CAPEX

Finding ways to produce savings for a company heavily reliant on communication systems and networking can often seem challenging. However, the ability to run a phone system over the Internet, or Voice Over Internet Protocol (VoIP), clearly shows how traditional systems fare in comparison to the efficiency and savings of better tools. However, what also occurs when one introduces new technology platforms often includes ripple effects, and that’s where we get into the discussion about how to define the financials of an internet-based communication system.

Understanding CAPEX, OPEX, and VoIP

Historically, significant network changes and communications systems fell into the same bucket as infrastructure, which made them capital expenditures, or “CAPEX” for short. These costs frequently gained support through long-term financing, bond financing, or investment. They were rarely classified as operational expenses, or “OPEX” for short. Part of the reason tended to be due to accounting needs. Spreading the cost of an entire VoIP system change as a direct cost per unit produced or service provided was extremely hard, if not impossible mathematically, and then one had to explain that inflation to a client in pricing. Instead, most companies treated a VoIP charge as an overhead cost and built in the expense with an indirect rate added to a unit produced price via markup.

Why the Change?

With newer VoIP, you take away the old PBX hardware, then things become quite scalable financially. Because the service comes from a service provider, and the actual …