with the agility and cost-effectiveness of digital natives. IT Ops teams increasingly feel the effects of a dramatic increase in public and private cloud budgets. Technology vendors and various partners actively engage with IT teams to make their cloud projects a success.

Cloud native platforms (CNPs) will help enterprises executive their urgent digital initiatives: Gartner estimates they will account for 95% of new digital initiatives by 2025. CNPs enable organizations to:

• Maximize their cloud computing potential by matching compute requirements with demand
• Enhance resilience and agility so that companies can deliver business value to customers faster.

Cloud native platforms enhance a range of digital workplace solutions and improve emerging automation technology processes and solutions. From orchestrating managed files transfers in a hybrid IT environment to synchronizing workloads and data pipelines across cloud platforms and applications, IT Ops will find increasing support in both infrastructure and application.

Plus, CNPs are a significant improvement over the conventional lift-and-shift approach that many teams have taken to the cloud. They offer more of the benefits of the cloud without adding any complexity to maintenance.

Rise of just-in-time infrastructure

For too long, companies have invested heavily in on-premises machinery. It required excessive maintenance even when it was not needed. However, cloud deployment enables I&O teams to deliver computing when and where it is required. It will increasingly make it easier to deploy on-demand cloud hardware possible.

This just-in-time structure also helps teams meet increasingly shorter timelines. A recent survey of tech leaders found that IT Operations teams must meet increasingly tight deadlines to meet business objectives. Technologies in deployment expect to reach adoption in the next 6-18 months. With this new structure, teams can deploy infrastructure as fast as possible in any needed location, such as data centers, the public cloud, wherever.

Time to deployment is a strong negotiating factor that helps give enterprises a strong position when competing with providers. Just-in-time infrastructure will lead an evolution in current providers’ relationships and broaden the option of provider solutions where feasible.

New business-minded skills for teams

A challenge for many IT Operation teams’ work and outcomes is that they struggle to clearly connect them with business needs and goals. It holds back innovation as leaders fail to make a compelling business cases for new initiatives and technologies.

To overcome this inherent weakness, new hires will have to have more than a technical background—instead bringing a business-based mindset. New employees will have to be able to find the business benefits of technology and help connect it with overall company goals. It will enable more effective and comprehensive business decisions that positively impact the whole organization.

For example, leaders need to be able to present a business case for just-in-time infrastructure, which necessitates more business acumen than most IT Ops teams have displayed in the past.

This need for business-minded new hires means that IT Ops will have to overhaul traditional hiring practices and create a cultural shift within teams. Some of the best ways that leaders can do this include:

• Changing the recruitment process to emphasize behavioral skills over technical
• Empowering non-technical hires to explain infrastructure-led innovation to leadership
• Partnering with HR to reflect changes in skills requirements, recruitment plans, and job scope

(Learn more about IT/business alignment.)

Minimal-touch maintenance and workload automation

Continuous IT services have long been a priority for most IT Ops teams. However, recent events (including significant staff absences in the face of a multi-wave pandemic and increasingly extreme weather events) have highlighted how easily IT is still dependent on manual processes.

Automation and zero-to minimal- touch maintenance enable organizations to support processes running even in the face of other external factors. Reducing manual maintenance not only keeps organizations prepared for emergencies but increases efficiency and workload deployments in day-to-day functioning.

As a result, traditional workload automation solutions are evolving to meet the needs of modern cloud infrastructure, big data workloads, and event-driven business models. Service Orchestration and Automation Platforms (SOAPs)  help companies organize their workloads in real-time through event-driven triggers. Gartner estimates that 80% of organizations currently utilizing workload automation will adopt SOAP to coordinate cross-domain workloads. They support critical processes such as:

• Organizing data pipelines
• Providing network resources and storage on demand
• Managing data and resources

Edge data driving IT operations

Gartner finds that, by 2022, 60% of enterprise IT infrastructure will focus on “centers of data.” This means that data will inherently motivate IT operations decisions, frameworks, and workflows.

According to an IDC study, more than 50% of the infrastructure will be deployed at the network edge by 2023. This trend suggests that more data will be generated, processed, and stored closer to the edge of the network infrastructure. By 2024, the number of apps running on this infrastructure will also increase by 800%!

From a daily job routine perspective, IT Operations will increasingly focus on the associated metrics that define real-time user experience, focused both on security and performance of the apps. Organizations are increasingly investing in public cloud and hybrid IT infrastructure solutions to prepare for the transition.

Cross-functioning collaboration across teams

Many of these trends reflect an increasing partnership between IT Ops teams and business users. These trends mean that the most successful teams will have growing collaboration with other IT teams, including DataOps, DevOps, and more.

In the past, IT Ops teams worked in a silo where they mostly concentrated on creating and overseeing the environments they were responsible for maintaining. The expansion in the role of IT Operations and the potential for innovation means that teams are now embracing the organization’s larger shared vision and goals.

2022 and beyond will see the IT Ops grow to facilitate other teams while still delivering valuable solutions. Teams will increasingly improve cross-department partnership by deploying platforms with centralized management while offering services that help other teams and departments perform their roles more efficiently and effectively.

With the rise in automation, IT Operations will have more time to dedicate to meeting the needs of their counterparts and encouraging future collaboration.

Related reading

• BMC IT Operations Blog
• BMC AIOps Blog
• IT Operations Best Practices
• Using Redundancy to Remove Risk from IT Ops
• Digital Transformation Trends
• Today’s Top Trends in Software Development

For a long time, automation was secluded to the world of IT professionals. It required complex coding skills, buzzwords, and a substantial platform to support it. However, the rise of low-code tools and robotic process automation has changed the IT automation paradigm and opened it up to business users and non-coders.

As a result, 2022 promises to be the most exciting year for IT automation, and its use cases continue to multiply. Forrester referred to automation in 2022 as “the new fabric of digital business” as it has increasingly taken center stage to enhance traditional business processes. As companies embrace digital transformation, automation continues to be a critical key to success.

Here are some of the automation trends to look out for in 2022 and how it will continue to shape the world of business:

A rise in hyperautomation

Most experts dismissed the rise of remote work in 2020 as a temporary shift to handle an acute state of emergency. However, two years later, many employees are still working from home, and even more are juggling a hybrid office.

With this shift in the work environment, automation has merged many segments to account for these changes. Robotic process automation (RPA), process mining, chatbots, low-code workflow platforms, artificial intelligence, machine learning, and intelligent document processing are increasingly merging to create a more unified experience.

Experts are referring to this blurring together as hyperautomation. It requires a more disciplined approach for enterprises to quickly identify, vet, and automate as many of their processes as possible. Hyperautomation is a rapidly growing trend: Gartner expects that the hyperautomation market will expand to nearly $600 billion by the end of the year.

2022 will see leaders increasing step away from segmented automation and view it as pieces to a puzzle that can be put together to improve the organization at the same time.

Cloud-based architectural innovation that increases flexibility

When looking forward to the next step of automation, many of us explore the exciting new technologies and their use cases. However, delivery is just as crucial to how successful these new solutions are.

Flexibility in delivery is a critical factor that organizations have to make when purchasing a platform. Organizations are increasingly demanding more flexibility that will enable them to avoid lock-in to any one delivery model.

As a result of this changing market demand, many automation companies are building platforms that can change from software as a service (SaaS) to an on-premises solution with very little disruption. Low-friction transitions to delivery modes will increasingly become the norm in 2022.

Automation companies are now utilizing cloud-native architectures that enable them to harness the flexibility of containerization and microservices. With these technologies, companies can provide the same functionalities no matter how the customer wants to run their platform.

