November 09, 2021

How CapEx and OpEx Changes Affect Cloud BCDR Costs

By David Weiss

As managed service providers (MSPs) support clients and their workloads, it’s helpful to review the differences in cloud resources costs and payment models when compared to on-premises infrastructure.

Migrating from on-prem infrastructure to a public cloud like Azure enables organizations to shift from capital expenditure (CapEx) to operational expenditure (OpEx) spending models, meaning they only pay for what they use in the cloud. However, there is inherent unpredictability in switching to OpEx , and your clients’ business continuity and disaster recovery (BCDR) solution could be affected by it.

In this article, we’ll review how CapEx and OpEx spending interact with BCDR services and the implications for your margins as an MSP.

CapEx and BCDR

CapEx refers to a business’ upfront spending on physical infrastructure, including physical assets that cannot be deducted from income for tax purposes.

If your client is using an on-premises IT workload, their CapEx spending would apply to the following:

  • Systems and servers
  • Devices
  • Maintenance
  • Software (if bought as a unit)
  • Private cloud services

For example, some enterprises invest in redundant infrastructures for backup purposes at another location. Small and medium businesses (SMBs) aren’t likely to have that kind of cash on hand, however, which is why OpEx spending on BCDR is usually best for SMBs.

OpEx and BCDR

Cloud billing comes with various costs when it comes to BCDR. OpEx spending is often more advantageous for MSP clients, especially for cost management and accounting purposes, and there are some costs you need to prepare them for as they move to the cloud, such as:

  • Cloud services and resource usage rates
  • Virtualization costs for disaster recovery testing and failovers
  • Data egress fees for cross-region or single-region cloud recovery
  • Multi-cloud replication
  • Overhead or worker hours of verifying costs
  • Extra costs for support

While a shift from CapEx to OpEx spending for BCDR can bring about newfound flexibility to many organizations, it also brings about some unpredictability in cloud spending month to month. This can be a challenge for MSPs, as they need to accurately anticipate spending to build healthy margins.

Countering this unpredictability is one reason we offer Datto Backup for Microsoft Azure. A comprehensive BCDR solution made specifically to meet the needs of MSPs, Datto Backup for Microsoft Azure provides a predictable pricing model via one flat-rate bill that covers:

  • Multi-cloud backups with $0 data egress
  • Virtualization of workloads to the Datto cloud
  • Disaster recovery testing

Additionally, our offering includes daily backup verification, 24×7 security monitoring and award-winning support at no extra cost.

With Datto Backup for Microsoft Azure, MSPs have the ability to customize protection and streamline recovery for critical business infrastructure residing in Microsoft Azure. The predictable costs of Datto Backup for Microsoft Azure make it easier for you to forecast your profit margins and eliminate the variability of cloud BCDR spending.

Optimizing OpEx

As you begin supporting workloads in Azure, be aware of the differences in resource costs and payment models compared to on-premises infrastructure. Migrating to Azure enables organizations to shift from CapEx to OpEx spending models, which can reduce expenses but introduce cost unpredictability. As clients make this transition, the flat rate pricing of Datto Backup for Microsoft Azure helps provide MSPs with a clear path to revenue growth.

To learn more, download The MSPs Guide to Business Continuity and Disaster Recovery.

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