CAPEX vs OPEX: Which is best when it comes to your business’ security?Jason Siddall
From investing in new air conditioning systems to yearly maintenance and renovations, any business, big or small, have several essential expenses. For most business owners or managers, cutting costs on expenses is a major priority. Luckily, the increased use of technology in many aspects of the business world, are making it easier to lower certain expenses. Cloud-based services especially have proved to have major advantages with cost savings. One of the best places for any business to start saving costs is with cloud-based security systems.
If you own or manage a business, you have probably come across the terms for financial models, ‘OPEX’ and ‘CAPEX’. Both of these terms refer to expenses in your business, but in different ways. While many businesses are ramping up budgets to upgrade or invest in new security systems to guard themselves against escalating crime, the question arises: Which of these is best when it comes to your business’ security system? Before we delve into which is better, let’s look at the differences between CAPEX and OPEX and the benefit of each:
What is CAPEX and OPEX?
Capital expenditures (CAPEX) refers to expenses toward fixed assets, such as the purchase and maintenance of vehicles, equipment, buildings or land. Typically, these purchases are intended to benefit your business for many years.
- The benefit of CAPEX
CAPEX expenses are recorded as assets on your business’ balance sheet and can make it healthier in financial terms to attract investors.
However, the more money put towards CAPEX means less cash flow for your business, which can halt shorter-term operations.
Operating expenses (OPEX) refers to funds that ensure the successful day-to-day operation of your business. Typically, items bought with these funds do not last longer than the year it was purchased in.
- The benefit of OPEX
The biggest benefit of OPEX is that it can be fully deducted. In other words, these expenses can be subtracted from the revenue when calculating the profit or loss of your business.
Which is better for security expenses?
A security system is a major investment and highly valuable for any business. It is the one thing that a business should never cut corners with. Today, however, effective, high-quality security systems, hardware and in-house data centres may rack up costs. Therefore, many businesses are looking for a ‘pay-as-you-go’ solution, like electricity in the home, that can be paid on a monthly basis. This way, the system will be classified as OPEX and can be fully deducted.
Why cloud-based security systems are ideal
Cloud security systems, such as access control and CCTV, can easily be ‘hired’ from a security company and installed on a business property. In other words, the business does not own the equipment but pay on an ongoing basis. This is ideal for businesses looking for a flexible, cost-effective solution. Typically, the security company also take care of the management and maintenance of the system and data monitoring every month, as well as customise the system as and when needed. It is perfect for businesses looking for a robust security system maintained monthly.
What if you already have an access control and CCTV system in place?
If you already have an access control and CCTV system managed from a local server in place, you may already know how expensive it can be because you had to pay for hardware upfront (CAPEX) as well as update and maintain update and maintain it regularly. Additionally, planning for potential hardware failures and unexpected breakages isn’t easy and can lead to high additional costs. Ultimately, an older in-house system can put you on the backfoot, security- and cost-wise.
Strategic Asset Management Solutions (S.A.M.S) specialises in offering customised, turnkey security solutions, including cloud-based access control and CCTV surveillance systems, suited to businesses’ specific requirements. When you decide to upgrade an existing security system, S.A.M.S Connecting the Dots can offer a reduced cost on capital expenditure (CAPEX) for new hardware, including CCTV, in a leased agreement which then includes the managing and maintenance of the hardware. S.A.M.S can also provide cloud-based data and access monitoring, as well as the storage of vital data (OPEX). This is an excellent cost-saving option for businesses with expensive, outdated security systems. Ricky Homem, the MD of S.A.M.S Connecting the Dots says, “Lower costs in terms of capital outlay, energy costs, maintenance and skilled IT staff means that these hard-won funds can be channelled elsewhere such as marketing or new product lines.”
Going forward: Moving to the cloud
Through the years, security expenses have been considered as CAPEX. Now, with the move to the cloud and a more pay-as-you-go-type method, businesses can lower their budgets and can shift their security CAPEX costs to OPEX instead. Says Ricky, “with faster connectivity comes the undeniable benefits of not having to shell out for hardware, and instead, enjoying cloud storage.” If you own or manage a business, investing in an effective cloud security system and saving costs on necessary expenses should be two of your biggest priorities. Now, S.A.M.S allows you to do both.
With smarter cloud-based access control and CCTV security system from S.A.M.S, you no longer have to try to plan for potential hardware failures and updates because your system will effectively be managed and maintained. This way, you have complete peace of mind knowing your business and assets are safe and secure. With all its benefits and potential to slash budgets and raise profits, it is evident that cloud security is the way forward to compete in the modern business world.
S.A.M.S Connecting the Dots is a smart technology company that specialises in customised, turnkey cloud-based solutions suited to businesses’ security strategies, and asset management solutions for businesses without high upfront costs.
Learn about TCO – Total Cost of Ownership.