This improvement in delivery means that users won’t have to acquire fundamentally new skills or environments if they decide on a different delivery mode later. Plus, customers that leverage on-prem solutions will have more flexibility, timeliness, and an easier time updating and expanding their installations.

Innovations in 2022 will likely include how solutions are packaged. They will be easier to install, manage, and upgrade and won’t require a steep learning curve.

New automation champion: Chief Sustainability Officer

The role of Chief Sustainability Officer (CSO) is relatively new to the C-suite, but it is exploding in popularity. Consumers are more concerned about the environment, and climate change, so many corporations are bringing on CSOs to help them become environmentally friendly. Researchers found that the number of CSO roles among Fortune 500 companies has grown 228% over the last decade.

As CSOs find more creative ways to lower their organization’s carbon footprint, automation is increasingly becoming one of their tools of choice. It is a powerful solution to reducing the waste that both hurts sustainability and affects their bottom line. For example, data centers are a significant expense: they account for 3.7% of total carbon emissions and 40% of the typical company’s overall electricity. However, automation can power down data centers when they are not needed to reduce both significantly.

In 2022, the CSO will increasingly become the champion of automation efforts. They will be able to leverage their technology to increase efficiency and reduce waste.

Reimagining processes to increase employee productivity

The typical worker must toggle through various tools to get their work done for nearly every task. Today, the average corporation has over 170 different applications its employees use. While adding tools and technology has long appeared to help produce productivity, many leaders now realize that too much technology results in low-value work that zaps both productivity and overall work engagement. Employees spend much of their day inputting data and running programs instead of the high-value and innovative work that improves the organization.

Many organizations are turning to automation in 2022 to provide employees with the assistance they need to relieve these tedious and low-value jobs. More leading organizations leverage automation to give workers digital desktop assistance that will add a layer between employees and the enterprise applications they utilize to get their work done.

Through automation tools, such as RPA, employees will no longer have to handle tasks such as inputting or transferring data or closing out programs. With reusability, standardization, centralized management, and governance, companies will reimagine their processes to be more rewarding for workers and productive for the organization.

Automation will address the labor shortage

2021 saw many restaurant employees and other hospitality workers leaving their jobs in droves. Businesses struggle to find employees to fill in the high-stress and fast-paced hospitality work environment. Forrester predicts that 35% of service companies will utilize physical robot workers to fill this gap in 2022. Robotics can now fill these employment gaps by offering delivery, food preparation, grounds maintenance, warehouse jobs, and customer service.

This shift to address the labor shortage will likely dramatically change the landscape of low-end service workers.

Improving customer experience through employee experience

The employee and customer experiences have always been correlated, but many companies are starting to realize how necessary the employee experience is. One 2021 survey of C-suite executives and leadership showed that 85% agreed that employee experience affected the overall customer experience.

Employee engagement is a critical factor in overall enterprise productivity and the customer experience, yet 2021 saw engagement levels drop for the first time in a decade. Companies need to increase their focus on the basics to help improve overall satisfaction and engagement on the job.  2022 will see companies concentrate on improving their overall employee experience through automation.

Automation helps take the tedious and repetitive jobs so that employees can spend more time in the high-value activities that are more fulfilling, such as providing superior service to customers. In addition, automation enables employees to deliver seamless and personalized interactions that translate to a better customer experience.

In 2022, technology for speed or a better bottom-line is no longer enough. Instead, automation must make an effortless experience for both employees and customers.

The challenge of digital transformation

Finally, it’s essential to understand that digital transformation is complex. While technology adoption is inevitable, it doesn’t always translate into transformed business processes. The latter requires ongoing improvements across various domains: talent acquisition, workforce culture, business requirements, and the market landscape, among others.

Organizations successful at digital transformation align their initiatives of adopting digital technologies with the business value of automating IT processes and operations.

Of course, improving your company doesn’t stop with DX. Empowered by digital transformation, organizations can be on their A-game and evolve to become an Autonomous Digital Enterprise, a forward-looking vision of the future state of business that embraces intelligent, tech-enabled systems across every facet of the company to thrive during seismic changes.

Related reading

• BMC Business of IT Blog
• BMC AIOps Blog
• IT Automation vs Orchestration: What’s The Difference?
• Automation In DevOps: Why & How To Automate DevOps Practices
• Increase Agility with Enterprise DevOps
• Server Automation Explained

The past two years have seen radical digital transformation. Companies and industries that have traditionally been hesitant to adopt new technology suddenly embraced their digital transformations—they needed to find new ways to work.

Interestingly, many experts believe that these radical shifts are only the beginning.

In a recent Deloitte survey, three-quarters of executives stated that they expect more changes in the next five years than there were in the past five years. The rate of change only increases as organizations are more open and willing to make the changes they need to keep up with the competition.

Digital transformation (DX) encourages business organizations to adopt new technologies in order to deliver better value to their customers. DX transcends traditional customer engagement channels, such as marketing and advertisements, and encompasses the processes, culture, technologies, and experiences that collectively determine the business value of reaching the right customers at the right time.

At the same time, embracing digital transformation saves business organizations valuable resources and generates new revenue streams. DX-focused technology solutions and service models operate productively and scale their services with agility.

In this article, let’s explore what’s trending in digital transformation for 2022.

Low-code tools will help meet the labor shortage

The DevOps skill shortage is a problem for most businesses: The U.S. Bureau of Labor Statistics indicates that there will be a 1.2 million shortage in engineers by 2026. Low-code and no-code software are critical tools to help businesses fill this gap in 2022.

For many years, low code tools have been a source of controversy in the IT community. Many developers worried that low code software could replace their jobs and that organizations could run on their own with these tools. However, this controversy is now fading as low-code software becomes an asset for developers.

The low-code tools of 2022 enable developers to solve more straightforward problems that take up too much of their time. Instead, IT can concentrate on higher-quality tasks and become more effective. Organizations that combine this low-code software with professional developers increase their total digital impact and gain an edge over the competition.

In addition to the total impact on organizations, low-code tools are leading to the democratization of AI. There is no longer a steep learning curve for software, allowing professionals in other departments to make smart decisions. It makes it accessible to every organization and every person within the organization.

As data quality and use cases expand, businesses rely more on it for daily operation. Low-code software provides a valuable bridge between the broader business requirements and what developers need to concentrate on to take companies to the next level.

Robotics will improve every department

Companies are increasingly turning to robotic process automation (RPA) to streamline their processes and save on costs. As a result, RPA adoption is exploded. In fact, experts, the market will surge 53% in 2022—growing from $2 billion in 2021 to $3.17 billion this year.

RPA continues to grow as the use cases for robotic automation continue to expand as well. It offers organizations many benefits:

• Enhanced efficiency
• Increased security and compliance
• Improved analytics
• Streamlined scalability
• Enhanced customer experience

Automation is no longer limited to large enterprises. Small- and medium-sized businesses (SMBs) in all industries need to implement RPA in their companies to stay ahead of the curve in all areas, including customer support, marketing, and accounting.

This year will see more companies harnessing automation and RPA to perfect their business operations while lowering costs.

Data analytics will enable “just in time” shipping

2021 was a year of significant supply chain disruption. While supply chain issues were expected during the first part of the pandemic in 2020, the continued inventory shortages and shipping delays over a year later left many organizations reeling. Companies of all sizes were scrambling to get what they needed and continue to meet demand.

With a supply chain crisis on their hands, many companies will turn to data analytics in 2022 to help them meet their challenges. They will be forced to address bottlenecks and fragilities in their data pipelines that cause a lack of visibility into their supply chains. Legacy models, systems, and approaches will no longer hold back organizations as they turn to new solutions to meet their needs.

“Just-in-time” shipping is possible for organizations in 2022 with the right data analytics to provide insights.

