A traditional IT Investment:
Business incurs the full cost of the infrastructure up front, and the pay service fees each year to deliver up time on that infrastructure. While businesses can reduce cost and improve productivity with full use of their new infrastructure, such purchases are not often planned with full capacity use in mind.
As you know, businesses overprovision to ensure they do not run out of capacity a year in the future. When overprovisioning, a sizable investment would not deliver value until well into the solution’s lifespan, when it is diminished in value. Precautions like overprovisioning are necessary to make traditional IT acquisitions effective. Unfortunately, they also limit how quickly a company achieves positive net income and decrease the value customers see from their investment early on. The extended time frame of traditional IT infrastructure purchasing does not evaluate well from a Net Present Value (NPV) perspective.