Not too many years ago, businesses paid for their IT as an upfront and typically large CapEx investment. Decisions were based upon costs associated not only with the hardware and software required to deliver technology solutions but also the human factor of projected costs to implement and maintain the technology infrastructure. These costs were in the 5 to 6 figure range and that investment only lasted for the hardware and software life cycle which meant that every 2-3 years, businesses would be forced to incur another large capital outlay for technology.
This all changed with the evolution of cloud computing which has brought a new way to allocate expenses from CapEx to OpEx and allowed companies to effectively predict and streamline their IT costs.
Some benefits of moving IT from OpEx to CapEx include:
1. One time expense versus pay as you go
The pay as you go/consumption model has shifted IT spending from a capital expense to an operational expense which means the large upfront investment is removed and replaced by a predictable monthly fee.
In addition, by shifting the day to day IT to a third party, internal IT staff can start to focus on new technology and innovative solutions to help the business not only save money but allow it to grow and gain a competitive edge over competitors.
2. IT enables agility
One of the most obvious examples of this is being able to scale a company’s infrastructure and users up or down as the business needs change. A company that needs to do this just a few days a year, say maybe during a busy holiday season, would see the benefits of being able to scale up when needed and then back down for the rest of the year. They would only have to pay for what they consume versus having to invest in hardware and software that is only utilized for a short term and then would sit unused the remainder of the year