Improvements in cybersecurity

For the past two years, businesses have experienced escalating threats to their data. 2021 saw the biggest cyberattack to date and became a wake-up call for many organizations to prioritize cybersecurity. In 2022, data protection and cybersecurity will be at the forefront of digital transformation.

However, the rise in remote work has made companies more vulnerable than ever. Last year saw the average cost of a data breach increase, averaging about $4.24 million per company. Although leaders expected that workers would return to offices at some, it is becoming increasingly clear with changing employee attitudes and the emergence of COVID-19 variants that a complete return to office will not be possible for everyone.

The good news is that there are better options for companies to improve their data security. Just a few of the new technologies in cybersecurity include:

• Enhanced encryption methods
• AI-enabled threat detection systems
• Embedded hardware authentication
• Blockchain security
• Zero-trust model

There are many steps that organizations can take to keep their data safe. Expect to see even more as companies are starting to realize how critical it is.

Multi-cloud architecture to improve remote work and security

2021 saw many organizations move away from on-premises software and embrace cloud-based solutions. Experts estimate that by the end of 2022, cloud spend will exceed $480 billion.

This ubiquity in the cloud leads to an increase in multi-cloud architecture for many organizations. As companies use more than one private and public clouds, they are changing the way they distribute the software and workloads within it.

Multi-cloud architecture is particularly critical in the wake of remote work and emphasis on security. For many organizations, the increase in cybersecurity outweighs the potential complexity in their infrastructure management. They can manage the risk of employees accessing their network from home and improve disaster residency requirements, resilience, and disaster recovery.

A multi-cloud strategy has already been largely adopted across enterprises: 92% surveyed last year said they have a multi-cloud strategy. However, 2022 will see this trend trickle down as SMBs continue to follow.

(Get more cloud & SaaS statistics.)

Improved data quality for better analytics and decisions

Data-driven decisions are a fundamental part of digital transformation. They provide organizations with critical insights that shape how leaders improve and streamline their businesses. Using data to drive decision-making is a key reason many companies undergo a digital transformation.

However, these decisions are only as good as the quality of data. Bad quality data hurts many organizations and the decisions that they make. Experts estimate that the average cost of poor data quality for an organization is $12.9 million.

This number will only rise with an increase in dependence on digital channels for selling services and products. From predictive analytics to accurate insights into leads, poor quality data means that organizations miss out on key opportunities.

Not only does it directly impact the short-term revenue, but the downstream effects of poor data lead to complex data ecosystems and poor decision making.

Good quality data offers a better understanding of the customer, which means better leads, algorithms, and customer relationships. That is why many organizations are tackling data quality in 2022. Improving data quality standards, implementing data cleaning tactics, and tracking data quality levels through metrics will grow increasingly popular as companies realize how critical they are to business success.

(Compare data quality to data integrity.)

5G-enabled will soon be a necessity

The start of this year saw a slowdown in 5G as the Federal Aviation Administration and 5G carriers struggled to agree on the safety of 5G service on aircraft. However, they have recently come to an agreement, allowing 5G to grow more than ever.

What does this mean for businesses? The fast-paced transition to a 5G-driven era means that employees and consumers will expect improved digital experiences that will require investments in 5G technologies. Most tech companies will likely continue to encourage their workforce to work from home. 5G internet speed will be instrumental in improving all digital experiences currently limited by slow internet.

Similarly, consumers will expect more responsive, data-driven services, especially as AR/AI becomes a reality in the 5G era.

Related reading

• BMC Business of IT Blog
• Digital Transformation Metrics & KPIs for Measuring Success
• Must-Read Digital Transformation Books
• Top IT Trends Today
• SaaS Growth Trends & Statistics
• Top Paying IT Salaries

Organizations are turning to cloud adoption in larger numbers than ever. In fact, Gartner reported that 85% of organizations will be “cloud-first” by 2025. From the pressure to work remotely, reduce overhead costs, provide superior service to clients, and keep up with the competition, cloud adoption is central to almost any growth strategy.

Shifting to the cloud pays off for many companies: 61% of enterprises that integrated cloud as a part of their digital transformation increase revenue by at least 25%.

However, adopting the cloud—private, public, or hybrid—requires a learning curve. Organizations need to acquire the skills and knowledge to develop the processes for ongoing operations. Those who don’t often find their efforts do not increase revenue as they expected.

Here are 12 top practices you need to incorporate as you begin to use the cloud and make it part of your IT and app dev environments. The most successful organizations in their use of public cloud have all of these practices in place.

(Want more cloud stats? Check out these cloud stats & trends.)

1. Commit to cloud-first

Before you jump into implementing the cloud, have a clear idea of the advantages your organization can gain from it and why it is suitable for your business. Identifying concrete reasons you want to move to public cloud is critical for implementing an adoption strategy and getting everyone on board.

A cloud-first commitment means that your organization will move everything to public cloud unless there is a compelling reason not to do so. Organizations that try to hold onto their on-premises applications and data will find that the results are not what they would hope them to be.

2. Designate a Cloud Steward

A Cloud Steward is a designated person responsible for leading your organization’s cloud initiative. This role includes planning, migration, and ongoing cloud operations, such as optimization, governance, and security. In some instances, the Cloud Steward may also be responsible for the contract with your cloud service provider(s).

A successful Cloud Steward needs to have both IT and business experience. IT experience alone is not enough—a successful steward has a thorough knowledge of the practical applications of the cloud.

(Understand more roles in cloud computing.)

3. Differentiate your cloud adoption approach

A well-planned cloud adoption strategy is critical to a faster and more effective implementation with reduced risk. However, there are three distinct areas of cloud adoption that require unique approaches. These three areas of cloud adoption are:

• Software as a service (SaaS) for faster access to modern functionality
• Cloud infrastructure platforms (CIPS) for creating unique functions
• Migrating current and legacy applications

When formulating your cloud strategy, evaluate each approach for a complete view that weighs the trade-offs between management and operational control.

4. Establish a Cloud Center of Excellence (CCOE)

With cloud adoption, IT no longer has centralized control of the IT infrastructure resources purchases or used. It is up to the CCoE to establish the business guidelines and standardization needed for secure and compliant business operations. The CCoE focuses primarily on creating policy and compliance for cloud usage across the enterprise.

The CCoE typically includes representatives from IT Finance, DevOps, IT Ops, and SecOps. Multiple people can be from each area, but a well-defined CCoE should not exceed ten people.

5. Create a community

Cloud adoption often starts with individuals or selected business units buying cloud services to support their IT infrastructure or application development efforts. When those purchases are siloed, the purchaser often isn’t aware of the scope of the financial commitment for their entire organization.

Good communication across the organization, including cloud benefits and cost implications, is key to successful cloud adoption. Cloud evangelism and adoption will expand as more stakeholders become aware of how it can benefit the business as a whole.

(Explore best practices for organizational change.)

6. Promote ongoing improvement and optimization

Cloud adoption is not a one-time effort. It is vital to establish economic modeling and process—and constantly revisit them. This should include procedures and metrics from the line of business, finance, and technology—for example:

• Budgets
• Value measurements
• Chargebacks

The goal is to build an approach that provides a continuous process and steps for improvement. And remember, all processes should come from the CCoE.

7. Continuously evaluate & architect for future state

Find ways to make cloud education and learning happen across the enterprise. Organizations typically don’t spend much money on education, but there are low-cost ways to teach and learn, and their adoption is part of a continuous improvement model.

• Cloud education modules are available on YouTube.
• AWS and other cloud service providers and vendors offerfree education on their websites.
• Online communities andlocal meetups provide another source for ongoing learning.

Look for ways to apply what you’ve learned to your organization and share it with others.

