Traditionally, when purchasing a major communications technology system like a new UC or IP-PBX platform, or performing a significant upgrade to an existing system, businesses have favored Capex financing over Opex financing. Capex is used by companies to purchase or upgrade assets such as property and equipment. and is typically a major financial decision for a company because it is a significant, one time investment that must be maintained for a period of time using opex. Opex, on the other hand, is an ongoing cost used for running or maintaining fixed assets like telephone infrastructure, computers and other systems.
There’s a growing argument, however, that operating expenses have distinct advantages over capital expenditures when it comes to technology investments. This is especially the case for finance departments in small and medium businesses. Costs are spread out over a period of time and line-of-business leaders and financial decision makers are able to justify using money from their monthly operating budget more easily than their capital budget. Additionally, the growing availability of high quality Software as a Service (SaaS) solutions in areas like email, CRM and now Unified Communications (UCaaS) are making the Capex vs Opex decision part of mainstream technology financing discussions for every company.
Benefits of OpEx Communications Technology Financing
Many IT leaders we speak with are being asked to do more with less. You know the drill…support more applications, more websites and more devices for more people… just do it all with a smaller budget than last year. OpEx financing is one way to address this challenge. According to Shoretel Sky, a division of Shoretel, some of the benefits businesses can derive from Opex financing include:
- Paying for only the capacity it needs at the moment and scaling as requirements change
- Easing and speeding up the budgeting process because short-term spending requirements are less
- Making multiple investments across the business since capital isn’t tied up in large upfront expenditures
- Funding expenses faster through operations rather than needing to borrow money or divert money from other projects to pay for large, upfront technology costs
- Smoothing out cash flows over time instead of requiring lumpy outlays
These benefits would seem to be particularly relevant for businesses considering deploying cloud-based Unified Communications applications (UCaaS). Just subscribe and you’re up and running with web collaboration, presence management, video conferencing, instant messaging and more for a low monthly fee, right? Well, yes, but things aren’t always as simple as they sound.
Consider All Components of Your OpEx Financed Implementation
Businesses interested in deploying a new communications solution (even UCaaS) via an OpEx financing model, should be sure to take all aspects of the project into consideration prior to execution. It is not uncommon for businesses to disregard meaningful (and often expensive) components of the project outside of the monthly per-person / per-seat charge that appears from the UCsaaS vendor when they consider Opex financing options. For example, items businesses should consider include:
- Desktop hardware (laptops) or mobile devices necessary to support the new solution
- Endpoint devices like wired or wireless headsets and video cameras
- Wireless network upgrades necessary to handle increased load
- SIP Trunking to handle communications sessions
- Session Border Controllers (as we covered recently, still crucial for cloud deployments)
- Professional Services for all of the above
The question is, with so many more things to consider, how does all this get covered under Opex? The good news is the market is adapting.
Covering Your Entire Tech Project in Your Operating Budget
These significant added expenses, if requiring a capital expenditure, can derail much needed projects – often for extended periods of time. Many businesses are looking for the ability to wrap the cost of their deployment – hardware, software and services – into a monthly subscription payment model, giving them the ability to avoid large up-front capital expenses. This removes a major deployment obstacle faced by many IT and finance departments, and accelerates the successful implementations of communication and collaboration deployments.
One solution now available in the market for voice and UC deployments comes from Jabra, the high-end headset maker. As Urban Gillis, Sales Vice President, explains, “Our customers – and our resellers – are looking for an easy financing solution that allows them to bundle all logistics, hardware, software and infrastructure for their voice or UC roll-out into one monthly subscription payment. This includes non-tangible items such as services and soft costs and eases cash flow for the entire solution.” He went on to explain their recently announced Jabra Vendor Services Group approach gives SMB’s an alternative way to acquire communication and collaboration solutions that is not a leasing model.
“The program allows our partners to handle all logistics, support and financing for the duration of the subscription agreement. At the end of the subscription term, customers can upgrade to newer solutions, return the equipment or keep what they have under a new agreement,” explains Gillis. For more information on this program, contact Jabra today.
With UCaaS and Cloud PBX solutions exploding and financing options like this showing up in the market, expect to see the trend towards financing enterprise communications project via the Opex budget to continue to accelerate.