Here Are Some Tips To Move From CapEx To OpEx In Your IT Budget
The cloud has a number of benefits to offer, a key one of which is the opportunity to move from capital expenses (CapEx) to operating expenses (OpEx). However, this is more easily said than done.
Many business’ IT budgets (and those who make them) are still thinking in terms of CapEx. It’s the conventional way that IT systems used to be financed. But that’s no longer the case…
Are you budgeting properly to attain the best possible return on your information technology investments? Industry leaders know how important IT is when it comes to staying competitive in an increasingly fast-paced marketplace. However, many companies struggle with budgeting because they lack a meaningful planning and ongoing management process.
Budgeting For The Cloud – CapEx Or OpEx
When big businesses consider the cloud, they think about it the same way they do any other endeavor – from the ground up, with the capital funds to commit to it.
Whereas small to medium-sized businesses often look for an economy of scale that provides them with access to resources they wouldn’t be able to afford otherwise, enterprises often are thinking too big to see those benefits. That doesn’t mean they don’t apply though.
No business owner or manager should assume they have to build their own data center to get the most out of the cloud. By working with a managed cloud services partner, they can maintain control, and still take advantage of the change from CapEx to OpEx. Whereas CapEx — on-premise IT solutions — is paid for upfront and brings in a gradual return over the following months and years, OpEx is “pay-as-you-go”. You pay for a cloud solution month by month, which vastly reduces the window between investment and return.
Sounds great, right?
Unfortunately, if your budget is developed in such a way as to denote CapEx vs. OpEx, when it comes to IT, you likely have a lot more of the former and less of the latter. That can make it difficult to invest in Software-as-a-Service and other cloud-based services.
How To Approach A Cloud-Friendly Budget
Trying to change your business’ IT spending mindset from the ground up can be a daunting task, but it’s not impossible.
With IT shifting from just another piece of equipment in the office to the core of business operations, you should designate it as a central part of your budget. This also means that you must assess and clearly define how IT aligns with your business objectives to decide what you’ll need for the coming year(s).
Proper IT budgeting will help you lay a foundation for success for the future. Using the right IT solutions can help you:
- Accelerate your business growth
- Increase your operational effectiveness
- Ensure optimal productivity from your employees
- Overcome operational challenges
- Increase collaboration and communication
- Reinforce your efforts to win new business
The key here is that you need a strategy. IT, and its budgeting, should be a core part of your business plan. Think big and in terms of the innovative measures you can employ to increase productivity, efficiency, mobility, collaboration, and communication. Every department in your business should adopt this philosophy when considering what they need to improve operations and cut costs.
Make sure to include key players in your organisation when planning your IT budget. Your purchasing department may have different goals and requirements than your sales or distribution teams. Make sure you consider all initiatives and how innovative technologies will help them succeed.
And don’t forget to remain open-minded. What worked for you in the past probably won’t be enough in the year(s) to come. Consider your business’s changing needs and how new technologies might align more closely with them.
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