8. Make data actionable

Data needs to be actionable, and for that, it needs context. Cloud providers give you raw data and leave it up to you to provide the context. For example, if you get a recommendation from the cloud service provider to downsize a virtual machine (VM), what must you consider?

• Is it a VM that has a spike associated with it once a week where you will need the VM at the current size?
• Can you downsize the VM and use auto-scaling to handle the peak period?

Another area where good data is needed is understanding how you use discounted services like reserved instances (RIs). RIs are for long-term use and long-term service commitments. Many organizations start off buying RIs but don’t effectively use them. Without understanding how you use RIs, you are not optimizing potential savings.

9. Identify & model cost drivers

For some organizations, the cloud is an economic decision before it is a technical decision. It is important to determine if public cloud is the right choice. You need to compare costs between on-premises and public cloud infrastructure services constantly:

• Where do you get the best performance and cost?
• Where is the best place for each workload?
• Look at the business side of using public cloud. Where are most of your costs coming from?

There are a lot of layers of information to understand expenses properly. It is important to correlate cloud costs with other business metrics. Extensive economic modeling needs to be done to fully understand the cost benefits, if any, for cloud use.

10. Evaluate costs & benefits

Consider Jevon’s paradox. Jevon was an economist in the UK who observed that technological improvements that increased the efficiency of coal use led to increased consumption of coal rather than reduction. He argued that technological progress does not reduce consumption. This applies to cloud usage as well.

You tend to consume more cloud services as you continuously optimize cloud spend. This is one of the reasons why cloud service providers want to help you save money. They understand that you will buy more if you run more efficiently.

It is recommended that you start your cloud adoption with one-year RIs and take the time to really understand your workloads, cost, and long-term needs. Then you can determine if a one-year or three-year RI is better for your organization’s needs and what workloads should continue to use on-demand services.

It is important to understand the trade-offs of short- and long-term costs and commitments.

11. Take a business-focused approach for driving cost reduction

Once you have a process to reduce spending, you need to tie that process back to the business. That requires breaking down costs. Every organization has different goals for how extensively they want to use public cloud:

• Some may not want to have more than 40% of their IT infrastructure and applications in the public cloud.
• Others may want to achieve 80 percent usage or more.

Once you break costs down to a granular level, you can truly optimize costs and determine how you can have a tangible impact on operating and capital expenses.

12. Establish a cloud governance model

Where are you on the governance path? Governance for the cloud means establishing the policies and guidelines that allow the organization to safely and efficiently use public cloud services.

Governance should not impede users or cripple the DevOps team from acting. Successful governance requires input from stakeholders, so the business remains agile. Good governance prevents unmanaged growth, immediately eliminates waste, establishes processes for long-term optimization, and includes automated monitoring and remediation.

Related reading

• BMC Multi-Cloud Blog
• Cloud Infrastructure: A Brief Introduction
• Cloud Governance Best Practices
• Best Practices to Avoid Cloud Vendor Lock-In
• AWS vs Azure vs GCP: Comparing The Big 3 Cloud Platforms
• The State of SaaS in 2022: Growth Trends & Statistics

Data impacts nearly every part of our lives and is critical for companies to stay relevant. It has transformed almost every industry to drive efficiency, better insights, and business growth.

However, managing this data can take an enormous amount of time and expense. Between security, auditing, organizing, and more, managing data sets can create a significant strain on employee time and energy. In fact, most data scientists and business analysts spend around 80% of their time finding, cleaning, and reorganizing data sets. This leaves just 20% of their time to spend on value-generating activities.

As data scientists become more in-demand and are now difficult to find, their time is even more valuable (and costly) than ever. Streamlining the aspects of their job that are not critical to their expertise can help improve productivity and save money.

Machine learning (ML) can solve this problem. It is a valuable tool for managing and improving efficiency with critical data. The explosion of ML has enabled those with light technical capabilities to handle what was once limited to highly skilled workers.

ML is now one of the biggest trends in data management. The sheer volume and growth of Big Data today have made ML indispensable for most companies. It is ideally suited to play a crucial role in enabling organizations to address their challenges in data management.

Here is what you need to know about Machine Learning, how it improves data management, and tips to successfully implement it.

How machine learning improves data management

Machine learning is a subset of AI that enables computer programming to learn based on experiences. A number of ML and Deep Learning techniques can be employed to help companies perform many crucial tasks, including:

• Address security and compliance challenges
• Schedule SLAs and batch or backup jobs
• Model computations

In the broadest sense, these techniques are divided into three core types:

Supervised learning is where the system is trained with examples of the desired output. Through the use of labeled pairs, the system can map the input to the output based on these examples and decide class labels for the actual inputs. Some of the most common techniques for supervised ML include regression and classification. Also, recommender systems are often based on this type.

Unsupervised learning, where the system learns from unlabeled test data. It recognizes and pinpoints data commonalities and reacts based on either the presence or absence of these similarities in new data. Unsupervised learning can be especially helpful for learning structure in data since users don’t have an expected output but instead want to group the data. Some of the most common forms include:

• Neural networks
• Clustering
• Anomaly detection

Reinforcement learning is most often used when action needs to be taken sequentially. One output depends on the one before it, and the next input depends on the current output. In reinforcement learning, the application learns how to achieve a set goal in an uncertain environment. Game development where the game plays against a human player, some recommender systems, and autonomous vehicles use this type of ML.

Each one of these systems helps embed ML-driven intelligence into data management tools.

(Learn more about supervised & unsupervised learning.)

Benefits of ML for managing data

Some of the most significant benefits that ML algorithms can offer in data management include:

• Optimization. ML can automatically table join approaches, select distribution methods for data, resource management schemes, and choose query optimization strategies. This can create faster and more responsive system performance.
• Capacity management. As data increases, scaling becomes an issue for most organizations. ML can perform workload-aware autoscaling and spot instance purchasing.
• Automation. ML can cut down on some of the more time-intensive development tasks associated with data management. A few of the functions it can achieve include mapping sources to targets, onboarding new sources, and cataloging data.

Most of all, ML allows companies the chance to back away from the more traditional rule-based management. Rule-based management heavily relies on human oversight and the ability to predict every potential scenario. Instead, ML works out the right way to help achieve company goals, eliminating much of the heavy workload.

Because of these benefits, ML can offer organizations a distinct advantage for many different users:

• Users who are not highly technical, for example, can do advanced functions that were once limited to data scientists.
• Developers can delegate many of their tasks to others so that they can improve their productivity and concentrate on high-value tasks.
• ML can also help improve system performance that requires less administrator involvement.
• IT will have a significantly reduced burden since they no longer need to manage massive amounts of data.

Where to use machine learning

As more companies realize the benefits Machine Learning offers data management, its use is exploding across all industries. It can be utilized in nearly every business vertical to help improve productivity and accuracy.

With its advantages, ML has a number of use cases to automate and optimize data management:

Anomaly detection

Data collection is only as good as its accuracy. However, identifying outliers and points that don’t belong can be a time-consuming process. It is also an area that rarely scales well as volumes of data increase rapidly. ML can work accurately and sift through large datasets. Plus, it constantly adapts to be more precise as it learns with time.

(Try this anomaly detection introduction.)

Data cataloguing

Data collection continues to surge as volume increases each year. ML can help ease the time and energy usually spent organizing the search and discovery, governance, and curation. ML can identify patterns and utilize ML to make the data more user-friendly as it learns user behavior.

It can also help improve GDPR compliance and better ensure privacy functionality.

Data mapping

With ML, businesses can utilize their data more easily because it is organized in manageable and easy-to-understand systems. Organizations can better personalize their marketing efforts and segment their data, as the ML algorithms can identify data and categorize it for future purposes. Plus, it can cleanse data effectively with unification and data cleaning.

