Dec 13, 2016

Corporate Real Estate and Cloud Technology

By Don Catalano



The way your company approaches real estate is an excellent way to also approach your technology portfolio. Odds are that when it comes to real estate, you rent most if not all of what you occupy and, if you own real estate, it is because that property really fits your needs and you are sure that you want to make a long-term commitment to it.


Leasing property has a range of benefits. Rented property consumes less up front capital, even if it comes with a higher monthly cost. You avoid the responsibility for capital outlays to repair property and, in some cases, even to upgrade or reconfigure it. Leased property is also flexible since you can always grow it, shrink it or leave it when your lease comes up for renewal.


The cloud and the software-as-a-service model are the technology equivalent of leasing real estate. When you move applications and data away from your company's infrastructure, you get all of the same benefits.


Lower Capital Outlay

Buying software-as-a-service and using cloud resources reduces your company's capital outlay. Instead of purchasing software licenses, you simply make a monthly payment. With cloud technology, you can plug into storage or processor capability without having to purchase drives, servers or other pieces of physical hardware.


There is more to leasing technology than just the capital savings, though. Your company might also end up saving operating funds. Frequently, the monthly cost of software-as-a-service is less than the cost of buying upgrades as they come out. Both software and hardware plans also frequently include support (much like a full service real estate lease), so you could also save money by not having to purchase separate service contracts.


Higher Flexibility

Leasing your technology also makes it more flexible. For instance, if you need to add more licenses, you don't have to go out and buy more expensive software licenses. Instead, you just increase your monthly outlay. That monthly expenditure can also be frequently scaled down if you have a reduction in headcount. With cloud resources, you may even be able to pay on a usage basis, so that you are able to scale up and scale down on a constant basis to exactly match your company's needs.


Having your software and hardware in the cloud also can make it easier for you to switch vendors. While you might need to reconfigure applications, you can switch from Amazon Web Services to IBM or to Google Cloud Platform. Changing applications is easy, too, since you're just stopping one periodic bill and starting another one. You don't have to worry about the costs already involved in the licenses that you would have otherwise purchased.


There are good reasons that your company leases its real estate. Applying those lessons to technology can help you to run more effectively at a higher level of cost efficiency. Whether you are purchasing Adobe graphic design products in the cloud, optimizing your portfolio with cloud-based REoptimizer® or using Amazon's solutions for scalable storage, leasing your IT infrastructure is the way to go.


Other Commercial Real Estate Technology articles:

3 Ways Technology is Disrupting CRE

Simplifying Site Selection with Technology

Advantages to Technology in Commercial Real Estate


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Don Catalano

Don Catalano