Article by Emma and Henry
Staying Viable: How Do You Eliminate Costs, Conserve Capital and Ease Your Cashflow ?
According to the Singapore Department Of Statistics, small and medium enterprises (SMEs) make up 99% of the country’s total number of enterprises. In the midst of the current COVID-19 pandemic, many are struggling as business come to a standstill, or is being curtailed. Strict restriction of movement has deprived businesses of their customers, disrupted supply chains and destroyed the livelihood of many income-earners. As a matter of fact, 5 months into the pandemic, Singapore’s economy declined more than 40% for 2Q 2020.
Digital solutions emerge as the critical enabler, as businesses scrambled to connect to literally everything outside their locked down premises. Thus, for many SMEs, whilst revenue continues to plummet, ideally costs are discretionary but the cost of keeping I.T. running is unfortunately non-discretionary. Conversely, under the circumstances, it is even more important that SMEs keep their I.T. systems running to maintain a strong online presence to connect or transact with their customers.
The pandemic has left us all reeling with losses and inconveniences, but there are changes that businesses can make today, not only to survive this trying time, but also to capitalize on this slowdown as an opportunity, become more capable and agile certain areas of the business, in preparation for the return to life in a post-pandemic normal. One such area is cloud hosting – “moving to the cloud”, i.e. consuming I.T. services like an utility (like you would water or electricity), paying for only what you use, without having to own, operate, or maintain any equipment yourself.
Why is everyone doing it and what are the advantages (without getting into the technical details)?
Cloud hosting has a real and measurable potential to make a difference to your financial bottom-line.
Making the switch from owning, operating, and maintaining your I.T. assets and infrastructure to cloud hosting can eliminate costs, conserve capital, and ease your cashflow.
Consuming I.T. services from the cloud allows your business to cut costs without compromising your efficiency and agility. On the contrary, cloud users usually report that their efficiency and agility are enhanced. One reason is that they don’t have to deal with the costs associated with owning, operating, and maintaining their I.T. equipment and infrastructure, as well as a team of expensive specialists on their staff. You pay for only what you used, as and when you needed it, thus treating IT as an operating expense (opex). This is different from owning your own equipment, which you will have to manage, to depreciate, to pay for upgrades or repairs, to build an expensive infrastructure to house them, and to hire staff to operate them.
A good example how cloud hosting eliminates costs is when, say, your web traffic spikes, or you need a to run an “app” only at certain times of the year (Christmas perhaps). If you procure your I.T. capacity from the cloud, you shouldn’t have to purchase additional hardware or software, which would then become under-utilised once Christmas is over but which you will continue to depreciate and maintain afterwards. In minutes or hours (not days or weeks!) you’ll be able to provision your I.T. processing resources to match your business requirements as it is easy to adjust your network, compute or storage capacity on demand. With cloud hosting, you have the flexibility to control your finances: pay for what you use, not what you own, especially in the current economic downturn, any dollar saved is a dollar earned.
Besides cutting costs, the cloud allows you to conserve your capital. Here’s another example. As the Covid pandemic runs its course, the impetus for SMEs to step up their digital transformation is potentially game-changing, if not a matter of survival. This is evidenced by the various incentives the government has made available. Does this mean that SMEs should now go out and procure expensive hardware, software, and services? Which then show up as assets in their balance sheet and liabilities if they had taken out bank loans! And, even they didn’t take out any loans to fund their purchase, wouldn’t not having spent any in the first place better, or spending it on more urgent needs? Capital conservation is the beauty of cloud hosting. With cloud hosting, SMEs can go about adopting or upgrading their technology much more quickly and cheaply, without a heavy capital outlay that weighs down their balance sheet.
As it is said, cashflow is king. Besides saving money (opex) and lowering capital expenditure (capex), cloud hosting enables you to better manage cashflow. This is possible since capacity usage are metered and can therefore be tracked. Coupled with forecasting according to the seasonality of your business or project cycles, it is possible to pinpoint exactly the time periods and how much opex will be incurred. You can then factor this into your cashflow management plan, perhaps avoiding interest charges on short-term borrowings or the opportunity cost of foregoing or postponing a more urgent expenditure.
Accrets International delivers cloud hosting and other cloud-based solutions that can save you money. We own and operate Private Cloud I.T. infrastructure in multiple Tier-3 data centers in Singapore that serve as production, development, or disaster recovery facilities for our clients. Talk to us today. Let us help you explore how you can benefit by “moving to the cloud”. The Covid crisis is a reality check for many SMEs, and yet it is something that many SMEs can also leverage upon to step up their digital transformation.
Accrets International can show you how. Give us a call.