Security

Data security is one of the most prominent concerns organizations have today: the average cost of a data breach for a U.S. company is $4.24 million. Machine Learning can help prevent a breach by detecting malicious activity, analyzing mobile endpoints, and automating repetitive security tasks.

Data domains

With ML algorithms, businesses can automatically recognize and catalog data structures and sources into specific domains. It enables people to browse and search the domains that concern them, such as customer or product domains. In some cases, advanced ML can detect domain relationships across various datasets to make browsing and searching even more effortless.

As ML and data continue to grow, the use cases also expand. ML has implications for capacity planning, governance, system performance, and more.

Tips for using ML for Data Management

To get the most out of Machine Learning for data management, consider taking these three steps to start:

1. Begin with your current domain-specific knowledge. Consider which processes and rules your employees handle manually to figure out where to start. For example, you might currently have contracts that have been open for too long that need to be addressed. With that understanding, you could build a model to find unmatched contracts.
2. Find new patterns by automating. With unsupervised learning and automation, you can utilize ML to pick up on incorrect sequences, typos, or other potential mistakes.
3. Identify patterns that add value. Not all patterns and trends in your data are valuable from a business perspective. For example, you might not need to know where your customers are located at this point in your online business. Determine which patterns are useful for your company and validate them against common-sense checks.

These are not one-time-only steps. Instead, continue evaluating where you can implement and incorporate Machine Learning models to improve the learning process continuously. As organizations grow and change, their need for ML will as well. Recognize new areas where ML can improve performance and productivity and assess whether your current use is helpful.

It is also vital that IT teams do not feed all of the data into unsupervised learning models with ML. Teams still need to be involved and ensure that they are not over-fitting models to derive too many insights.

Improving data performance with machine learning

Machine learning has the potential to radically transform how organizations collect, organize, and utilize their data. Companies can better use their data to provide deeper insights and make finding the information they need quickly. With the use of ML, companies can become more agile, adaptable, and efficient.

As businesses collect more data to remain relevant, the productivity of their IT teams often suffers. ML can provide a valuable tool for organizing their data and scaling their operations without compromising accuracy or security. ML can provide a critical role in data management by continuously evaluating ML needs and keeping IT involved.

Related reading

• BMC Machine Learning & Big Data Blog
• Data Management vs Data Governance: An Introduction
• Data Analytics vs Data Analysis: What’s The Difference?
• Using Python for Big Data & Analytics (Python is Perfect for Big Data)
• Best Books on Big Data & Data Science
• AI/Human Augmentation: How AI & Humans Can Work Together

With Christmas around the corner, picking gifts for the tech enthusiasts, IT pros, and those who work from home can be challenging. How do you know what’s a great gift from the shoddy tech gadgets that come out in droves? Is this something they will like and actually use? Or will they end up going through the hassle of returning it?

Don’t worry; we’re here to help! We’ve rounded up the top tech gifts of the season—at all different budgets—so that you can knock tech gift-giving out of the park.

(This article is part of our Tech Books & Talks Guide. Use the right-hand menu to navigate.)

IT Tech Gifts for 2022

We won’t tell you which Black Friday deals are worth it, and we won’t wade into murky supply chain issues. This year, we’re going back to basics—the tech you need to work your best.

Get organized with Great Useful Stuff Multi-Device Charging Station

Price: $39.99

If your loved one’s space is all cluttered with their different devices, give them the gift of organization this season.

This multi-device charging station has won multiple awards and is one of the best sellers on Amazon. The sleek, wooden design can seamlessly hold and charge multiple phones, iPads, and laptops all in one spot. No more tangled power cords or wasted space with this station!

Stay hydrated with the Monos Kiyo Bottle

Price: $70

Keep your loved one hydrated and healthy with the newest in portable water technology. Kiyo harnessed UVC technology to purify drinking water with the simple swipe of a finger. Killing up to 99.99% of bacteria, your tech enthusiast can get access to clean water from anywhere, even if it’s just at their desk. Plus, a silicon pad at the bottom of the bottle means no tipping and spilling on electronics.

Take notes with the Rocketbook Smart Reusable Notebook

Price: $32

Even the biggest tech-enthusiast has to take pen-and-paper notes from time to time. This notebook will help you seamlessly pair your notes to your technology. The Rocketbook lets you write out notes and send them to many cloud services and apps, including Evernote, iCloud, email accounts, and more.

The best part? The Pilot FriXion pen wipes off, so you can reuse the pages again and again!

Save it all with the SanDisk 500GB External SSD

Price: Starts around $100

Most IT pros find themselves running out of room on their computers often. Between never-ending updates, photos, and videos, an external hard drive is essential. SanDisk offers one of the best. With plenty of room, lightweight, fast, and equipped with extra security features, this is one of the best external hard drives on the market.

Stay cozy with the ecobee SmartThermostat with Voice Control

Price: $258.64

For those working from home, comfort is one of the best perks. Stay comfortable without disrupting your workflow with ecobee SmartThermostat.

The voice control features mean that you won’t have to get up to adjust the thermostat. The award-winning thermostat also has a built-in occupancy feature that allows it to automatically adjust the temperature to unoccupied rooms to save energy and money—an essential move for sustainable IT.

Listen in comfort with the Sony WH-1000XM4 headphones

Price: $248

AirPods may look sleek and provide convenience, but they are not built for all-day use. Sony’s over-the-ear headphones are designed to reduce pressure on the head and around the ears so your loved one will get a comfortable fit all day long. It even has calibration mode to detect whether the wearer is wearing glasses to provide the best shape. With the top noise-canceling technology and equipped with Bluetooth, they can work undistracted and make phone calls with ease.

Charge on-the-go: Morphie Powerstation Wireless XL with PD

Price: $69.95

Most of us use our tech on the go—at the coffee shop, in the car, on vacation, even from our living room away from a power cord. We may not always have access to a charger, so your techie-obsessed loved one is always at risk of running out of batteries at the worst time. Mophie’s Powerstation is a must for those who need to rely on technology everywhere.

Morphie is a company with a track record of supplying sleek design and reliable technology. They know how to create products that work for those who love technology. The Powerstation is on the larger side, making it ideal for your loved one to use anywhere. It has enough power to charge their phone twice. It also has both UB Type-A and USB-C outputs so that they can charge nearly anything and even multiple devices at once.

Ready to travel: Away Carry-On Luggage

Price: $265

Now that we are all back to traveling again, your IT professional will need new luggage as tech-savvy as them. Away offers sleek and fashionable luggage with a hard shell and leather details. It also has an interior compression system so that they will be able to pack as much into their carry-on as possible.

With an ejectable USB charger, your loved one won’t be frantically searching for a charger station at the airport as their phone battery starts to die. Away will make traveling both fashionable and convenient for them.

Clean tech with the UV Phone Sanitizer Box

Price: $39.99

The perfect travel companion during pandemic days. Phones are virtual petri dishes for bacteria, so consider this gift to keep your loved one healthy.

VCUTECH uses UVC technology to kill up to 99.9% of bacteria for both Apple and Android users in just 3 minutes. It also charges your phone—a two-for-one we can get behind.

Rest your eyes: Felix Gray Roebling Blue Light Glasses

Price:

• $95 for non-prescription and reading lenses
• $145 for prescription lenses

Blue blocking glasses are a must-have for the IT professional and WFH-ers in your life that spends most of the day in front of a screen. These glasses can help reduce eye strain, headaches, and long-term issues from extended periods exposed to blue light. Plus, the stylish frames make them look professional while doing so.

