opex capex

How to manage the IT budget and find the right balance between Capex and Opex

More and more companies are moving towards cloud solutions, adopting their services for important parts of their digital infrastructure, combining and appraising them with their data center and efficient IT teams

The cloud is functional for geographically distributed organizations, with employees working remotely and dealing with direct relationships with customers.

It is also the springboard to high-level applications for advanced analytics, artificial intelligence, digital assistants, and many others. With the cloud, the start-up costs of projects with strong digital components are reduced, erasing the workload of finding and setting up resources and acquiring the possibility of scaling up or down the resources used according to the variation of needs. These advantages complete end-user services provided via the Internet. In short, the cloud is the key to IT flexibility, a feature that will increasingly need to be dealt with in the future.

In the past, hardware and software costs were accounted for as capital expenditures (Capex), and now they fall under operational costs (Opex), for the joy and sorrows of those who have the task of designing IT budgets and balancing them with company-level budgets where the digital components have an increasing weight. While it may be convenient to include Capex to finance new projects, on the other hand organizations could face the problem of growing Opex with the adoption of Saas applications and “subscription as a service” infrastructures.

For example, they could face the difficulty of spreading over several fiscal years the investment costs that the company must face to leverage cloud services. And on top of this, they could have to face the additional issue of having to connect those growing costs to the revenues generated in the same period.

This leads us to state that the cloud is not, originally, all Opex. Frequently there is the overlooked possibility of unbundling Capex in contracts, exploiting the most correct interpretations of the IFRS (International Financial Reporting Standards) and IAS (International Accounting Standards) and in particular, of IFRS 16, relating to leases, and IAS 38, on intangible assets.

By applying proper attention in the drafting of contracts, there is the possibility of capitalizing on the costs of the cloud, obtaining benefits in terms of accounting and taxation. BinHexS has extensive experience in helping customers outsource individual parts to build their entire IT infrastructures in the cloud, ensuring excellent performance and easier management through orchestrators.

BinHexS’ tailor-made solutions, with a fully independent approach to IT vendors, support the customer in optimizing existing contracts, both in terms of SLA and legal protections, and help you obtain the greatest advantages in balancing Capex and Opex.

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