Why SMB’s Are Switching Their Tech Spend to Opex
The ongoing debate of whether to rent or buy has traveled beyond the real estate industry into the business space, where companies are plagued with decisions of whether to rent or buy their premises, employees, cars and now – technology.
There has been a longstanding tradition in most businesses to want to own the technology they deploy. However, changes in both the economy and technology in recent years is putting pressure on this tradition.
Today’s technology make-up being hardware, software and cloud, gives businesses alternatives to traditional ownership. This is especially true when it comes to things like data storage (cloud), software and communications technology. The financing models used to purchase these types of technology solutions is now a choice between capital expenditure (Capex) and operational expenditure (Opex). Uniquely, this is the case for other technologies offered by CSG such as printers, computing, digital signage, and Total Office.
Why Opex is Good For Business
While the Capex finance method has been the norm for most business purchases in the past, it has created a barrier-to-entry for budget-tight companies wanting to take advantage of new technology, and has led to businesses holding onto aged equipment for a lot longer than is advantageous. The result of old technology in a workplace? Higher operating costs, loss of competitive edge, and unproductive and inefficient workers and processes. With Opex, the main advantages are fairly obvious; small businesses with limited funds can afford to buy the latest and most innovative technologies as a subscription (or lease), and record it as a day-to-day operating expense, which most CFO’s prefer. But budget aside, there are other benefits of purchasing via Opex too:
More cash for Capex – moving to an Opex model for your technology and compute enables a company to use its available cash for other revenue-generating activities, such as lead generation, product development, human capital, or research and development.
Scalable technology – using a hosted solution under Opex allows companies to scale their technology and where cloud is concerned, only pay for what they use.
Ongoing support and fewer IT resources – subscription based technologies require resellers or vendors to maintain a long term relationship with your business. This will usually mean your business has access to technical support when needed and expert help with implementations and upgrades, so you’ll need fewer in-house IT support staff.
Managing Your SMB Technology
Disruptive technology takes on two meanings; one of those is the disruption to traditional businesses. Building and maintaining systems, managing supplier invoices, renewals and maintenance schedules; it’s a headache for time-poor businesses who should be focusing their energy on customer service and innovation, not on processes and admin.
In our latest whitepaper, “Break Free: Taking the pain out of small business technology”, we show you how you can overcome the challenges of technology by bundling all of your technology needs into a fixed-price monthly contract.