Keep working with the Topo Anti-Fatigue Mat

Price: $99

Many IT professionals have taken to standing desks to improve their overall health. It can start to hurt the back, though, when they stand all day on an unforgiving floor. This mat contours to the foot to help your loved ones stay comfortable on their feet all day long.

Type all day with the Razer Huntsman v2 Analog

Price: $249.99

Named the best keyboard by Tech Radar, Razer Huntsman v2 Analog has the latest optical technology and Razer’s analog mechanical key switches. Plus, the wrist rest and ideal angling will help your tech enthusiast work—or play—for hours with minimal discomfort.

BMC fan favorite: Das Mechanical Keyboard

Price: Options starting at $129

Mechanical keyboards are more popular than ever, and Das Keyboard is one of the leaders in the clickity clack revolution. Das Keyboards come with a variety of options and customizations, from customizable key functions to color enhancements and keyswitch options for the perfect tactile experience.

For the ultimate geek in your life, we might even suggest the completely blank Das Keyboard 4 Ultimate—because who even needs to look at keyboard labels? As more people work from home, it may the best time yet to try out a mechanical keyboard with a full audio experience. Type faster, louder, and with more precision with a Das Keyboard.

Cult classic: Apple Magic Keyboard with Numeric Keypad

Price: $129

For avid Apple fans, this is the go-to wireless keyboard. It’s very lightweight, which will make it ideal for bringing on the go. Its Apple-aesthetic minimalist design makes it attractive, and the low profile makes typing comfortable all day. The numeric keypad also makes it perfect for those who need it for spreadsheets and finance applications. This is the ultimate keyboard for all of your Apple enthusiasts’ needs.

Keep the caffeine flowing: Ember Smart Mug 2

Price: Starts at $99

Work and coffee go hand-in-hand. Get your loved one the Ember Smart Mug and they will never again have to worry about their coffee getting cold while they work on an important project.

Not only does the battery-powered mug keep coffee warm, it also allows users to set their ideal drinking temperature. The battery lasts for up to 1.5 hours on its own, or indefinitely when used on the charging coaster. The tech person in your life will thank you for this long-lasting boost of energy!

Unwind with the SEGA Genesis Mini Console

Price: $79.99

Everyone needs to unwind, and your favorite IT professional is no different. Treat them to some nostalgia-inducing self-care with the SEGA Genesis Mini Console.

This plug-and-play system comes pre-loaded with 40+ classic SEGA Genesis games for hours of throwback fun. When the stresses of the day become too much, transport your favorite tech enthusiast back to a more carefree time.

 Want more retro gaming fun? Try the NES Classic Mini and the SNES Classic Mini.

Best in tech recommendations

Looking for other gifts? Browse our recommendations for books, newsletters, podcasts, and more in our Tech Books & Talks Guide.

IT benchmarking provides valuable input into how other businesses are tackling critical initiatives. Benchmarking can offer a high-level view and a helpful frame of reference for your work in order to inform your decisions and overall IT strategy.

By benchmarking your IT activities and investments against your peers, you can:

• See if you are over- or under-spending
• Get a sense for the market
• Make a case for or against a particular expenditure

These data points can be especially helpful when researching a new solution, building a business case, or justifying a project to your manager.

There are all kinds of benchmarking metrics in IT. In this article, we will:

• Define benchmarking in IT
• Look at 5 IT areas to benchmark
• Show where to find benchmarks
• Offer some advice on measuring too much

Let’s get started.

What is benchmarking?

Metrics can provide value only when measured in the right context. When first collecting a metric, how will you know if the result is “good” or “needs improvement”? Enter benchmarks.

Benchmarks are a standard against which to measure your own metrics.

Benchmarking is a general business practice that measures an organization’s quality and performance. Benchmarking is a formal way of comparing the practices, processes, and outcomes of your organization with others in your industry, and sometimes beyond it, to assess whether you’re performing above, on, or below average. It is primarily data-driven.

Benchmarking is not a one-time activity. Instead, it’s a way to continually understand industry averages to inform your strategy and expectations. Leaders use benchmarking to celebrate wins and to find process and performance gaps—after all, you can’t fix a problem you’re not aware of.

Some benefits of benchmarking include:

• Finding out where other businesses outperform yours
• Comparing the processes and strategies of your competitors
• Identifying areas to improve your services and general performance
• Understanding which activities contribute to efficiency and productivity—and which do not
• Determining whether and how quickly you’ve achieved ROI on investments

IT areas to benchmark

Several IT areas can benefit from benchmarking. However, it’s important first to analyze exactly what you want to accomplish with benchmarking. Identifying your overall objective will help you track what is right for your company. Some aspects to consider include:

• Your overall business goals
• Your decision-making process
• Your customers’ pain points and goals
• What is easy to measure and report

Once you have identified what is important to both your company and customers, you can start analyzing which areas you want to benchmark.

Let’s look common IT areas to consider benchmarking against the market.

IT operations efforts

IT operations require a number of activities vital to the health of your IT department. The effectiveness of your IT operations—and the ITOps team—touches every single department in your company. Consider all the areas ITOps supports:

• Maintaining infrastructures
• Onboarding and training new users
• Configuring new applications
• Maintaining security
• Ensuring service availability and reliability
• And much more!

The better your ITOps team can perform, the more advanced your business will be. Common areas to benchmark in IT operations include:

• Comparing your IT overhead costs to others in your industry can help save your company money and improve your bottom line.
• Looking at the number and types of service disruptions can also help you measure how well the services you provide stack up to the competition.

(Learn about tracking and measuring IT failures.)

Service management efforts

Your IT service management (ITSM) is critical your reputation as a business. If you develop great products or services, but deliver and manage them poorly, your customers will take notice and move on quickly.

With the right IT operations in place, service management is particularly driven by right processes and overall productivity, which all drive revenue.

Benchmarking is vital to finding areas of opportunity to improve and empower your IT department to have more effective processes and drive productivity. In terms of service management, you might start with the service desk and technical support. ITSM benchmarks can include:

• Improving call duration or the average time to answer a ticket can all have a powerful impact on every part of your business.
• Understanding the customer experience your service/help desk provides can also be a differentiator. After all, we know that customer experience is extremely important in fields that are crowded with competitive options.

Successful service desks have also defined which metrics they use to measure success. Regularly benchmark your performance on these metrics to others in your field, perhaps quarterly or semi-annually. Some common ITSM metrics include:

• First-call resolution rate
• User/customer satisfaction
• Cost per ticket
• Time to resolve

(Explore service desk benchmarks and overall service management metrics.)

Software development

Evaluating your software development can be a complicated process. You might have any number of separate software development projects or products to support, and each team might work the software development lifecycle (SDLC) differently. A benchmark that applies to one project might not apply to others.

Measuring success in this area will always depend on:

• The characteristics of the project
• Your overall goals

In a DevOps environment, you might look to measure (and therefore benchmark) areas such as:

• Time spent on innovation
• Number of defects avoided
• Agility
• Quality work or improvements released

As a software company, BMC has undergone its own DevOps transformation, and you can learn more about exactly how we benchmarked and measured success in this video:

Digital transformation efforts

Digital transformation is not merely a buzzword. Adopting new technology has become increasingly urgent, and it is obviously critical for businesses to remain competitive.

However, many IT departments struggle to execute a meaningful digital transformation for their companies—fewer than 30% of organizations actually succeed in their digital transformation pursuit. Even with the right technology, implementing the changes and getting your talent and culture on board with it will determine the success of any digital transformation. It requires:

• Setting the right goals
• Maximizing the assets that IT has
• Developing a practical roadmap to achieve success

To create a successful roadmap, you have to understand your current digital state. Competitive benchmarking may be helpful, but internal benchmarking can give you a better understanding of your current state.

