OPEX or CAPEX for your IT spend?
Classifying IT Investment as Operational Expenditure has its benefits
OPEX or CAPEX for your IT spend?
Classifying IT Investment as Operational Expenditure has its benefits
Traditionally IT investment has been a one-off capital expenditure followed by a period of 3-5 years usage, where the asset value is written off in the company accounts, before the whole cycle begins again. But more recently there has been a shift in thinking towards spending on technology as an operational, rather than capital cost. Why the change and what are the advantages for businesses?
As consumers, we are all used to the idea of paying monthly for some of our products and technologies. Think about your mobile phone contract or your car or streaming entertainment package. It’s a trend that’s popular and growing as more technology services move to the cloud.
A similar approach is now being adopted for many business technology purchases for a number of very sensible reasons. But first let’s take a look at what used to happen. Traditionally, if a business wanted to invest in IT equipment, such as new laptops or PCs, they would pay for their technology upfront as a capital expenditure (CAPEX).
CAPEX investments refer to any significant cash investment, including infrastructure, property, software licenses and equipment. It shows up on the balance sheet of a company and it depreciates in value over its lifetime, according to depreciation schedules. Although CAPEX is traditionally considered the norm for big IT investments, it also creates a barrier for companies with tight budgets or start-ups that want to take advantage of new technology quickly because they have to have all of the money available upfront or make loan or leasing arrangements.
Operational expenditure (OPEX), on the other hand, consists of money spent on on-going expenses. Traditionally, these include utilities, rent, wages, and services. Because the costs are ongoing, OPEX is part of the profit and loss system for a business.
Using an OPEX method via a subscription or “as-a-service” model, has a number of advantages. It enables companies to spread their payments over a longer period and use their available cash more effectively for revenue-generating solutions like product development, lead generation, or research and development.
Additionally, as well as paying for the technology hardware on a monthly basis, companies can also include the costs of related services in areas such as repairs, upgrades and environmentally-friendly disposal of the technology at its end of life. This provides a total cost certainty for the business and can save money in the long run.
The “as-a-service” approach also has other benefits when it comes to flexibility. It’s much easier for a business to scale up and down as required. For example, adding new devices and services on a monthly basis or removing them. This flexibility ensures the business only pays for what it needs at the time, rather than having additional tech that is no longer required gathering dust in the warehouse.
So, OPEX investment in business technology looks set to be a long-term trend. In fact, Panasonic was one of the first OEMs to offer its rugged notebook and laptop devices in this way. Back in 2018, the company launched TOUGHBOOK-as-a-Service. It’s an end-to-end subscription service, powered by international provider of digital -as-a-service models, Econocom, that allows companies to pay for their TOUGHBOOK solutions monthly, over time.
TOUGHBOOK-as-a-Service eliminates the need for large upfront costs and allows organisations to benefit from an OPEX-based solution rather than CAPEX.
TOUGHBOOK-as-a-Service packages include access to the devices, delivery, standard warranty, helpdesk support, and end-of-life services such as collection, recycling and data wiping. As well as the rugged hardware, customers can choose to add customised options such as vehicle docks, accessories, professional services, software and warranties into the monthly payment.
So, if you’re considering your next big IT investment, it might be worth investigating the benefits of an OPEX over CAPEX investment for your business.
Read more about TOUGHBOOK-as-a-Service below or get in touch for a quotation.
Read more insights…
blog
The Buyer’s Guide to Rugged Mobility – How Rugged is Rugged?
The modern mobile worker needs a reliable, customisable, and rugged device that keeps them connected and productive in the most challenging of environments, regardless of the industry. But what makes a rugged device ‘rugged’?
blog
The TOUGHBOOK 55mk3 Sets the Standard for Today’s Mobile Workforce
The new Panasonic TOUGHBOOK 55mk3 is the most customisable rugged device on the market. Compatible with Windows 11 Pro, it is perfectly suited to the mobile workforce of today
article
THE VERSATILE TOUGHBOOK 55 REGENERATED FOR THE CHANGING NEEDS OF THE MODERN MOBILE WORKFORCE
TOUGHBOOK 55mk3 sets the standard in rugged mobile computing for any application, with vastly improved “Raptor Lake” processing power, modularity, and connectivity.
blog
Connectivity and long battery life is key in the Swedish forest industry
It is remarkable how intensely a business can benefit and grow because of digital transformation. In recent years, connectivity and the use of rugged devices has pushed the forest industry to new lengths.
Sorry there was an error...
The files you selected could not be downloaded as they do not exist.
You selected items.
Continue to select additional items or download selected items together as a zip file.
You selected 1 item.
Continue to select additional items or download the selected item directly.
Share page
Share this link via:
Twitter
LinkedIn
Xing
Facebook
Or copy link: