Engaging cloud vendors
Quentin Docter, Cory Fuchs · 2020
This chapter focuses on the financial aspects of engaging a cloud provider, business aspects of vendor relations, and cloud migration approaches.For most companies, the entire point of moving IT infrastructure to the cloud is to save money. Generally speaking, using the cloud versus having on-premises infrastructure does do that. One way companies save money is by investing less in hardware and software that will become obsolete. Companies might also be able to save on taxes based on the types of expenditures they have. Choosing the right software licensing model can save money too, as can spending less on human capital and properly utilizing professional services. While using cloud services might be cheaper than the alternatives, it's unfortunately still not free. When thinking of moving to the cloud, you need to be aware of different classifications of expenditures and costs. Money spent on buying, improving, or maintaining fixed assets is classified as a capital expenditure. The cool finance kids will shorten this to CapEx.The other type of expenditure, called an operating expenditure (or OpEx), is used for the purpose of supporting the ongoing costs of conducting regular day-to-day business. Salaries, administrative expenses, office supplies, utilities, research and development, property taxes and insurance, licensing fees, and the cost of goods sold all fit into OpEx. The business benefits of OpEx are expected to be realized in the current year, and the goods or services purchased are not considered company assets for accounting or tax purposes.