CompTIA Cloud Essentials+ (CLO-002)Business Principles of Cloud EnvironmentsEasy
A small business is evaluating moving its on-premises customer relationship management (CRM) system to a cloud environment. They are concerned about the initial investment required for new hardware and software licenses if they were to rebuild the system in the cloud. Which financial model would best address their concern by allowing them to pay for cloud resources as an ongoing operational expense?
- AOperational Expenditure (OpEx)
- BReturn on Investment (ROI)
- CCapital Expenditure (CapEx)
- DTotal Cost of Ownership (TCO)
Show answer & explanationAnswer & explanation
Correct answer: A. Operational Expenditure (OpEx)
Operational Expenditure (OpEx) involves paying for services or resources on an ongoing basis, typically monthly or annually, without a large upfront investment. This aligns with the business's desire to avoid significant initial costs.
Why the other options are wrong
- B. ROI measures the profitability of an investment, not a financial expenditure model itself.
- C. CapEx involves large, upfront investments in assets, which is what the business wants to avoid.
- D. TCO is a comprehensive cost analysis, not a financial model for expenditure.
Operational Expenditure (OpEx)
Funds used to run the day-to-day operations of a business, typically expensed in the period they are incurred. In cloud computing, this often refers to pay-as-you-go or subscription services.
- No large upfront cost
- Paid for as consumed or subscribed
- Treated as an operating expense for tax purposes
Memory trick: OpEx is like renting a cloud, CapEx is buying your own server farm.