Cloud Computing
OPEX
Definition
An Operational Expenditure (OPEX) is an ongoing cost for running a product, business, or system. In the context of cloud computing, it refers to the recurring costs of using cloud services, such as monthly bills for compute and storage.
Why It Matters
The cloud's pay-as-you-go model transforms IT spending from an upfront capital expenditure (CAPEX) to an ongoing operational expenditure (OPEX). This provides financial flexibility and allows businesses to scale their costs with their usage.
Contextual Example
A company's monthly AWS bill is an operational expense. This is in contrast to the traditional model of buying a server, which would be a capital expense.
Common Misunderstandings
- OPEX is the ongoing cost. CAPEX is the upfront cost.
- This shift from CAPEX to OPEX is a fundamental financial benefit of cloud computing.