AWS Certified Cloud Practitioner (CLF-C02)Cloud ConceptsEasy
A small manufacturing company currently spends $200,000 upfront every five years to purchase and install physical servers. After migrating to AWS, they instead pay a monthly bill based on usage. Which cloud economic shift does this describe?
- AShifting from operational expenditure to capital expenditure
- BConverting variable costs into fixed costs
- CShifting from capital expenditure to operational expenditure
- DEliminating the need for any IT budget
Show answer & explanationAnswer & explanation
Correct answer: C. Shifting from capital expenditure to operational expenditure
Buying physical servers upfront is a capital expenditure (CapEx), while paying monthly based on usage is an operational expenditure (OpEx). Cloud computing lets organizations trade large upfront CapEx investments for variable, pay-as-you-go OpEx.
Why the other options are wrong
- A. This reverses the actual direction of the shift described.
- B. This is the opposite; the company is moving to variable costs, not fixed.
- D. The company still has an IT budget, just structured differently.
CapEx to OpEx
Cloud computing lets organizations replace large upfront capital expenditures on hardware with variable operational expenditures based on actual usage.
- CapEx = upfront purchase of physical infrastructure
- OpEx = pay-as-you-go, usage-based spending
- One of the six benefits of cloud computing
Memory trick: Trade the big check for a monthly bill.