Microsoft 365 FundamentalsDescribe cloud conceptsEasy
A company is evaluating cloud services and wants to understand the concept of 'CAPEX' versus 'OPEX' in the context of cloud computing. Which statement accurately describes how cloud computing typically shifts IT spending?
- ACloud computing primarily shifts spending from Capital Expenditure (CAPEX) to Operational Expenditure (OPEX).
- BCloud computing shifts spending from Operational Expenditure (OPEX) to Capital Expenditure (CAPEX).
- CCloud computing primarily increases Capital Expenditure (CAPEX) by requiring large upfront hardware purchases.
- DCloud computing eliminates both Capital Expenditure (CAPEX) and Operational Expenditure (OPEX), leading to no IT costs.
Show answer & explanationAnswer & explanation
Correct answer: A. Cloud computing primarily shifts spending from Capital Expenditure (CAPEX) to Operational Expenditure (OPEX).
Cloud computing eliminates the need for large upfront hardware purchases (CAPEX) by allowing organizations to pay for resources as they use them, which falls under Operational Expenditure (OPEX).
Why the other options are wrong
- B. This is the opposite of how cloud computing typically impacts spending.
- C. This is incorrect; cloud computing minimizes upfront hardware costs.
- D. This is incorrect; cloud computing still incurs costs, but they are structured differently.
CAPEX vs. OPEX in Cloud
Cloud computing typically shifts IT investment from Capital Expenditure (CAPEX) to Operational Expenditure (OPEX).
- CAPEX: Upfront spending on physical infrastructure (e.g., servers, data centers).
- OPEX: Ongoing costs for services or resources (e.g., utility bills, cloud subscriptions).
- Cloud providers own and manage the infrastructure, customers pay for usage.
Memory trick: Cloud moves money from big upfront buys to smaller, ongoing bills.