Stabilize IT Budgets by Converting CapEx to OpEx

Written by Daniel Fay on March 16, 2020

Share This Article

Over the past decade, we’ve seen the tech market evolve from traditional on-prem configurations to cloud-based setups. This comes with multiple benefits, not only for resiliency, but also for running your business on an easily forecastable budget. Many businesses are moving to solutions with as-a-Service licensing models because they’re easier to maintain, forecast, and budget against. Factors that are harder to predict, such as hardware, downtime, repair, and disaster recovery, are mediated by the cloud-based service provider. Let’s take a closer look at how to complete the conversion from a CapEx-heavy IT budget to a more consistent OpEx model.   

What Are the Differences Between CapEx and OpEx in Tech?

Within IT, you’ll inevitably have both Capital Expenditures (CapEx) and Operational Expenditures (OpEx), but in today’s unpredictable economy, it can be beneficial to shift toward OpEx where possible. The two models require different IT administration approaches, and your company may budget differently for each as well. Here are the most notable differences between the two types of expenses, with examples of each:

Capital Expenditures 

  • Upfront cost
  • Intended for more than a year of use 
  • Usually a property or equipment purchase 
  • Lifespan could be anywhere from 2-10 years depending on deprecation

Examples of CapEx:

  • Data center infrastructure
  • Physical server hardware
  • Windows 10 licenses
  • Network storage devices

Operational Expenditures 

  • Recurring cost to run the business
  • Flexible; can expand or shrink based on need and utilization
  • Usually a service, subscription, or contract
  • Lifespan could be indefinite depending on the service

Examples of OpEx:

  • SaaS application licenses
  • ISP business internet
  • Utilities

Capital Expenses and Traditional On-Prem Solutions

Traditional on-premises configurations require hardware servers, locally installed applications, and varying styles of licensing. On-prem servers present an initial up-front capital expenditure as high as several thousand dollars depending on make, model, and hardware requirements as determined by your utilization and organization size. 

Other costs associated with traditional on-prem infrastructure include measures to ensure reliability, sustainability, and availability of your technical architecture. You may also need to allocate funds for a data center or server room, disaster recovery, backups, load balanced networks, and more. These additional costs to ensure uptime in the case of an outage or emergency should be considered as part of an on-prem solution’s total cost. And beyond the more obvious financial benefits, the reliability built into a cloud-based OpEx model can also save IT labor hours. 

How Can JumpCloud Help With Your CapEx Costs?

JumpCloud assists small and medium-sized enterprises by providing a 100% cloud-based directory solution called Directory-as-a-Service® (DaaS). DaaS is an alternative to Active Directory® and LDAP that helps bring secure identity and access management to the multiple resources you’re already using, with no need for on-prem services or servers. 

JumpCloud is built to manage Mac®, Windows®, and Linux® systems alike, and its protocol-backed integrations are vendor- and manufacturer-agnostic. With JumpCloud, admins can control access to hundreds of SSO apps, segment access to WiFi and VPN connections, and sync user identities with Office 365™, G-Suite™, or an existing Active Directory Domain.

Migrating from a traditional CapEx model to a more progressive OpEx model allows your company to divert large budgets for previous CapEx costs to other resources. JumpCloud’s Directory-as-a-Service model covers your directory’s high-availability and reliability infrastructure in the cloud, with no extra associated costs. 

JumpCloud allows you to sign up for free and test with full functionality. Whether your company has five or 500 or 5,000 users, JumpCloud’s model allows you to pay for what you need and keeps operational costs easy to manage, forecast, and expand as needed. It eliminates the large up-front costs of running hardware and its associated licensing. With JumpCloud, you can easily manage all of your employees and their access to the different systems, applications, networks, and more that they need, all from your browser. 

JumpCloud’s pricing model is transparent, and it’s tailored for cloud-forward, mixed-platform environments. Your first 10 users are free for life, and you pay for only what you need based on two pricing models: Pro and Build-Your-Own-Directory™ (BYOD). The Pro plan includes all protocols, system management, and the base directory, while the BYOD pricing model allows you to pick and choose the different protocols, resources, and items you need for your business a la carte. Try JumpCloud today.

Daniel Fay

Daniel Fay is a Product Marketing Manager at JumpCloud.

Continue Learning with our Newsletter