The move from capex to opex should be handled

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Unformatted text preview: l, or both. The move from capex to opex should be handled carefully The subscription and PAYG approaches turn IT asset costs from upfront capital expenditure (capex) into ongoing operating expenditure (opex). Neither accounting strategy is inherently superior, though. CFOs need to bear in mind a variety of criteria, including: ■ the overall position of the company – it makes sense for a cash-strapped start-up to favor opex, but this is less the case for cash-rich companies such as (some) software vendors ■ the specific vertical sector in which it operates – for example, in the public sector it is much easier to get financing for capex than for opex ■ tax-related tactics – on-premise hardware and software capex can be turned into depreciation write-offs for tax purposes. However, opex cannot be depreciated. Procurement spets need to adapt and update their skills Deciding whether public cloud services are worthwhile depends on a variety of issues, such as the type of public cloud (whether infrastructure-, platform-, or software-asas-service) and type of project (mission-critical or not). It requires a holistic approach to cost calculations – for example, taking into account data transfer costs that quickly make projects such as online data warehouses costly on an IaaS PAYG scheme. Procurement spets need to adapt to these new requirements. Overall, they are more used to fixed, frontloaded cost structures than subscriptions and PAYG schemes. For example, without a good grasp of spending, the latter can easily turn from an attractive pricing model into an expensive mess. The problem is exacerbated by the fact that many people, from both vendors and user organizations, focus not only on the ease of provision of cloud computing services but also on the ability of cloud service provision to bypass traditional IT structures. This encourages the creation of a shadow IT infrastructure. S TRAIGHTTALK I T 13 Procurement spets also need to learn the tricks of t...
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