UNDERSTANDING THE CLOUD, SaaS, CapEx, AND OpEx

There is no doubt about the advantages of cloud computing these days; as we all know, using cloud-based software will enable you to access and control your business anywhere, anytime, and reduce costs too.

 

When it comes to cloud ROI, comparing capital expenses (CapEx) to operational expenses (OpEx) reveals the cloud is a great way to switch IT spending to a pay-as-you-go model and reduce CapEx costs, as well as reap other benefits.

 

What is SaaS, CapEx & OpEx?

 

SaaS, Software as a service is a software licensing and delivery model in which software is licensed on a subscription basis and is centrally hosted. SaaS is known as "on-demand software" and Web-based/Web-hosted software.

 

CapEx is defined as business expenses incurred to create long-term benefits in the future, such as purchasing fixed assets like a building or equipment. Some examples of IT items that fall under this category would be whole systems and servers, printers and scanners, or air conditioners and generators. You buy these items once, and they benefit your business for many, many years. Maintenance of such items is also considered CapEx, as it extends their lifetime and usefulness.

 

OpEx is your operating costs, the expenses to run the day-to-day business, like services and consumable items that get used up and are paid for according to use. This includes printer cartridges, paper, electricity, and even yearly services like website hosting or domain registrations. These things are necessary for your business’s success but are not considered significant long-term investments like CapEx items.

 

Advantages of SaaS

 

Reduced time to benefit

 

Software as a service (SaaS) differs from the traditional model because the software (application) is already installed and configured. You can simply provision the server for an instance in the cloud, and in a couple of hours, you'll have the application ready for use. This reduces the time spent on installation and configuration and can reduce the issues that get in the way of the software deployment.

 

Lower costs

 

SaaS can provide beneficial cost savings since it usually resides in a shared or multi-tenant environment, where the hardware and software license costs are low compared with the traditional model. Another advantage is that you can rapidly scale your customer base since SaaS allows small and medium businesses to use a software that otherwise they would not use due to the high cost of licensing. Maintenance costs are also reduced since the SaaS provider owns the environment and is split among all customers that use that solution.

 

Scalability and integration

 

Usually, SaaS solutions reside in scalable cloud environments and have integrations with other SaaS offerings. Compared with the traditional model, you don't have to buy another server or software. You only need to enable a new SaaS offering, and in terms of server capacity planning, the SaaS provider will own that. Additionally, you'll have the flexibility to be able to scale your SaaS use up and down based on specific needs.

 

New releases (upgrades)

 

With SaaS, the provider upgrades the solution and becomes available for their customers. As a result, the costs and effort associated with upgrades and new releases are lower than the traditional model, which usually forces you to buy an upgrade package and install it (or pay for specialized services to upgrade the environment).

 

Easy to use and perform proof-of-concepts

 

SaaS offerings are easy to use since they already come with baked-in best practices and samples. Users can do proofs-of-concept and test the software functionality or a new release feature in advance. Also, you can have more than one instance with different versions and do a smooth migration. Even for large environments, you can use SaaS offerings to test the software before buying.

 

How 24x7 Retail is contributing to the growth of your organization.

 

Cloud solutions are gaining traction globally because of their ease, low cost, and comprehensive services. More and more companies are discarding their old, clunky IT infrastructures for the more agile cloud. 

 

With 24x7 Retail, we will contribute to your business growth by delivering, 

  • flexibility to scale and adapt services to match your ever-changing goals and needs

  • accessibility everywhere and any time, as long as you have an internet connection

  • global collaboration

  • efficiency, as there is little to no lead time for launching your business to market and few logistics to coordinate

  • competitive advantage as a quick resource for the most innovative technology available

  • data security and IT infrastructure managed by a professional service provider in collaboration with world-leading platforms, rather than your workforce

  • savings on backend hardware and equipment

  • cost-effective pay-as-you-go structure,

  • regular updates and access to up-to-date technology

  • a competitive edge over competitors who must still devote resources to managing their IT infrastructure

 

With 24x7 Retail, we offer the best of both worlds by providing both SaaS (OpEx) and CapEx models

 

24x7 Retail - OpEx (SaaS) Model

The solution is offered with the intention to provide the lowest possible startup costs for an organization to get its business up and running. With 24x7 Retail OpEx model, you will be paying a Transaction Processing Fee (TPF) - just like a service charge - based on the actual number of transactions (Example: Invoices) you do in your store. This helps you to manage costs at a lower rate if sometimes your business is not performing as expected. As we offer our services, software, and cloud infrastructure, you will be charged for the total solution based on the actual as you will need more and more resources and services when your business is performing.

 

24x7 Retail - CapEx Model

 

Software is offered with a standard CapEx license that enables you to use the software without paying additional charges. You need to maintain the infrastructure. The advantage of CapEx is that assets purchased this way can be depreciated over time. The long-term total cost of ownership is lower than a similar OpEx expense. However, large upfront payments can upset cash flow and may not cover all the necessities of moving to the cloud.