Reducing Costs With Cloud Communication

By:  |  Category: Blog, Telephony Thursday, April 26th, 2018  |  No Comments
Cloud Communication

Reducing costs with cloud communications

Not all dollars cost the same. A dollar invested in a technology project that has a low return on investment (ROI) has opportunity costs that may amount to far more than the initial investment itself. Similarly, many technology projects require ongoing commitments—sunk costs—that further erode profitability for a business: the proverbial “throwing good money after bad.”

Not only is there a heavy financial stake, but also the organization is essentially placing a series of bets on the investment:

  • Is this the right technology for our business? How will the technology change over the next three, five, and 10 years?
  • Is this the right vendor to partner with for our business? Will they be around in three, five, or 10 years?
  • How quickly will our business grow over the next three, five, and 10 years? Will this investment scale to support that growth?

Capital budgeting is always a very subjective process. A capital expenditure (CapEx) is usually defined by a minimum investment threshold, for example one thousand dollars, and the investment must have a valuable life of more than one year.

CapEx may, in some cases, include bundled equipment, installation and project management costs, implementation services, freight expenses, and initial training costs, among others. Businesses can depreciate a capital investment, typically over a five‐ or seven‐year period, but they must also pay property taxes and maintain fixed asset records on all capital investments throughout the useful life of the investments. And of course, most technology today is obsolete well before its five‐ or seven‐year depreciation period.

For these and many other reasons, most businesses prefer operating expenses (OpEx) instead of CapEx. OpEx costs—like utilities, rent, perpetual licensing fees, and software maintenance—are typically lower (in the short term) than CapEx costs. This is particularly true in terms of upfront costs required, which frees up cash for other projects that drive revenue and growth for the business. OpEx costs are typically more stable and predictable than CapEx costs and provide more flexibility for a business should requirements change.

For example, a service provider will usually charge a known recurring rate for a given level of usage, a per‐user (or per‐seat) fee, or a monthly subscriber fee.
The original thought behind premises‐based communications systems was to keep costs down by owning the solution. But as those systems have aged, businesses find themselves owning the problem of maintaining, upgrading, and expanding those systems. The cloud offers a better path for growth.

It not only saves you money through economy of scale, but also it scales cost-effectively as you grow. You never have to worry about adding more servers and switches as you add more employees. You simply add another seat in the cloud at a fixed monthly cost and have the assurance that new employees are connected into all of your business communications from day one.

  • If you’re looking to reduce communications costs, cloud communications can save you money:
  • No costly, upfront investments in servers, switches, and PBXs
  • No budget “surprises” with consistent or predictable calling plans
  • No costly, across‐the‐board software upgrades as new features and versions are released — you get the latest versions immediately, automatically
  • No wasted money on overprovisioned trunks or underutilized hardware
  • No high energy and cooling costs to run a roomful of equipment, and rent to store it all

As part of your ROI analysis, you should compare the total cost of ownership (TCO) of cloud‐based and premises‐based communications solutions.

Remember, a cloud‐based solution consists almost entirely of OpEx costs, whereas a premises-based solution requires both CapEx and OpEx (in the form of ongoing software assurance and upgrades).

If you need assistance with a Mitel cloud communication system, give EnhancedTECH a call for a complimentary consultation at 714-979-9330 or contact us at [email protected]

Samantha Keller

Director of Marketing and PR at EnhancedTECH
Samantha Keller (AKA Sam) is a published author, tech-blogger, event-planner and mother of three fabulous humans. Samantha has worked in the IT field for the last fifteen years, intertwining a freelance writing career along with technology sales, events and marketing. She began working for EnhancedTECH ten years ago after earning her Bachelor’s degree from UCLA and attending Fuller Seminary. She is a lover of kickboxing, extra-strong coffee, and Wolfpack football.Her regular blog columns feature upcoming tech trends, cybersecurity tips, and practical solutions geared towards enhancing your business through technology.
Samantha Keller

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