The New Normal:
Opex instead of Capex
Today’s CIO is confronted with a shift in thinking about expenses: look for ways to move expenses from the Capital Expenditure (Capex) budget to the Operational Expenditure (Opex) budget.
The Chief Financial Officer will look at ways to spread large costs over time to take advantage of amortization and depreciation. CFO's manage those expenses separate from the day-to-day operational expenses of the organization. Generally, big-ticket items like telephone systems, servers, software and, in some cases software development resource costs for products or internal application development, are capitalized. The Capex budget is determined annually, and investments made against it become locked in. Capital expenditures also appear on the Balance Sheet.
In contrast, the Opex budget is used for the day-to-day costs of running the business and are managed on a monthly basis. These expenses appear on the Income Statement simply as "operating expenses". These expenses fluctuate with the business and can go up or down from month to month. Examples include rent, utilities, payroll, and other expenses the are typically paid monthly.
CIO's must do two things at the same time: manage expenses and deliver high-quality, high-availability and robust applications for the business to grow.