Why You Should Switch from CapEx to OpEx

Fidelus Blog - Why You Should Switch from CapEx to OpEx

In the past, businesses had to come up with a ton of money to pay for their technology infrastructure as an upfront, capital expense (CapEx). Everything from physical servers, network pipes, racks, hardware, storage facilities, cooling systems, and software would be purchased for thousands of dollars – only to be purchased again a few years later during the next refresh cycle. From the cost of infrastructure to the ongoing maintenance, IT departments spend 70 to 80% of their budgets servicing the existing operation, leaving very little funds left over to innovate, compete, or grow the business.  With so much money going out the door in upfront costs, business managers often see IT as a necessary expense that doesn’t deliver much value to the organization. Today, technology has evolved and so has the way in which it’s paid for – now, you can switch your IT expenses from CapEx to Operating Expenses (OpEx).

Cloud-Based Technology Changes the Way You Pay

As cloud computing and the wide range of “as a service” solutions have evolved, IT spending became available as a pay-as-you-go financial model. The need for extensive, unpredictable upfront capital investments in technology can be replaced with a predictable monthly fee. As a result, your IT operations can switch from CapEx to OpEx.

Replacing costly cyclic infrastructure builds with smaller, ongoing costs allows IT to bring more value to the business. With more manageable expenses, and outsourcing the infrastructure responsibilities and challenges to a third party, internal IT departments can then focus on innovation, new products and services to meet the growing needs of the business, and finding ways to make the business run more efficiently to save money.

Adapt to Changing Business Needs with an OpEx Model

When you switch from CapEx to OpEx, not only are you saving money on the upfront costs, but you make better use of the technology resources you have, avoid overspending, and can adapt to your changing business needs in an instant. When you deploy your own technology infrastructure, you have to plan for the best case scenario and ensure you have the infrastructure in place to handle your maximum workloads. For many businesses, however, you may have peak periods during the year with heightened activity. A retail business will see a huge spike in sales between Thanksgiving and Christmas, for example. But what about the offseason, or times throughout the year when you aren’t performing at maximum capacity? The on-premises equipment you spent a fortune on is not being used fully, wasting your resources. Just because you aren’t using the full infrastructure you have doesn’t mean you don’t have to pay to maintain it, keep power to it, and later – upgrade it. The majority of businesses are not utilizing their hardware efficiently on a regular basis because of the capacity required for peak demand periods.

When you switch from CapEx to OpEx, you can scale your resources up and down according to the needs of the business. Provisioning and re-provisioning can be done without the need to add or remove hardware, and with pay-as-you-go business models, your monthly bill will go up or down based on what you utilize.

Work with a managed service provider with a pay-as-you-go business model and avoid having to come up with large amounts of money for capital expenses, maintenance, and data center operations. The cost advantages of 100% utilization of your resources, and the ability to quickly adapt to your business needs without having to procure hardware and install it, gives you the competitive edge.

Fidelus Technologies, based out of New York City is a Professional and Managed Information Technology Services company focused on customer success and business efficiency . Our services provide seamless networking, data center, wireless, security and unified communications expertise for medium and enterprise sized businesses.  We have a consultative life cycle approach that includes requirements gathering, assessments, solution design, planning, project management, engineering, adoption and evolution (training) services to fully support the IT needs of your organization.

If you’re looking for more information on how Fidelus can help with your organizations technology  please contact us here. To access our in-depth analysis on how IT teams across the country are using IT services and products within their organization click below.

2017 U.S. IT Services Report sponsored by Fidelus