OPEX is the Future for Enterprise Technology

When I came to Brainerd Baptist School back in 2009, we began systematically moving to an OPEX model for all of of our IT-related purchasing. This includes laptops, iPads, and network infrastructure. While most companies don't currently have built in plans for OPEX models, we accomplished this by simply leasing equipment from either the company directly or from a third party leasing firm. I am a big fan of moving capital expenditures (CAPEX ) to operating expenditures (OPEX).

  • Budgeting for payments rather than purchases

Cash flow is king when it comes to the business world. By moving infrastructure and equipment costs into payments, it better allows accounting departments to manage and forecast expenses. The IT department isn't sending in purchase orders for large quantities of products at a time, but rather for smaller recurring invoices.

  • Systematic upgrades

Lets say that you spend $100,000 every 3 years (average IT life cycle from my experience) on new computers for your organization. What happens when it comes time to purchase new gear? It has been a bad quarter and you get asked o push the purchase to the next quarter (and probably the next). By moving to an OPEX model, you simply make payments and receive new gear whenever your contract states. Otherwise, the 3 year turn over can easily become a 4 year turnover. Technology is always changing, so this allows an organization to change with it.

  • Easier revenue forecasting for manufacturers and VARs

Manufacturers and VARs also love the OPEX model. It's consistent revenue stream and makes forecasting a lot easier. Employees like to get paid every two weeks, so its much easier to manage cash flow when they know that are nearly guaranteed to bring in $XX per month even without a new sale (accounting for regular churn).

As cloud enabled networking becomes more prevelant, OPEX models make even more sense for all parties involved. It allows manufacturers to consistently put R&D resources into their cloud systems (because of steady revenue streams), while end user organizations receive built in support and systematic product upgrades.