Is the time right to OPEX your IT investment?
In the 1960s Bob Dylan wrote the famous song 'The Times They Are a-Changing', but the lyrics have probably never been as appropriate as they are today. In recent years we have witnessed seismic changes that could never have been foreseen, leading first to a loosening of fiscal policy and more recently, with soaring inflation, to a tightening of cash flow. With supply chains more volatile and under more pressure than ever before, and with the economic outlook uncertain, is now the right time for companies to try to conserve cash and reduce the risks of IT investments by looking at OPEX rather than CAPEX?
Traditionally, investment in corporate IT has been a one-off capital expenditure, followed by a 3–5 year usage, in which the value of the asset is written off in the company accounts, before the whole cycle starts again. Recently, however, there has been a shift in thinking towards considering technology expenditure as an operating, rather than a capital, cost. Now more than ever, this approach could offer several business advantages.
1. Conserving cash
Adopting an IT-As-A-Service approach allows organisations to spread the cost of their technology across predictable monthly fees – conserving cash in the business without the requirement to make a large investment up front.
2. Increased flexibility
With the technology being supplied and paid for on a monthly basis, it provides a whole lot more flexibility. The organisation can scale up or down as required. So, no more costly tech sitting in a warehouse waiting to be deployed!
3. Uninterrupted efficiency
Technology can be refreshed and updated as the business demands and maintenance costs can be built into the contract - reducing unexpected maintenance and downtime costs. Not to mention increased day-to-day operational savings.
4. Opportunities to invest elsewhere
By not heavily investing with Capital Expenditure upfront, the IT department frees up time and potentially budget to invest elsewhere, such an innovative product development to generate additional revenue or new solutions to make significant savings.
5. Changes the perception of IT
By changing from a CAPEX to an OPEX Pay As You Go model, it also changes the way the IT department is perceived within the business. Suddenly you are no longer a major cost centre with expensive cyclical infrastructure bills. By transferring the burden of the IT infrastructure to a third party and establishing predictable operational expenditure, you can be innovators in the business rather than a drain.
Panasonic was one of the first companies to offer its rugged laptop, tablet and handheld devices using an OPEX TOUGHBOOK-as-a-Service model back in 2018 and the solution is more popular today than ever. It’s an end-to-end subscription that allows companies to pay for their TOUGHBOOK devices monthly, over a 3-, 4-, 5- or 6-year contract.
TOUGHBOOK-as-a-Service subscribers pay the same as a cash purchase, even though payments are spread over a longer term - eliminating the need for large upfront costs and allowing organisations to benefit from an OPEX-based solution rather than CAPEX.
TOUGHBOOK-as-a-Service solutions include access to the devices, delivery, 3-year 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 options such as docking stations and accessories, specialist software applications 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. As Dylan said, “The Times They Are a-Changing”.
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