Over the past year, conversations about data centre modernisation have lent heavily on the vendor narratives around AI readiness, hybrid cloud growth, and infrastructure transformation. While these themes dominate events and campaigns, the reality on the ground is different. We have found that Australian organisations are in fact in planning mode, trying to figure out not just what to modernise, but how to fund it sustainably. With an uncertain five-year cycle ahead, careful planning is essential.
That’s why, before discussing the next-generation infrastructure or as-a-service capabilities, it’s useful to step back first. The initial decision many organisations should consider isn’t technical (we’ll cover that later in this series), but financial. How do you balance capital budgets, operational expenses, and consumption models in a way that supports long-term flexibility?
This blog explores how commercial decisions influence modernisation strategies, and how Data#3 supports organisations in balancing capital expenditure (capex), operational expenditure (opex), and as-a-service investment models as they plan their next phase of data centre transformation.
Organisations recognise the need to act, but uncertainty about the future is holding back investment. Factors such as AI, VMware licensing changes, and rising cloud costs have created a complex decision-making environment where IT and finance leaders are finding it difficult to agree on the best course of action.
This crossroads partly results from businesses recognising that AI is reshaping infrastructure demands, and there are concerns about investing significant budgets in technology that may evolve rapidly. VMware customers are rethinking their virtualisation strategies following the Broadcom acquisition and related licensing changes, unsure whether to reinvest or migrate. Meanwhile, cloud costs that were once predictable and efficient have skyrocketed, as steady-state workloads consume more resources than expected.
For most, the problem isn’t technology, it’s the commercial structure. The challenge is finding a flexible financial approach that allows organisations to move forward without locking themselves into a path that might not serve them in the long term.
Discussions around capex and opex are not new, but the landscape has shifted. The growth of as-a-service and consumption-based models has blurred traditional distinctions between buying, leasing, and managing infrastructure. Just so we’re all on the same page:
There can also be confusion around the difference between as-a-service and managed services. As-a-service describes a commercial model that enables customers to access infrastructure or software flexibly while retaining operational control. Managed services, however, shift the daily management responsibilities to a third-party. Clarifying this distinction is essential, as many organisations still confuse the two.
The right financial model can be as strategic as the technology itself. Flexibility in procurement can unblock stalled projects and help customers act even when the long-term platform decision isn’t finalised.
For instance, councils and mid-sized organisations reconsidering their VMware environment due to rising licensing costs might hesitate to commit to a full platform overhaul. By adopting a consumption-based model, they can make gradual changes, migrating lower-priority workloads first and expanding infrastructure as their decisions become clearer. This approach reduces initial risk while keeping options open.
Finance teams are increasingly central to these discussions. Many organisations now treat technology upgrade cycles as collaborative efforts between IT and finance, with commercial structures setting the pace and scope of change. In this context, flexibility, transparency, and scalability often take priority over the specific technology.
The main idea here is to stop focusing on the next step in technology. Instead, let’s utilise the commercial models we already have to help you advance or resolve the bottlenecks you’re facing now. It’s a shift from purchasing infrastructure to creating an investment model that encourages change.
Our position is straightforward: there is no universal best model. The right approach depends on an organisation’s unique financial governance, current commitments, and tolerance for uncertainty.
In some cases, capex still makes sense, particularly where predictable workloads or ownership preferences prevail. Opex models can be ideal for organisations seeking budget flexibility or wishing to align IT spending more closely with revenue cycles. Meanwhile, as-a-service arrangements often provide the best of both worlds, allowing customers to scale infrastructure consumption as business needs evolve.
Australian enterprises expect consumption and flexibility to be part of the conversation. Whether it’s a hybrid cloud rollout, a data centre refresh, or an AI deployment, most now evaluate not just what technology they’ll use, but how they’ll pay for it over time.
To help organisations move forward, Data#3 offers a commercial model assessment. This collaborative exercise brings IT and finance teams together to evaluate capex, opex, and as-a-service options in the context of their unique environment.
The assessment is not about choosing a single model. It’s about understanding which combination provides the most flexibility, efficiency, and control for your business today, while leaving room for tomorrow’s change.
If your modernisation plans are stalled, this is the logical first step. The technology decisions can wait. The conversation about how you invest cannot.
This blog is just the start of our three-part HPE Data Centre Modernisation Series. You can read the next blog, When cloud economics stop adding up: the cost curve of AI testing vs production, today.
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