EASY POINT OF ENTRY WITH NO CAPITAL EXPENSE
There has been a longstanding tradition in most IT departments to want to own the technology they deploy. Changes in the economy and technological advances in recent years, however, are putting pressure on this tradition. When deploying to the cloud very little planning is required to customize the process to your business systems. Planning is reduced to weeks and deployment to hours. End users do not incur any initial capital expenditure for hardware, software, backups, redundancy system and storage planning or technical support. Instead the expense is an operational expense, like paying for electricity or water.
CFOs, in particular, want to shift more of the costs associated with IT from the capital expenditure (CapEx) budget to the operational expense (OpEx) budget. Accomplishing this objective is much more than just an accounting maneuver -- it requires a fundamental change in the way IT is procured and financed. One of the benefits of the OpEx model is that there is no long-term commitment. When you are finished with the resource, it is turned back to the provider, who holds utilization responsibility -- that is, the provider has to figure out how to obtain sufficient usage of the resource to make it economically workable.
This lack of commitment is financially valuable in that it frees companies from having to make a significant long-term investment. It makes sense that, per unit of measurement, OpEx resources would be more expensive than CapEx resources. For example look at rental car pricing to recognize that we pay a premium for short-term commitment. You save money by paying that higher rate for a shorter period of time, which ultimately is less expensive than purchasing a car only to use it for a short while.