A word of caution, though: Digital transformation benchmarks are tricky because each transformation it utterly unique. Your company’s transformation areas will vary from similar companies.

Instead of relying on traditional IT benchmarks, these measures provide deeper insight into your transformation:

• Scope of transformation
• Active usage of new technology
• User engagement
• Availability & reliability
• Risk factors
• Customer experience
• Innovation

IT organization benchmarks

Service management consultant Kirstie Magowan provides many metrics that help you assess the success of your overall IT organization, including all the previous areas. She suggests bucketing benchmarks into four keys areas, with metrics that support each one:

• Operational metrics
• Financial metrics
• Solution delivery metrics
• Organizational metrics

Where to find benchmarks

Once you figure out to benchmark, you have to collect data to start gaining insight. There are typically two types of benchmarking that IT departments use to get perspective:

• Internal
• Competitive

Internal benchmarking

Internal benchmarking is the practice of comparing your current efforts and output with previous efforts and output in your company.

For example, comparing year-over-year stats or checking in throughout a digital transformation can help your IT department stay on track.

Internal benchmarking requires that you have already established best practices for metrics. If you have not, you’ll have no uniform way to compare metrics over time.

Competitive/industry benchmarking

Competitive benchmarking is more common, and it’s particularly useful when you don’t have stable historic data on your own performance.

Competitive benchmarking helps you understand how your IT department compares to other similar companies. Companies can find industry benchmarks through:

• Reports from industry groups, like the Service Desk Institute
• Research analyst firms, like Gartner or Forrester
• Quarterly/annual statements from other companies
• Marketing representatives
• Anecdotes or casual discussions

A new benchmarking tool that helps companies measure their digital competitiveness is The ADE Index. It can highlight your current strengths and weaknesses, particularly around digital transformation. Knowing how your organization fares today helps you establish and plan for your short- and long-term goals more effectively.

Short for Autonomous Digital Enterprise, an ADE is a customer-centric, agile, and data-driven organization that minimizes manual effort to capitalize on human creativity, skills, and intellect. An ADE continuously examines its customer and partner relationships to create new value intelligently.

Caution on measuring

Knowing where you stack up and where you can improve is a key practice in any business. Still, companies can easily get too caught up in measuring, says Magowan. She explains how metrics should matter—to your customer. If you’re measuring something that ultimately has no impact on the customer, what’s the point?

Another take is Goodhart’s Law, a socioeconomic paradox that is summed up as:

“When a measure becomes a target, it ceases to be a good measure.”

Are you measuring to improve, or measuring to beat numbers?

Related reading

• BMC Business of IT Blog
• 7 Business-Critical IT Policies
• Collective Intelligence Benchmarking (CIB): An Introduction
• Digital Maturity Models Explained
• Business vs IT vs Digital Transformation: Strategy Across 3 Critical Domains

When it comes to procuring new equipment, capabilities, and software, IT professionals generally have two options:

• Obtaining new capabilities and equipment as a capital expenditure (CapEx).
• Obtaining them as an operating expense (OpEx).

As many companies shift from traditional hardware and software ownership to as-a-service models, IT and finance departments must reconcile how best to classify cloud costs.

According to Gartner, after a decline in IT spending in 2020, spending has picked up significantly in 2021. Experts project that worldwide IT spending will increase 6.2% to total $3.9 trillion.

In other words, IT spending is big business. The way companies think about it may deserve new consideration. In this article, we will:

• Define CapEx and OpEx in relation to IT spending
• Compare when to use each
• See how CapEx & OpEx plays out in a real IT purchase
• Explore recent changes that seem to favor OpEx
• Share additional resources

(Note: This articles discusses CapEx and OpEx purchasing in the United States. The points and ideas discussed may be different in other countries.)

(This article is part of our IT Cost Management Guide. Use the right-hand menu to navigate.)

What are capital expenditures (CapEx)?

Capital expenditures (CapEx) refers to the money a company spends towards fixed assets, such as the purchase, maintenance, and improvement of buildings, vehicles, equipment, or land. You might also hear this called PP&E, short for property, plant, and equipment.

One-time purchases of these major physical goods or services are intended to benefit the organization for more than one year. In the IT world, examples of these major items include:

• IBM Power systems
• Intel-based Windows servers
• Other high-dollar items
• A variety of supporting items such as Universal Power Systems (UPS), line printers, air conditioners, scanners, and generators
• Additional procurement costs

(Explore IT infrastructure & components that might fall into this category.)

CapEx spending has pros and cons from the accounting side. If the asset’s useful life extends beyond a year, which is typical, the cost is expensed using depreciation, anywhere from 5-10 years beyond the purchase date.

Real estate, in particular, can be depreciated for over 20 years—something that has fueled commercial real estate for decades. Finance teams and bookkeepers applaud these CapEx tax depreciations.

On the other hand, the more money you spend on CapEx means less free cash flow for the rest of the business, which can hinder shorter-term operations.

Unlock the potential of IT Service Management with BMC Helix ITSM. ›

What are operating expenses (OpEx)?

Operating expenses (OpEx) are the funds that support your day-to-day business. OpEx items are generally used up within the year they are purchased. Examples include:

• Consumables such as printer cartridges, paper, electricity, and other supplies
• Contract items such as yearly service or maintenance agreements, website hosting, and web domain registrations

OpEx purchases cover pay-as-you-go items that show up on an organization’s profit and loss statement, and they are deducted from income as they occur.

When material goods or services are purchased as an OpEx item, the workflow is this:

1. Costs are assigned to the operating expense budget.
2. The expense is tracked in your profit and loss statement
3. The equipment’s monthly expenses are tracked and deducted from the bottom line as they are incurred (instead of being depreciated over several years).

Management is often tasked with decreasing OpEx spending without blunting the firm’s ability to compete or produce.

Unlike the depreciation of CapEx, OpEx are fully tax-deductible in the year they are made.

Expense vs expenditure

A technical note on terms in this article. You might notice that we use “capital expenditure” and “operating expense”, instead of calling both expenditures or both expenses.

From an accounting perspective, expenditures are the payments you make on long-term spending. Expenses generally refer to more short-term spending. However, unless you’re talking to the company bookkeepers, most folks won’t notice the difference.

Determining CapEx vs OpEx

Though the definitions seem clear cut, there are plenty of grey areas. Many IT material goods—like servers, generators, or UPS systems—can be purchased either as a capital item or as an operating expense item.

For example:

• CapEx. You can pay cash and own the item outright.
• OpEx. You can lease the item or sign a hosting contract with a managed services provider (MSP) that provides access to the equipment as a service for a monthly cost.

Having the choice between CapEx and OpEx for acquiring new IT capabilities isn’t a novel development. These options have been with us in various shapes and forms for a long time. So, what’s different today?

The cloud. With new cloud hosting capabilities, using OpEx procurement to obtain major IT equipment and services is easier than it’s ever been.

Comparing CapEx vs OpEx for IT

Outside of the tax and payment treatments, there are several advantages and disadvantages to procuring major IT capabilities as either CapEx or OpEx items.

Let’s look at an example of upgrading or purchasing a new IBM Power system, and how the process differs when procuring it as either a capital expenditure or as an operating expense.

Here are different components to consider when deciding:

Approval process

CapEx and OpEx items go into different budgets, with different approval processes:

• Capital items generally must be approved through several layers of management (including executive management), which will hold up purchasing until approval is received, which could slow you down significantly.
• Adding the IBM Power system as an OpEx item is generally an easier process, as long as the item is covered through and budgeted for in the operating expense budget.

Upfront costs

For a capital purchase, all money must be paid up-front.

