Preparing for Economic Uncertainty with the Right Data Center Services
By: Ernest Sampera on May 6, 2020
At the onset of 2020, it looked as if the global economy was set to continue the steady upward trend that has prevailed for the last several years. Organizations could look at key economic indicators and make plans for the future with a large degree of confidence.
Then the COVID-19 outbreak quickly escalated to become a pandemic, injecting massive amounts of economic uncertainty into global markets as entire countries issued social distancing guidelines and stay-at-home orders. As companies try to figure out how to best respond to these rapidly changing circumstances, it’s a good time to think about the role of economic uncertainty when it comes to assessing and managing risk.
The Risks of Economic Uncertainty
Not knowing what financial, labor, and consumer markets will look like in the next few months is one of the most frightening situations an organization can find itself in. That’s because it’s so difficult to plan for the unknown. Short term financial decisions need to be made to address immediate concerns, but always with an eye toward the future. If consumer demand drops in the retail sector, for instance, it doesn’t make sense to enact massive budget and personnel cuts if the market is expected to rebound within two months. However, if all economic indicators point to things getting worse, cutting early and cutting deep might be the best strategy to avoid future pain.
Making these decisions are much more difficult in times of economic uncertainty. This is especially true of the financial services industry, which must not only assess where the financial markets will be in the future, but also think about how the companies they do business with will be impacted by changes in their respective industries. A payroll billing vendor, for instance, could find itself overextended from an investment and infrastructure standpoint if many of its clients close their doors or lay off a large percentage of their workforce.
While risk mitigation planning typically focuses on things like natural disasters and cyberattacks, it should also consider how periods of economic uncertainty will impact operations and expose an organization to danger. It may be difficult to predict the causes of uncertainty, but companies can certainly identify aspects of their business that will be affected by it. One of the most important areas to look at is investments in technology infrastructure.
The IT Impact of Economic Uncertainty
The ongoing digital transformation of the financial services industry has caused firms to put more emphasis on their IT investments than ever before. In an increasingly competitive and crowded market, fintech companies rely on their innovative, technology-driven services and solutions to stand out and win over customers. One of the surest ways to fall behind the competition is to keep relying on outdated technology and infrastructure.
Unfortunately, investing in those innovative fintech solutions is expensive and time-consuming. End users may not put much thought into the banking apps or financial service portals they use to manage and access money, but they are the product of extensive research, testing, and development. The very best products are focus tested to provide a superior user experience and are backed by stable, reliable, and scalable technology stacks somewhere behind the scenes.
Because building those services require substantial investments, companies want to know that the market for them will still be there when they’re ready to roll out to customers. In times of economic uncertainty, however, it’s difficult to know whether that will be the case. Meanwhile, uncertainty also drives customers back to proven solutions they’re comfortable with, which could place additional strain on existing infrastructure that might not have been designed to handle so much demand.
3 Ways Data Center Services Can Help You Overcome Economic Uncertainty
Colocation data centers offer financial companies a few solutions that can help them navigate periods of economic uncertainty. Here are three big advantages of data center outsourced IT.
1. Reducing IT Costs
For starters, colocation can greatly reduce the cost of maintaining IT infrastructure. In times of economic uncertainty, being able to keep costs in check is incredibly important. On-premises data solutions tend to be very inefficient in terms of power consumption and resource usage. Optimizing IT deployments within an energy-efficient colocation environment can significantly reduce operating costs and also eliminate the expenses associated with day-to-day management.
The core problem of economic uncertainty is that it makes planning future IT needs incredibly difficult and risky. If the economy worsens, companies will likely need to be able to scale back their infrastructure, but if it improves, they need to be able to scale quickly to take advantage of opportunities.
With an on-premises solution, scaling is both risky and requires extensive preparation to determine what resources are needed and what will happen to them if circumstances change. In a colocation environment, however, the easy access to power, cooling, and connectivity resources makes scaling capabilities upward or downward incredibly easy. The rise of virtualization technologies and cloud computing services make it easier than ever for colocation customers to quickly access resources when they need them and not a moment before. This allows them to plan cautiously while keeping the option open to scale rapidly should demand call for it.
In periods of economic uncertainty, businesses often live or die on the margins. Inefficiencies that could be tolerated in good times can become productivity killers in times where every shred of revenue counts. When it comes to fintech solutions, customers will look at reliability and stability as key differentiators because they quite literally cannot afford to struggle through periods of downtime.
Building technology solutions and networks in a colocation environment that’s engineered for perfection can help financial services companies deliver services with high levels of uptime. A colocation data center also has the benefit of being able to allocate resources to help customers handle increased traffic. This ensures that their systems will stay up and running so businesses can capitalize on every potential opportunity while also preserving the trust of their existing customers.
Meet the Challenge of Economic Uncertainty with vXchnge
With multiple data center locations in key emerging markets throughout the US, vXchnge is well-positioned to deliver innovative colocation solutions wherever you need to do business. Our state-of-the-art facilities are backed by 100% uptime SLAs to deliver unmatched reliability. And thanks to our award-winning in\site intelligent monitoring platform, you can monitor every aspect of your colocated infrastructure at any time, from monitoring power and bandwidth usage all the way down to accessing compliance reports and managing support tickets.