Operating costs are recorded as an expense on the income statement. For example, the payment of rent of $10,000 for the current period is a fixed expense that can not be restructured. In the past most technology purchases were done as a fixed capital expense. The company was forced to pay the full amount up front or spread it out over time as a lease payments. However if the businesses needs changed the expense remained the same.
In a Operational Expense aka OpEx model your expenses reacts to your needs at that moment in time. You pay for what you consume versus what you predict you are going to consume over a given period.
For example; if a company purchased 20 copies of an antivirus program, which was paid in full at the time of purchase. If after 3 months the company downsized by 5 people, the capital spent on 5 of those programs have gone to waste. The company can not recovery those dollars spent for that Capital Expense aka CapEx.
If they had used the OpEx model they simply would subtract the 5 unneeded programs from the next months expenses. Managed Services, Hardware as a Service, and Software as a Service all use the OpEx model. This can literally save the company thousands of wasted dollars. A company could then reclaim those expenses and put them toward revenue generating assets. In fact most OpEx modeled solutions offer a much lower entry cost, whereby a companies ROI is often seen in as little as 3 months.
The face of IT services is changing, if you are stuck in the old capital expense model in your company give us a call today. We can provide you with a solid plan to reclaim wasted cash flow for your company. If you are currently faced with the tough decision of downsizing the first place to look is your IT support department. With recent advancements in monitoring and remote access capabilities it no longer makes financial sense to have internal IT at the support level. You should only be retaining strategic level positions. These positions will assist the company in making technology decisions that will move the company forward taking advantage of new emerging technologies. IT support is very important to your businesses' ability to stay productive, however you can more easily out source support functions in your company than replace strategic revenue generating personnel.
If you need to find a home for one of your IT staff? We are always looking for bright Account Executives to help bring world class services to our clients