Purchasing IBM Power capability on lease or from a hosting company as an OpEx item allows you to pay as you go, on a monthly or quarterly basis. This can free up budget dollars for more bottom-line revenue producing projects.

Supporting infrastructure capabilities

Purchasing an IBM Power machine as a CapEx item may also require you to buy several other supporting capabilities, including:

• Redundant power supplies
• UPS systems
• Generators
• Air conditioning
• Insurance
• Maintenance
• Data center access, in order to run it all

Procuring the same capability as an OpEx item under a hosting contract will usually include all the infrastructure items that go along with your hardware. This allows you to pay for the infrastructure along with the hardware, in one regular payment.

Shifting IT operations to an outside vendor

When purchasing an IBM Power system, you as the purchaser are responsible for all IT Operations management (ITOps) capabilities, including backups, operating system upgrades, and repairs.

• In a CapEx environment, you need to provide these capabilities. All IT Ops capabilities remain with you—the buyer.
• In a hosted OpEx environment, you can include these items in your contract, so that the provider will handle them as part of your monthly service.

Forecasting

Purchasing a capital item requires a certain amount of forecasting. IBM Power systems may be purchased on a four-year lifecycle, with the intent of replacing or upgrading the machine every four years.

That means when you purchase the machine you would need to buy it with all the capabilities you believe you’ll need for a number of years into the future. You’ll need to either:

• Overbuy the machine with capabilities you may not use until the 4th year.
• Purchase additional capabilities as you need them.

If you have a cyclical business where you have significantly busier months than others (think Christmas rush for retail), then you must size your machine to have the capability to always run at peak performance, even during the slow times of your year.

With OpEx hosting, you may be able to:

• Contract for additional CPU and memory on an as needed basis.
• Run with lower capabilities the rest of the year, possibly reducing your costs.

Hardware control

In a CapEx situation, you own the hardware and have total control over its use, location, and disposition.

If you are procuring an IBM Power system as an operating expense item in the cloud, you are dependent on the hardware, operating system software, and maintenance the cloud service is providing.

You may have problems if your cloud provider:

• Has an outage
• Doesn’t have sufficient capability to meet your needs
• Is unable to meet your service level agreements (SLAs)
• Goes out of business

In OpEx situations—especially with cloud providers—you introduce a third-party into the provisioning of your IT capabilities, which can affect your performance and deliverables.

(Understand whether vendor lock-in applies to your vendor relationships.)

Corporate policy

Many organizations specify that all major IT goods or services be purchased, and they cannot be leased or “rented” through an MSP. Other organizations may specify the opposite.

The point here isn’t whether one is better than the other. Instead, it’s that you may not even have a choice on CapEx vs OpX. A particular procurement method may be mandatory depending on your organization’s rules.

Changes in IT spending that favor OpEx

Traditionally, CapEx has two significant benefits, aside from the financial positives:

• A company will own the product outright, so you can alter and tweak it as you need⁠—once owned, you don’t continue paying for it.
• Owning assets such as hardware and software may be seen as prestigious.

Despite these benefits, three complaints of CapEx continually rise to the top:

• High-cost items require well-forecast budget estimates and long processes for approval, which can slow down purchase of the equipment.
• Age is a significant factor. Once you own the hardware or software, you’re likely stuck with it for a long time, in order to extend its ROI.
• Estimating future capacity needs for static hardware or software can be tricky and complicated.

As IT is imperative for any business operating today, two major changes have affected both hardware and software.

Today, hardware is frequently significantly cheaper to purchase than it once was, which we expect with time.

Further, though you might need highly specialized (expensive) machines in certain areas/departments, many employees can perform their daily functions on basic, low-cost computers like Dell laptops or Chromebooks, since so much work has shifted to the cloud.

So, what does this mean for OpEx? In the cloud era, companies who used to avoid significant operational expenses might be embracing them, particularly for these benefits:

• More cost-effective & flexible
• Less red tape
• Scalability

More cost-effective & flexible

The internet makes software a lot nimbler⁠—and more cost-effective.

Instead of purchasing expensive licenses to own and alter software in a CapEx model, companies can shift towards as-a-service options, including SaaS, IaaS, PaaS, AIaaS, and even IT as a service.

These options:

• Run via internet connection, generally eliminating any manual install or upgrade.
• Require small, monthly subscriptions, often per user.
• Offer transparency, letting companies pay only for pieces they use.
• Fall under the OpEx procurement model, with all its inherent benefits.

Less red tape

With low monthly costs, budget approval of OpEx procurement can be a lot speedier, reducing the time needed to achieve business goals.

The monthly payment model of software as a service (SaaS) and related services can help streamline business cash flow over time: there’s no long-term commitment. That’s good for:

• Turning off services when you don’t need them
• Switching to a new product when one product stops fitting your needs.

The minute one SaaS option doesn’t work, a department could—realistically, easily—switch to another one that better suits their needs. This flexibility is key for emerging opportunities.

Scalable

Not every operating expense is scalable, but SaaS sure is! If you need to add many users only for a month, SaaS is still cheaper than outright owning software for that many users.

Importantly, SaaS and similar solutions make it much easier to measure ROI—is the cost justifying the benefits? It’s usually harder to track ROI on a lump-sum purchase of a product that continues to age than it is on a monthly payment under a SaaS arrangement.

With these changes in cost and use of hardware and software options, the traditional benefits of CapEx may not carry their weight. Using an OpEx solution like SaaS allows organizations to unlock money that was formerly frozen in CapEx purchases on other business needs.

Will OpEx outpace CapEx?

Still, the complaints of CapEx do not mean that OpEx is the ultimate solution for every company or every purchase.

Some companies worry that they don’t know what to expect and instead wind up budgeting their IT needs on a month-to-month basis. If use is low one month, but skyrockets the next, long-term forecasting is complicated.

Justifying a switch from CapEx to OpEx can also be difficult, as CIOs, CTOs, and the finance department appreciate the tax benefits of CapEx. Many C-level execs and financial departments prefer stable payments over fluctuating monthly payments.

Fortunately, more SaaS providers are addressing these OpEx concerns. When the cloud first became feasible, a giant hindrance was the lack of transparency into costs. Forgetting to turn off an AWS instance, for example, could cost you dearly.

Fortunately, SaaS and other cloud providers are adjusting to these concerns. Increasingly, cloud environments can predict or limit⁠—often automatically⁠—these costs.

As cloud technology continues to develop, it will get smarter in its usage predictions, ensuring that monthly costs don’t go through the roof.

CapEx, OpEx: which is right for you?

The good news is that selecting CapEx or OpEx is not an either/or situation.

Companies need to choose which areas to bucket under CapEx and which to bucket in OpEx, understanding the trade-offs. Perhaps some enterprise systems must be owned outright and in-house, while other applications can come and go as the need and staff change.

• Proper forecasting can help a company invest as necessary in CapEx, while accurately estimating OpEx.
• Experts also recommend considering the non-monetary cost of the transaction. This can include the friction users feel when switching from one type of technology to another, common in a CapEx/OpEx tradeoff.

Keeping in mind the pains of forecast and change, remember that the benefit of considering CapEx/OpEx for IT spending is about shifting money spending to better benefit overall business needs.

Regardless of what expense model you choose, having the visibility and control of your infrastructure—whether in a CapEx model on premises or an OpEx model in public or private clouds—gives you the ability to make decisions that will impact your overall business success.

Related reading

• BMC Business of IT Blog
• What Is An IT Vendor Management Office (VMO)?
• Innovation and R&D in the Enterprise
• What Is XaaS? Everything as a Service Explained
• Get Started with ITAM: IT Asset Management Explained
• SaaS Today: Growth Trends & Statistics