CIOs To VAR500 Attendees: Op-Ex, Cap-Ex Flexibility Key In Winning Deals


Providing the flexibility of either operating expense or capital expense, technology solution options can mean the difference between winning and losing a deal.

That was just one of the big takeaways from a no-nonsense, 45-minute session with two of the best and brightest CEOs in the business at the VAR500 2011 solution provider conference session Monday at the Sawgrass Golf Resort & Spa in Jacksonville, Fla.

"Op-ex and Cap-ex flexibility has been one of the key evolutionary points of IT in the last couple of years," said Michael Skaff, CIO for the San Francisco Symphony in an open question and answer session with about 75 VAR500 solution provider attendees. "I am keen on having the flexibility between op-ex and cap-ex so we can shift (IT purchases) things back and forth. That can be the difference frankly between making a sale or not. That is a critical point for me."

 

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Operating expense based IT solutions are on the rise with the rapid acceptance of cloud computing solutions. Many CIOs are moving to buy more IT services under a cloud computing utility model, paying a monthly operating expense bill based on usage rather than opting to invest huge sums to own hardware-software infrastructure under the old capital expenditure IT project model.

Andrew Black, CIO for Stein Mart, a Jacksonville, Fla.-headquartered $1.3 billion department store retailer with 265 stores in 33 states, said one of the advantages of the cloud computing revolution is the "financial engineering" flexibility it offers CIOs to pay for IT solutions by the "drink."

"Sometimes you want to use cap-ex and sometimes you want to use op-ex," Black said. "When cap-ex is constrained you can trade capital for an ongoing expense stream. That is attractive to me."

Black said his capital expenditure-based IT budget is up four times what it was four years ago in the wake of a significant IT overhaul that included the hiring of a financial analyst who identified key cost cutting opportunities including reduced software maintenance fees for licenses that were no longer applicable.

The San Francisco Symphony has also moved aggressively to cut software maintenance fees, said Skaff, noting his capital expenditure IT budget is up. "We've gone after fat and been able to reinvest it elsewhere."

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