Making IT a Variable Cost

August 2009

The Globe and Mail recently had an article about changing fixed costs into variable costs. The benefit of variable costs, especially when times are difficult, is very appealing: why pay for what you don't use?

Can IT be a variable cost?

Absolutely. We have been setting up clients in a virtual and hosted environment that lets us easily turn on, and turn off, users, applications, servers, and storage on an as-needed basis. For our clients, this kind of flexibility creates huge savings in capital, maintenance, and commitment!

Ultimately, we're seeing the Information Technology world moving to a utility model. Similar to services like electricity, gas, or water, IT is moving to a pay for what you use model. In this case, it means paying on a per-user, per-month basis.

Is a utility model for you? That depends on your circumstances and preferences. For clients that are in a seasonal business, for example, the utility model can be great. Several of our clients operate in a cyclical environment, and there too the flexibility can be an important factor in their overall competitive posture. The utility model isn't necessarily less expensive. Rather, it creates an element of cost flexibility that can go a long way to increase a firm's responsiveness to market conditions.

Want to find out more?

I'd be happy to speak with you in person about your business, and whether the utility model makes sense to you. Feel free to contact me directly or at (416) 283-0846 x221.

Marc Dorval
President