OPEX VS CAPEX
One of the most attractive features of public cloud computing is the ability to amortise the costs of major capital expenditure over a large number of customers. By removing the need for massive capital investment, public cloud options remove the peaks and troughs from budget and move expenditure to the more responsive operational side. This change allows agencies to be more responsive to changing pressures and demands and has much to recommend it.
On the other hand, of course, once the capital base is removed, reconstituting it becomes very difficult. Justification for large, new lumpy investment is hard to establish. In turn, this reduces agency options and, to some extent, their ability to control their destiny. While we accepted this in the production of electricity over 100 years ago, the commodity future of computing is, understandably, yet to be established.
An example of one potential future is the manner in which we have invested in major ERP solutions. Once chosen and deployed, an ERP solution is difficult to change. While options exist, and the licensing costs aren’t the most significant, the cost of churn, for no capability gain creates a form of inertia that is very hard to overcome.
To really gain the benefits of public cloud computing, we need widely accepted standards so that mobility between providers is not just possible but practical.