Dell cloud financing takes the sting out of hybrid costs

The Dell cloud strategy is focused squarely on hybrid, and new financing models aim to ease that transition for companies concerned about cost.

With the swipe of a credit card, public cloud changed the way IT departments acquire infrastructure. Now, Dell wants to affect the same kind of change with private and hybrid cloud.

Dell, through its financing arm, Dell Financial Services, will offer flexible spending plans for private or hybrid cloud customers. Dell cloud financing is aimed at IT shops with reservations about cloud costs or their potential usage.

The new payment options include pay-as-you-grow plans for receiving equipment up-front, with payments increasing as the business grows; a provision-and-pay option for cyclical deployment plans that defer payments until the equipment is deployed; and scale on-demand, which lets customers make payments based on actual usage and only what the customer actually brings online.

Private cloud is still procured the old-fashioned way, with capital needed to build the infrastructure and to eventually scale, said Owen Rogers, lead analyst for digital economics at 451 Research LLC, based in New York. It appears the Dell cloud financing makes private cloud as easy to get as public cloud with on-demand, capex-light pricing models, he added.

"This is likely to be helpful to those enterprises with limited capex to move to private cloud, but enterprises need to make sure they understand what they are committing to," Rogers said.

Most IT organizations don't want to be in the business of managing budgets.
Mindy Cancilaanalyst at Gartner

At the Gartner Catalyst conference earlier this month, a primary concern for attendees was how to  manage cloud costs as companies put a real focus on the hybrid approach and move from capex to opex payments, said Mindy Cancila, research director for Gartner, Inc., based in Stamford, Conn.

"There's a whole bunch of tools and new processes and engagement models between IT and finance," Cancila said. "Most IT organizations don't want to be in the business of managing budgets."

When organizations get into financial management, they've already lost control of their spending and processes need to be put into place to help them, Cancila said. These new payment models from Dell don't solve the financial management problem for companies already in trouble, but it is an interesting approach for companies that recognize they are about to move to an opex model.

After abandoning previous efforts to build its own public cloud, Dell has cobbled together a hybrid cloud portfolio that includes consulting and management services; public cloud tie-ins with Amazon Web Services, Google Cloud Platform, CenturyLink, Joyent and others; and the ability to build private cloud with Microsoft, VMware and OpenStack.

The pay-as-you-go model is not sustainable as an all-in approach for enterprises, said Jim Ganthier, vice president and general manager of engineered solutions and cloud at Dell. Public cloud can be great for new workloads or test and development, but it can become very expensive as a company grows. Plus, certain intellectual property has to stay on-premises for security and compliance reasons, he added.

"It's very easy to initially stand up your infrastructure with a credit card, but if you have any aspirations of getting beyond an SMB or, like most startups, to become a publicly traded enterprise, you cannot stay on the public cloud," Ganthier said.

Trevor Jones is a news writer with TechTarget's Data Center and Virtualization Media Group. Contact him at [email protected].

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