Cash is king: Move to OpEx to keep cash on hand

As businesses start to plan for their upcoming budgets, it is difficult to prepare with full certainty. Regardless of financial situations, there has never been a better time to maintain cash reserves to ensure operations can scale with customer demand.

The best way to prepare for uncertainty while maintaining cash reserves is to reduce capital expenditures investments and move towards a consumption based model. Utilizing an OpEx (operating expense) model can give your business the cash reserves needed for uncertain budgetary planning while unlocking additional benefits that aren’t available with legacy, capital intensive investments. Let’s take a step back and understand these concepts.

A capital expense (CapEx) represents an investment in the business with the expectation of receiving benefits for longer than a single tax year. This can be, for example, the purchase of hardware or physical network systems. These investments have significant upfront costs that drain cash reserves or add to your operating debt, but can be amortized over years. 

On the other hand, an operating expense (OpEx) relates to investments based upon consumption of the good or service. You only pay for what you use and can upgrade or expand as needed. In a rapidly changing world, switching systems to OpEx investments gives your business the ability to more accurately forecast and budget for your operation, whereas CapEx requires a heavy initial investment, longer term maintenance costs, limits your ability to upgrade and struggles with scaling additional functionality or users. 

When comparing both options to figure out which model is best for your cost-reduction strategy, the answer takes form in moving to cloud-native platforms as an example of OpEx that enables a pay-as-you-go approach. Cloud-native solutions, scalable and flexible by nature, allow organizations to be more agile and their respective departments to be better aligned as the overall structure and demand grow.

Let’s explore the additional benefits of moving to a OpEx contact center.

Installation and maintenance

With on-premises systems, implementations and upgrades represent a substantial capital expense, and many providers require lengthy maintenance contracts. Additionally, they are usually expensive and complicated to set up, requiring support from a technical third party.

Cloud solutions, on the other hand, are usually easy to set up, easy to use and highly scalable. Additionally, the entry cost is usually lower compared to on-prem options. All you have to do is to acquire the desired software to meet your business needs, install it on all devices and you should be good to go.

Flexibility and scalability

Software built on the cloud often presents a flexible range of options that enables you to choose how much you want to spend. Public cloud services allow for a pay-as-you-go model, in which you acquire only the software you need to meet success, while on-premises or private cloud services are built in-house and usually require higher know-how and costs. A third option, named hybrid cloud, comes when you acquire a public software and then have your in-house team manage it.

On the other hand, cloud services are highly scalable and suited to meet fluctuating business demands. Contact centers using cloud software can easily bring in new agents as needed and provide adequate remote training.

 

Integrations and automations

Investing in an on-premises solution means you are making a significant bet on the future of your functionality, which is not a wise choice for today’s environment of the rapidly fluctuating customer service space. Instead, consider investing in flexible solutions to meet changing customer demands.

One of the many advantages of modern cloud software is the ability to enable your agents to have a single, 360-degree view of the customer through integrations and automations. You can integrate your cloud service of choice with existing collaboration tools, record systems and CRMs, enabling an automated view of customer data to boost agent efficiency. As other tools or systems receive updates or changes, native cloud systems provide flexible, extensible and seamless integrations.

Overall, using an OpEx model enables your business to control costs, better forecast your expenditures and reduce cash intensive investments. On-premises equipment is costly and inflexible, with unforeseen maintenance expenses and no ability to scale to demand. A Contact Center as a Service (CCaaS) offering, on the other hand, enables you to reduce costs upfront and control investment as your business grows.

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