By 2023, Gartner predicts that 40% of organizations will adopt the Anywhere Operations model and leverage this framework to expand their customer base. However, reaping the benefits of Anywhere Operations requires significant IT investments in crucial business areas. Such IT spending can be made as capital expenses (CapEx) or operating expenses (OpEx). Let’s explore why companies are switching from CapEx to OpEx for IT spending:
CapEx vs. OpEx
A Capital Expense (CapEx) is the traditional way for making an IT investment. CapEx can require significant upfront spending to acquire, upgrade, and maintain a company's physical asset (i.e. office buildings, tech equipment, etc.).
CapEx can make IT investments very expensive, since they are one-time purchases intended to deliver benefits over multiple years. Furthermore, allocating more of your IT budget to capital expenses leaves less cash flow for critical short-term operations and special projects.
Operational Expenses (OpEx) offer a cost-effective and flexible alternative to CapEx. These operating expenses are considered the costs of your organization’s daily operations, such as annual service agreements (web hosting and web domain registrations), consumables, electricity, rents, and wages.
The OpEx approach to acquiring IT assets for Anywhere Operations involves leasing hardware and enrolling in essential IT services to support your network requirements.
Reasons for Switching to OpEx IT Spending
An OpEx model can position your organization to keep abreast with technology advancements, control IT spending, and maximize your IT budget:
1. Low Starting Costs
Reduce upfront expenses with the OpEx model for IT investments. Organizations can spread their IT costs over time. This is quite helpful for startups and small businesses, who desire enterprise-quality technology and services without the hefty price tags. SMBs with limited capital and lots of criteria for building their operations can leverage OpEx to free up cash flow for other short-term priorities.
2. Avoid Depreciation
When purchasing tech assets using CapEx, decision-makers are forced to worry about their IT depreciating or aging behind the latest innovations. Managing your asset lifecycle can distract from the fast-paced demands of your daily operations. However, if you lease IT equipment or roll those costs into an OpEx model, you can worry less about your IT assets depreciating and focus more on your business.
3. Outsource the Maintenance
Choosing a dependable and experienced managed IT services provider as an operating expense means maintenance and upgrades are included in the Service Level Agreements. The provider completes all backups, operating system upgrades, IT support and repairs, and onboarding assistance for your teams. Reduce your responsibility for ongoing maintenance and free up your internal IT department to support the core business.
4. Faster, Confident Decision-Making
OpEx lowers monthly IT costs into predictable operating expenses, making it easier to approve IT budgets. Reduce the loss of valuable time in meetings pitching for stakeholder buy-in and chasing signatures. Decision-makers face less red tape when evaluating and prioritizing IT projects with OpEx's lower monthly price tag. Organizations of all sizes will benefit from a streamlined decision-making process.
5. Unlock Easy Scalability
Law firms, medical practices, and financial businesses are among the many sectors that must keep abreast with demands and changes in their industries. As markets change rapidly, IT spending also needs to scale. An OpEx model is entirely flexible, so you can turn IT services on and off, scale your operational needs upward and downward, or even change products to suit your company’s requirements for market response and industry compliance.
6. Stable IT Budget and Predictable IT Spending
The pandemic has significantly affected small businesses, as a January 2022 survey revealed that approximately 66 percent of these SMBs reported a moderate to large negative impact on their operations. Therefore, it is crucial to have a fixed IT budget with cost-effective and predictable IT spending. Leasing IT assets and services using OpEx helps you forecast expenditures and conserve your budget for high-yielding IT investments.
7. Continual Improvements
Choosing OpEx unlocks greater accessibility to the latest IT assets and services that are robust against new threats in the cyberspace. With a managed IT infrastructure agreement, you can gain a reliable and secure network at an affordable operating cost. Furthermore, your IT partner absorbs responsibilities for updating and upgrading equipment and services to keep your operations secure. Businesses choose the operating expenses model to keep their company operating at the optimal level.
Making the Switch to OpEx IT Investments
Net Friends helps businesses switch to OpEx IT investments to reap the rewards of Anywhere Operations. We invite you to discover how our suite of services, such as NetCore for managed IT infrastructure services, can help you optimize your IT budget. Contact us today to get assistance in seamlessly transitioning to an OpEx model and Anywhere Operations for greater market competitiveness.
WHAT TO READ NEXT:
- Tips for Adapting Your Business Continuity Plan for Anywhere Operations
- Top 4 Critical IT Projects for Small Businesses
- How A Managed Services Provider Can Help You Manage Your IT Budget
