Why Focusing on Operating Expenses is the Best Way to Budget IT

Business technology is one of the greatest expenses in your budget, particularly when things don’t go according to plan. These are typically looked at as capital expenses, which means they are expensive and unpredictable by nature… but they don’t have to be. Today, we want to show you a different way of managing your IT that transforms it into a predictable operating expense.

But First, a Lesson In Capital Expenses vs Operating Expenses

How Capital Expenses Work

Capital expenses are when you purchase something and own it outright. You’ll then use it and repair it over time, and when it’s too old, and slow, and doesn’t work the way you want it to anymore, you’ll replace it. You might notice a couple of problems with this model:

• Significant costs coming out of your capital.
• Depreciation eating away at your technology’s value.
• No sense of when expensive repairs or replacements will be necessary.

This all gets in the way of your building a profitable business with an accurate, predictable budget. It also encourages you to hold on to technology longer than you should, which creates more costs in the form of decreased operational performance over time, as well as security risks.

How Operating Expenses Work

The operating expense model uses remote connectivity to keep uptime as close to 100% as possible. In other words, rather than responding to issues as they pop up, IT as an operational expense aims to prevent the issues entirely through proactive monitoring of your systems. In essence, this model is a subscription service with the outcome of working technology. Here are the advantages:

• You aren’t subject to paying a complete sum up front.
• The cost is stable and consistent from month to month, boosting predictability.
• Everything within scope is included in the monthly cost, with the provider ensuring uptime by repairing or replacing troublesome equipment.

It’s clear that this model is more sustainable and more predictable, especially when compared to the alternatives.

For SMBs, Operating Expenses Are Better for IT

In business, there is so much you can’t predict, but your IT costs should be one thing you can control. Get started today by working with Phantom Technology Solutions. Learn more by calling us at (800) 338-4474.