1. They have old servers that are now becoming unreliable, putting their businesses at risk
2. They need to downsize to less office space
3. They want to trim payroll
4. They want to trim the total cost of maintenance
One answer is: eliminate the onsite data center and move IT infrastructure and the application management to the cloud. “Cloud is evolving rapidly into a solid solution for companies to explore,” says Dan McNerney, SVP, Freeborders.
Here is a case study of how one company solved all three challenges by moving its IT to the cloud. It includes drama (just two weeks to move!) and a happy ending: annual cost savings of 20 percent.
The expensive status quo
PENTAX Ricoh Imaging Americas Corporation needed to move to a new location. Leadership quickly determined building a new data center at the new facility would be cost-prohibitive and unnecessary, according to Gary Robinson, IT Manager. Eliminating the data center, which could have cost as much as $30,000, slashed the company’s square footage needs, producing additional savings.
At the same time, PENTAX had to do something about its antiquated hardware. A $100,000 line item for new, reliable servers made the Americas division one of the most expensive among all the international divisions. Purchasing the new hardware was one of the reasons skewing the numbers. So PENTAX Americas leadership determined to use this opportunity to change course.
“We thought moving our entire IT landscape to the cloud was a great idea because it would reduce cost,” says Robinson. Using outsourcing providers to manage the infrastructure and applications cut costs by eliminating capital expenditures and reducing the expense of the long-term application support.
PENTAX selected Freeborders to do its application management as a service (AMaaS). Freeborders architected the solution and then the two companies talked to different cloud hosting providers. Robinson says PENTAX, which is based in Denver, Colorado, chose Hosting.com to be its cloud provider for many reasons, but significantly because its corporate office was in the same Denver neighborhood.
By the time PENTAX signed the outsourcing contracts, the providers had two weeks to move to the hosted facility since the company’s lease was expiring and the landlord refused to extend it.
McNerney says Freeborders did the physical data center move over a week-end. Once the IT infrastructure was up on Monday, Freeborders began the SAP migration using its SAP2Cloud accelerator. This took three months. When Freeborders was done with the migration, PENTAX reduced its SAP physical server count from nine to two.
“We achieved a payback on this investment in less than six months,” Robinson reports. By eliminating the need for its own data center, PENTAX could enjoy a 60 percent return on its investment over a five-year period.
McNerney adds moving to the cloud also provides flexibility and scalability. He says whenever PENTAX undertakes a special project, it can lease the extra hardware from Hosting.com for a temporary period. When they complete the project, they simply decommission it. “PENTAX is not stuck with a server it doesn’t need,” he says.
Robinson says PENTAX was able to further reduce its total cost of ownership by utilizing Freeborder’s application management services. Replacing internal IT resources produced an annual savings of about $250,000 per year.
Robinson is not worried about data security. In fact, he says Hosting.com’s data center is more secure than the old internal one, so he is more comfortable. As for disaster recovery, McNerney says cloud providers typically can perform disaster recovery “within minutes” compared to some traditional IT solutions at minimal costs.
Outsourcing the infrastructure and applications management frees up a company’s internal IT resources so they can focus on research and development, things that improve a company’s bottom line, McNerney adds. “Now they can focus on their business and have the time to implement important innovations.”
Advice on moving to the cloud
McNerney says companies don’t have to go “all in.” Select one aspect and learn the ropes.
He says when hardware reaches its end-of-life is a good time to consider the cloud. And consider it companies must. The Freeborders executive says companies who don’t move to the cloud “could be outpaced by their competition on the long run.”