Minimize CapEx and Control OpEx With Cloud Communications

CapEx and OpEx Cost Comparison

Organizations of all kinds are making the migration from analog, copper-based telecommunication service to cloud-based systems. There’s no doubt the flexibility, mobility and efficiencies of these new services had something to do with their decision. 

But we’d be remiss if we did not discuss the financial implications of this transition. Let’s dive into the financials to see how cloud-based communication systems impact your bottom line. 

The difference between CapEx and OpEx

Capital Expenditure (simply known as CapEx) is any business expense incurred to create a future benefit. Whether you’re buying new or upgrading existing assets, things like buildings, machinery and equipment are all examples of CapEx. You can think of it as any one-time, up-front payment (which also makes it harder to budget for in advance). 

Operational Expenditure (OpEx), on the other hand, includes business expenses required for day-to-day operations and is often charged on a recurring monthly basis. Wages, maintenance, utilities and repairs all fall under this category. OpEx is essentially the money a business spends in order to turn their inventory into profit. 

The cost of legacy communications technology 

It’s not uncommon for people to associate the latest technology with an expensive price tag. But when it comes to corporate communications technology, the opposite is actually true. 

If your voice service is provided by an on-site PBX with connected analog devices, all of this equipment is owned and maintained by your organization. There are likely multiple vendors, limited capabilities and a mishmash of applications (one for chat, another for video conferences, and another still for virtual collaboration). 

Because of all the equipment, maintenance and overlapping functionality, your organization will end up with high and unpredictable communications costs. We’re not just talking about the up-front costs of all this equipment, but the ongoing (and erratic) costs associated with replacements, service, maintenance and support. Not only are you not getting a simple and powerful solution, but you’re paying an arm and a leg for this jumbled mess. 

The financial benefits of cloud communications 

Today’s businesses need access to best-in-class communication solutions, but at an affordable cost across the entire customer lifecycle. It’s not just about minimizing initial costs (like investing in a brand-new PBX), but also considering the long-term operating expenses. In other words, it’s all about minimizing CapEx and controlling OpEx. 

Organizations need their communications service to meet this criteria, but only the cloud-based ones do. You can see this play out when analyzing the differences in CapEx and OpEx between cloud-based and premise-based solutions. 

CapEx considerations 

When we’re talking about communications services, there’s a big difference between the CapEx for a traditional, premise-based service and a cloud-based system. Look at all the equipment and licensing costs associated with a traditional system! 

Capital Expenditure Cloud vs On-Premise Price Comparison Chart

As you can see, there are no additional upfront costs in the cloud model, with the exception of physical phones (if you need them), third-party integrations and training. Plus, phones technically only fall under the CapEx category if you purchase them. If you decide to lease them, they’ll fall under your operating expenses. 

OpEx considerations 

When considering ongoing service costs, you can’t just weigh the immediate costs of new equipment. You also have to consider the long-term costs. Luckily, with a cloud-based solution, many of the operating costs associated with premise-based services are eliminated.

Operational Expenditure Cloud vs On-Premise Price Comparison Chart

Because most cloud-based systems are offered as a Software as a Service (SaaS) model, your organization will likely pay for a monthly, per-user subscription. Maintenance, connectivity and physical space are now irrelevant. Now there will be no surprises on your monthly invoices; everything is completely transparent and scalable. 

There’s no doubt about it, if you’re worried about saving money (who’s not?), selecting a cloud-based communications solution is a lot more cost effective than a traditional, premise-based system. Not only will you save money upfront, but you’ll achieve more control and predictability in your operating costs.

Katie Dudlets

Katie Dudlets

Katie Dudlets serves as TelNet’s Marketing Manager and Chief Storyteller. A whiteboard enthusiast and compulsive book collector, she can usually be found expounding on the advantages of corporate storytelling. When not at her desk, you’ll probably find her admiring the artistry of a well-crafted taco, petting a dog or zipping around Lake St. Clair on her jet ski.

Subscribe to Our Newsletter

TelNet Worldwide
Scroll to Top
How can we help you?

Click to chat with a team member.

Get a Quote.
No Strings Attached.

Want to know how our features, plans and pricing could fit into your business? There's no better way to learn more than to talk to one of our Solution Specialists and get a free quote!

Blog Categories

Is Office Right for You?

Office is a calling-only package that provides HD voice on IP-enabled desk or conference phones. Office is intended for organizations who don’t use our collaboration software or perhaps use another collaboration platform and want to add voice.

Is Mobile Right for You?

Mobile is for organizations whose employees are on the move and do not need a chat platform or to host meetings. The package provides mobile calling. If softphone calling capabilities are all that is needed, our mobile package is your ideal solution.

Is Meetings Right for You?

Meetings is intended for organizations who are totally replacing an existing collaboration platform or adopting their first platform. Meetings includes calling features plus Webex, which is a full-featured collaboration suite that includes many remote and hybrid work functions.

Is Premium Meetings Right for You?

Similar to Meetings, Premium Meetings is intended for organizations replacing or adopting their first collaboration platform. Premium adds enhanced Webex features, including presenter controls and higher participant counts, making it ideal for bigger organizations who host large webinars or meetings.