What is it and how can you benefit from it?
OPEX vs CAPEX
The first thing what every cloud contracter will try to make clear is these two terms and why your resources should be more on the OPEX side instead of the “classical” CAPEX side.
In IT, CAPEX corresponds to the cost of acquiring infrastructure such as hardware (e.g. servers) and equipment, which usually have a useful life of two to ten years, depending on the depreciation value. In a CAPEX budget item, the costs are incurred in the present and the company expects to make a profit in the future.
OPEX in IT includes costs for SaaS licences, IaaS subscriptions, contract-based services, internet and utilities. As OPEX corresponds to current costs, an OPEX model does not take into account future benefits to the business.
The whole idea behind shifting recourses to the OPEX side is that initial investments are close to none and recourses are only used when they also generate income
If you own a server the amount of times that it’s running on maximized capacity is usually very limited. So should you have bought a cheaper, less powerfull server? The answer is probably “NO”, because there are peak moments where you need that extra performance.
When using the cloud, the solution is called “elasticity”, which means that you actually would go for the cheaper option. As soon as it reaches a threshold of (let’s say) 70% it automatically scales out to make a second server available to take some of the load of the first server.
The same would go the other way around. If you have 2 servers running below (let’s say) 30% capacity, the second server would automatically shut down to make sure the costs stay as low as possible.
You have a webshop and every december, the amount of orders and visitors are through the roof and you need three times the server capicity as you normally need. To buy servers that you would only need 1 month of the year would be a big investment and to be honest a waste of money.
In a cloud environment you can just scale up when needed and scale down once everyone did their holiday-shopping.
Interested to see what possibilities the cloud holds for you?