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Capital expenditures (CapEx) versus operating expenses (OpEx)

Capital expenditures (CapEx) versus operating expenses (OpEx) - Google Cloud Platform Tutorial

From the course: Google Cloud Digital Leader Cert Prep: 1 Digital Transformation with Google Cloud

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Capital expenditures (CapEx) versus operating expenses (OpEx)

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One area where cloud differs from traditional IT is how managing costs change when you move to the cloud. With organizations moving from on-premises infrastructure to on-demand cloud services, there's a major shift in spending from capital expenditures to operating expenses. But what's the difference between these two? Capital expenditures or CapEx are up front business expenses put toward fixed assets. Organizations buy these items once and they benefit their business for many years. For example, in IT, these expenditures might mean buying hardware like servers, printers or cooling systems. Maintaining these assets is also considered CapEx because it extends their lifetime and usefulness. Small businesses can find CapEx spending challenging because large one time purchases are often high cost. The more money you put towards CapEx means less free cash flow for the rest of the business. And then there are operating expenses or OpEx, which are recurring costs for a more immediate…

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