CapEx vs. OpEx: Which way is your budget shifting?
When it comes to system upgrades, several IT funding initiatives are shifting their focus to cloud technology; what will you do when you need to upgrade your existing system, but don’t have the funds available in this year’s (or even next year’s) budget? This is an opportune moment to examine your organization’s budget in regard to capital expenses (CapEx) versus operational expenses (OpEx), as implementing new technology will likely require you to switch a majority of your spending from CapEx to OpEx. Where does your primary focus lie? Respondents to an InformationWeek Analytics IT Budget Survey report that they are increasingly focused on calculating per-transaction service costs and implementing charge backs.
What you have vs. what you need
Are you paying monthly audio/web conferencing costs plus licensing fees for each user on your staff? If you answered yes, and that works best for your existing budget, then you might favor a hosted system versus a premises-based solution. A Frost & Sullivan report via TMCnews, notes that budget pressure and increased adoption of unified communications are driving demand for integrated web conferencing. While some look to hosted providers, the report also noted that as functional needs grow, organizations are expected to move to on-premises deployments. So who is best suited for a hosted system? If your organization can gain from the following benefits, then a hosted system may be right for you:
- low up-front costs (made possible through monthly billing)
- standard software on a per-seat basis
- greater ability to free up internal support staff
Additionally, the move from CapEx- to OpEx budget focus has driven cloud-based UC offerings and workplace virtualization. We have evolved to replacing stationary desk phones with virtual, mobile alternatives such as soft phones, instant messaging (IM) and video features. Still in all, this move isn’t feasible for everyone. Economic downturn has forced organizations to reduce overhead, thereby increasing mobile working and the need for consistently evolving UC solutions.
What are your options?
There are pros and cons for both hosted/cloud based approaches as well as on-premises solutions. The shift from CapEx to OpEx funding is driving demand for hosted solutions, but IT departments accustomed to on-premises technology sometimes point to security and availability concerns as part of their reluctance to transition completely to a cloud alternative.
We’ve touched on the pros and cons, and for some, the consistent service delivery, on-demand scalability, and standard suite of UC options available with a hosted solution is most beneficial, while others will look to hybrid models as a compromise.
The good news is there’s still another way to get all the benefits of an OpEx acquisition and an on-premises solution without breaking your budget. We’ve got one word for you: financing. In the next post we’ll look at the different options that are available. To learn more about your options, check out the video below.