Trying to decide between using CapEx funding for data centers or colocation vs using OpEx funding for moving your infrastructure to the modern cloud? Show
Most companies nowadays will need some sort of presence online. Options used to be extremely limited and costly, and in fact, until the last couple of decades, the only option was the build your own data center or colocation of your server in an external data center. In the 21st century, cloud computing has become a viable option for all businesses. Cloud technology is now highly adopted by businesses of all types and sizes due to its performance, security, maturity, and surprising affordability.
What is CapEx and OpEx Funding?Businesses have two types of expenses around infrastructure or the cloud: CapEx vs OpEx. CapEx funding (capital expenditure) means spending funds on real estate or even infrastructure purchases such as building a data center. CapEx funding by its nature requires upfront capital for these large purchases, which limits many organizations from building data centers. Capital expenditures are accounted for as payments for goods and services and recorded on the balance sheet. Capital expenditures incur depreciation as assets age. OpEx funding (operational expenditure) is the cost incurred while doing business. Colocation and cloud computing fall into this category. This means that cloud computing and OpEx funding are intertwined as compared vs CapEx funding. OpEx costs are recorded on the income statement. The OpEx-Funded CloudCloud computing is the most agile form of computing possible. Here are the benefits of using the cloud:
Liquid Web’s Most Helpful Humans in Hosting® can help you determine what kind of cloud option is best for you. The Benefits of CapEx vs OpEx for Cloud ComputingThe OpEx-funded cloud allows a company to be agile, elastic, and respond to periods of high demand and low demand dynamically. Pros and Cons of CapEx vs OpEx for Infrastructure and Cloud Computing1. Build Your Own Data CenterYou could build your own data center or buy an existing data center from someone. Here are the pros and cons: Pros:
Cons:
2. ColocationColocation is renting server space and a server from a provider. You can lease the server with OpEx funds or purchase the server with CapEX funds. Here are the pros and cons of colocation: Pros:
Cons:
3. Cloud ComputingCloud Computing can increase organizational agility and competitiveness. Here are the pros and cons of the OpEx cloud computing vs CapEx-funded infrastructure: Pros:
Cons:
OpEx-Funded Private Cloud Use Cases The simple answer is that an OpEx-funded private cloud is good for virtually anyone. Here are three uses cases for private cloud using OpEx:
Moving to OpEx InfrastructureWhen comparing CapEx vs OpEx for cloud computing, OpEx-funded private cloud is the best option for most companies, especially during these turbulent times. It can save your company money in the long run by not having to acquire expensive servers and other IT equipment or staff. Also, it can save money by not having to acquire land in order to build your own data center. The private cloud is an excellent location to host your company's IT assets, and a managed private cloud is a great option to consider when choosing your OpEx-funded private cloud expenditure. Choose Liquid Web for Private CloudLiquid Web’s VMware Private Cloud is a good option to consider when considering a highly performant and secure cloud. VMware is a bare metal hypervisor that is installed to a server platform and then the platform is provisioned to the specifications desired. Contact us today to talk to a Solutions expert and find out more about private cloud.
Which of these expenditure types require the upfront spend on physical infrastructure that can then be deducted as an expense over time?What Is CapEx? CapEx is the spending of money on physical infrastructure upfront and then deducting that expense from your tax bill over time. CapEx is an upfront cost, which has a value that reduces over time and usually has no recurring cost.
Which refers to spending money upfront and losing value over time in the cloud?Answer is Capital expenditure.
Capital expenditure refers to spending of money on physical infrastructure up front, and then deducting that expense from your tax bill over time.
What is capital expenditure and operational expenditure?Key Takeaways
Capital expenditures (CapEx) are a company's major, long-term expenses while operating expenses (OpEx) are a company's day-to-day expenses. Examples of CapEx include physical assets, such as buildings, equipment, machinery, and vehicles.
What are examples of capital expenditure?Capital expenditures are long-term investments, meaning the assets purchased have a useful life of one year or more. Types of capital expenditures can include purchases of property, equipment, land, computers, furniture, and software.
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