Regardless of the industry, every business’s budget comes down to the push and pull between CAPEX (capital expenditures) and OPEX (operating expenditures). Each has their place in the ledger. Each also has an effect on both your bottom line and your tax burden.
But where your IT is concerned, the typical column vs. column debate often misses a key element of the discussion:
From an operational standpoint, OPEX has some clear advantages that can make it a more suitable approach to funding your company’s IT. Essentially, it’s all about the greater advantages cloud computing provides.
These three cloud-based reasons show why an OPEX-based approach to managing your IT can revolutionize your budget management.
Cloud Computing Means Lower Upfront CAPEX Investment
Bulk order of equipment such as servers and computers or other network devices are expensive. At the end of the day, you’re essentially married to that equipment until the full investment pays off.
At current technological advancement rates, it won’t take long before that equipment becomes outdated. That could potentially happen long before you’ve gotten your money’s worth from the investment.
It might also turn out that your needs change before the investment pays off, putting you in the position to either budget for more equipment, or consider upgrading all your equipment with the new expenditures.
Shifting to managed services and cloud technology means you essentially rent your IT infrastructure for a consolidated OPEX cost. The expense of upgrading and maintaining the equipment, as well as the depreciation, falls to the service provider.
OPEX Costs Are Predictable
As mentioned above, it’s hard to predict where or how your company will grow when investing up front in IT infrastructure. With cloud technology, those expenses consolidate into a predictable, fixed set of OPEX costs.
No unforeseen costs from server downtime or network constraints. No unforeseen technological barriers to company growth.
OPEX is easier to track and easier to predict. It gives you more freedom and flexibility in your day-to-day operational decisions.
Cloud Technology Is Scalable
With an up-front CAPEX-based approach to IT, you’re stuck investing in more expensive equipment in order to grow. With OPEX and cloud computing, scaling up is as simple as hitting a few buttons to raise or drop resource availability to the level you need.
This means both vertical and horizontal scaling, with the added benefit of avoiding hidden costs while never having outdated equipment or systems.
Not to mention the mobility and flexibility that cloud technology provides. The ability these have to transform your business are too numerous to discuss in this post.
Want More Information?
Obviously, the intricacies of the larger OPEX-vs-CAPEX debate are far too large for one blog post. But for many businesses, suffice to say it makes sense to switch to an OPEX-based IT budget approach through cloud services.
We’d be happy to discuss it with you in more detail, as our goal is always to help businesses make the right decisions for their individual needs.
Please don’t hesitate to reach out to us, we’re here to help!