FlexStore Consumption Model FAQ
The Cloudian FlexStore consumption model provides monthly per-for-use billing to align storage cost with usage. It also allows organizations to account for on-prem storage assets as an operational expense, rather than as a capital expense. There are no upfront fees, and storage consumed may both rise and fall from month to month.
Intended as a long-term financing option, this program is ideal for companies who have a well-defined use case and wish to continue with this model throughout the asset’s usable life.
1. What are the benefits of this program?
- Achieve an OPEX model: This model enables on-prem storage consumption on an OPEX model. Note that the final interpretation is at the discretion of your accounting team/auditor.
- Match payments to consumption: This program lets you pay for equipment as it is consumed, rather than ahead of usage.
- Security and performance of on-prem storage: Combine the financial benefits of cloud storage with the security and performance benefits of maintaining storage resources on-prem, behind your firewall
2. What type of enterprise is this best for? Customers who will benefit from this program are those who wish to align storage costs with usage. Examples include service providers and organizations with internal IT groups who offer storage as a service. It is also ideal for customers who prefer to maintain assets off balance sheet.
3. Is this a lease? No. Unlike a lease, this program has no fixed payments.
4. Where do the assets reside? All storage assets reside in your data center or colocation facility.
5. Where is the program available? The contract must be with a US entity. The equipment can be located anywhere in the world.
6. What can be included in the model? Everything – hardware, software, services, installation, training.
7. Can storage be scaled? Yes. As storage resources are added they can be incorporated into the financing arrangement. No upfront costs are incurred when adding capacity.
8. Is there a consumption minimum? There is no minimum monthly payment. There is however a ‘must use’ provision which is crafted on a case-by-case basis to facilitate your use case. (for example, “40% usage after 12 months”)
9. What is the financial accounting advantage of this program vs a lease?
- Per accounting rules now in effect for publically traded companies, most leases are now a capital expense. This impacts key performance ratios used for covenants and may affect incentive and share-based payment calculations. For private companies, the new rules take effect in 2020.
- This consumption model is not considered a lease. The payments are variable and are not tied to an index/rate. Payments are determined by usage of the storage assets.
- Final interpretation is at the discretion of your accounting team/auditor.
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