Infrastructure as a Service For SMBs

December 15, 2022
Industry Commentary

Infrastructure-as-a-Service (IaaS) is a way to provide critical network and data resources to customers on demand, rather than forcing them to burn precious cash by purchasing hardware and software upfront. This “pay-as-you-go” model is far more cost-effective and efficient for small businesses; they always have the most optimal infrastructure to support their business needs.

IaaS is making waves in the Managed Services market due to its unique fit with the way MSPs do business, as well as its “SMB-friendliness”. IaaS helps SMBs obtain network infrastructure, security, WAN connectivity, storage, and other essential services with a highly flexible subscription model. In addition to offering resources to companies “on demand” rather than pre-planned and purchased upfront, IaaS is also attractive because the installation and maintenance approach taken by IaaS vendors (such as Uplevel Systems) fits extremely well with Small Business and Managed Service Providers needs. 

Evolution of IaaS

Traditionally, organizations purchased hardware and software themselves, and either managed them internally or contracted with MSPs for management. A large number of SMBs still follow this approach today, but it has some significant problems:

1. Large capital expenditures

SMBs are not cash-rich and do not follow the traditional fiscal year budgeting cycles of large enterprises. Coming up with the cash to invest in a large infrastructure build-out can be very difficult for a small but growing business.

2. Outdated, unreliable, and insecure infrastructure

This ties in with the cash crunch above. Frequently, SMBs will defer or skip needed network or hardware upgrades because they can’t or won’t spend the money. (Of course, this puts the burden on the MSP to make a conglomeration of junk work …) Also, they are reluctant to invest in important items such as security and backups – until disaster strikes, at which point it’s too late.

3. Lack of flexibility and scaling

Many SMBs are seasonal (think accountants and tax time). Buying the infrastructure needed to support the maximum possible size of the workforce is expensive and inefficient. On the other hand, buying for today keeps the business (and their MSP) constantly struggling to keep employees productive.

4. Recovery from failures

Murphy’s Law means that the equipment will fail one day after the warranty expires, saddling the business with the task of a large and unavoidable expense at what is likely a bad time. Even if the warranty is in force, getting a replacement from the vendor is not necessarily guaranteed to be simple or fast.

5. Loss of tax benefits

Capital expenditures can be written off but over a relatively long period of time (years). Operational expenses, however, can be deducted immediately.

How does IaaS work?

IaaS turns the “buy and own” paradigm on its head. Rather than shell out large wads of cash to buy equipment and applications that are not core to the business value proposition, the SMB simply subscribes to the infrastructure. The infrastructure vendor is then responsible (in conjunction with the MSP) for supplying, installing, maintaining, replacing, and upgrading the infrastructure, whether it’s hardware or software. The SMB pays monthly for what they need.

Here’s how it typically works:

  • The customer (or, more likely, the MSP) determines the nature or amount of infrastructure the SMB needs for its business. This is usually done up front by surveying the offices, interviewing the owner and managers, counting the number of employees, etc.
  • IaaS vendors provide hardware and IT infrastructure as required – to the MSP, not the customer.
  • The MSP manages the installation of the hardware and services.
  • The IaaS vendor creates a monthly bill for the services the organization consumes, which includes all related services like maintenance, updates, patches, etc.
  • If equipment needs to be replaced, it is covered under the subscription; the customer never needs to worry about the cost of replacement, since there are no warranties or service contracts.

Benefits of IaaS for SMBs

Did we mention that IaaS turns the traditional model on its head? Here are the benefits:

1. Pay for what is used – at any time

It’s a subscription. If the SMB doesn’t need a service anymore, just remove that service from the subscription. If the SMB needs more of something, add it to the subscription. It’s about as cost-effective as you can get.

2. Always up-to-date

The IaaS vendor is in charge of the physical infrastructure (hardware), software applications, and cloud services. It’s in the IaaS vendor’s best interest to ensure that the services are regularly updated and patched. (Otherwise, the customer is going to walk).

3. Reduced overhead

Complex IT infrastructure needs a lot of babysitting. Firewalls need signature updates, Wi-Fi APs need firmware updates, software needs patching, and cloud servers need rebooting. MSPs can make money by doing such routine tasks and billing the SMB, but pretty soon the customer notices that and starts complaining, so a lot of this routine just gets eaten by the MSP. (Or not done, which is much worse). The IaaS vendor, however, is managing an entire fleet of infrastructure spread over many customers and can dedicate resources to performing all these tasks automatically and cost-effectively. Thus, SMBs and MSPs can save a considerable amount of overhead costs and use them for more profitable purposes.

4. High security

Since the SMB doesn’t have to pay an arm and a leg for, say, the latest firewall technology, it’s a lot easier to persuade them to invest in some decent firewalls, rather than running off to Best Buy to get the latest $200 router special and then lean on the MSP to make a silk purse out of a pig’s ear. Paying for something on a monthly subscription – especially if it’s folded into the MSP’s own monthly bill – is a lot easier than getting the bean counters to cough up a few thousand dollars.

5. High reliability

Any IaaS vendor worth their salt will realize that sticking the customer with aging hardware is not a recipe for success. Since the failure of the hardware is directly on the IaaS vendor’s head, they are rather vested in making sure that the equipment is always running, and kept reasonably fresh. “Evergreen” or “refresh” programs are part of any worthwhile IaaS arrangement. The further benefit from the SMB’s (and MSP’s!) point of view is the reduction in unplanned outages due to some switch or router that’s long past EoL and liable to go down at any moment.

6. Alignment of goals

This is probably the least recognized facet of IaaS but at the same time its the most significant benefit for both SMBs and MSPs. Once you buy a piece of gear from a traditional hardware vendor (and the check is cashed), the vendor has no further incentive to be nice to you. (Unless you buy their expensive extended warranties … but did we mention that SMBs are reluctant to come up with large wads of cash upfront?) IaaS vendors, however, only get their subscription payments if the infrastructure is working and they’ve lived up to all their promises! This neatly aligns the objectives of IaaS vendors with those of SMBs and their MSPs.

Final Note

IaaS keeps SMB infrastructure resources scalable and flexible and makes sure that the resources match what the SMB really needs – not what they might need in a few years, or (worse) what they used to need a few years ago. An MSP that’s looking out for his or her customers can help them grow with cost-effective IT infrastructure solutions that meet their present requirements. And guess what? Uplevel Systems has been in the IaaS game since 2016, and we’ve helped hundreds upon hundreds of SMBs “right-size” their business IT infrastructure.

About Uplevel Systems

Uplevel Systems, as a small businessIT infrastructure managed service provider, enables any of these options. Uplevel’s subscription offering is the most popular with SMBs, but some prefer Uplevel’s new equipment purchase program and use a CapEx model.