Cloud Computing
CAPEX
Definition
Capital Expenditure (CAPEX) is funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. In traditional IT, buying servers is a CAPEX.
Why It Matters
The cloud allows companies to shift their IT spending from a CAPEX model to an Operational Expenditure (OPEX) model. This is a major financial benefit.
Contextual Example
Instead of making a large upfront capital expenditure to buy servers for a new project, a company can use the cloud and pay a smaller, predictable monthly operational expense. This frees up capital for other investments.
Common Misunderstandings
- CAPEX is the upfront cost. OPEX is the ongoing cost.
- Moving from CAPEX to OPEX is a key financial advantage of the cloud, making it easier for startups and businesses to get started with new projects.