Capex vs Opex: How Changing Your Phone System Can Change Your Spending

The Blue Fox Blog
The Blue Fox Blog
Capex vs Opex: How Changing Your Phone System Can Change Your Spending

As a leader of your business, your bottom line is always at the forefront of your mind. You are trusted to make important decisions where the funds of the company should go. There are many factors to consider when making these decisions, especially when it comes to technology improvements that can drastically impact the business. In years passed, the financial decision-makers preferred to make these changes as a capital expenditure (CapEx) so they could experience amortization and a depreciation of the investments over time, but today we are seeing more and more companies shifting the model to an operational expense (OpEx).

The Difference Between CapEx and OpEx

The shift from the CapEx to Opex models happens because of the removal of the of POTS lines and a traditional PBX phone system. The traditional PBX systems require a costly initial investment due to hardware, maintenance, and the routing of all internal communications. With a VoIP-based solution, the system is managed by the service provider and is often based in the cloud rather than physically at the business. Monthly service fees are paid through a subscription. Moving from CapEx to OpEx helps to reduce costs and the risks of capital depreciation.

The Problem with CapEx

Because of the rapid changes in technology, IT infrastructure requirements are less predictable. The unified communication options today are vast and highly personalized. Today, organizations have choices between technology that fit the unique elements of their business without the massive expense of the physical hardware and applications. When companies make this transition to OpEx spending through monthly phone system services, that also allows them the flexibility to redirect CapEx investments to other revenue-driving projects. In addition to eliminating the up-front costs, moving these expenses takes away the guessing game of how much equipment to purchase when more may be needed in the future due to business growth.

The End of POTS

Additionally, traditional POTS lines may soon be a thing of the past. As of 2014, VoIP adoption was at 60% in the residential market and 20% for businesses, with those numbers increasing each year. Making it clear that VoIP and the cloud are changing the way business leaders are making technology decisions and viewing their capital expenses, and if the cloud trend continues, more and more organizations will follow suit.