More businesses are using cloud technology than ever before. Cloud spending as part of overall IT budgets has significantly increased in the last two years. By 2023, 50% of all business workloads are predicted to be running in the cloud.
The impact of the Covid-19 global crisis meant many organizations had to shift to cloud computing to accommodate remote work. The hybrid workplace is predicted to be a permanent change adopted by businesses, indicating this trend in cloud computing spending will continue.
There is little doubt there are big cost savings when moving to the cloud. When it comes to cloud return on investment, comparing capital expenses (CapEx) to operational expenses (OpEx) demonstrates cloud computing is ideal, shifting IT spending to a pay-as-you-go model, reducing CapEx costs and gaining plenty of other benefits.
Traditionally, organizations relied on on-premise data centers which required a large CapEx investment to purchase space, hardware, software and an IT team to run and maintain everything.
Today, companies are looking for flexibility and cost-effective solutions, with the same security and data monitoring that traditional infrastructure offers. The solution is the cloud.
Businesses looking to make changes to their IT capabilities and infrastructure have two financial models to choose from: CapEx or OpEx.
These financial models aren't unique to IT, they apply universally to business expenses. However, today there are so many new and emerging technologies to meet business demand, it's important to review how expenses should be considered when looking at IT solutions for your business.
CapExare business expenses that create long-term benefits in the future, such as purchasing buildings or equipment. IT hardware such as servers, printers or even backup generators would fall under this category as they are purchased once and should benefit your business for many years. Maintenance of these items is also CapEx as it extends the lifetime of the equipment. |
OpExis the day-to-day operating costs and expenses to run the business, such as services and consumables that are paid for according to use. The paper that goes in the printer, the electricity to power the hardware, and even yearly service feeds for website hosting are all OpEx. They are a necessity for your business to successfully operate, but are not considered long-term investments as CapEx items are. |
Cloud computing has transformed the way IT budgets are allocated, from a CapEx expense to a predictable, pay-as-you-go model making it an ideal OpEx expense. Cloud-based technology solutions are delivered as a service, with no upfront costs to purchase hardware or software, with a predictable IT spend each month, much like a utility bill.
Services via the cloud as priced by use and service level - the more a company uses, the more they pay. This increases the ability for a business to scale their cloud computing needs alongside their business operations as things change.
Cloud vendors have followed the expenditure shift, by increasing the flexibility of pricing and value of the solutions and services they offer. This provides your business with the opportunity to shift direction rapidly, without being concerned about expenditure outlay on capital expenses purchases.
This also increases your organization's ability to focus on becoming digitally agile and making strategic plans for future growth.
The benefits of shifting cloud computing to OpEx are many. Your organization reaps the reward of unparalleled flexibility, which is vital in today's rapidly changing technology and business world. With the cloud, your business can respond quickly to market trends, and meet the needs of customers and stakeholders with ease.
Choosing to switch to the cloud doesn't have to be a challenge. With Microsoft Gold Partner BCS365 as your cloud migration consultants, our team of certified experts will assist with the process of cloud migration to ensure you get the most from your investment.