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Difficulty: MediumUnderstand concepts of cloud economics

A retail logistics company, ZenithFreight, is moving its on-premises package tracking system to AWS. The company currently pays upfront for physical servers, network switches, and data center cooling, which must be depreciated over five years. On AWS, ZenithFreight will pay a monthly invoice based on the compute and storage resources it actually uses each hour. Which of the following represents the primary cloud economics shift ZenithFreight is making, and its associated benefit?

  1. A
    Shifting from Operational Expenditures (OpEx) to Capital Expenditures (CapEx), which allows the company to own and depreciate cloud assets over time.
  2. B
    Shifting from Capital Expenditures (CapEx) to Operational Expenditures (OpEx), which requires the company to make heavy upfront investments to secure low hourly rates for all workloads.
  3. Shifting from Capital Expenditures (CapEx) to Operational Expenditures (OpEx), which allows the company to trade fixed capital expenses for variable operational costs.Answer
  4. D
    Shifting from Capital Expenditures (CapEx) to Operational Expenditures (OpEx) by rehosting all workloads, which eliminates the need to manage application-level operational costs.

Answer

Shifting from Capital Expenditures (CapEx) to Operational Expenditures (OpEx), which allows the company to trade fixed capital expenses for variable operational costs.
The correct answer accurately describes the transition from Capital Expenditures (CapEx) to Operational Expenditures (OpEx). On-premises data centers require substantial upfront capital investments (CapEx) for hardware and facilities that must be depreciated. In contrast, AWS allows businesses to pay for services on a variable, pay-as-you-go basis as an ongoing operational cost (OpEx).

Step-by-Step Solution

1
Identify the current on-premises cost structure.
ZenithFreight's upfront payments for hardware and facilities represent Capital Expenditures (CapEx).
Establishing the starting financial state is necessary to trace the economic shift.
2
Analyze the cloud cost model for ZenithFreight's workload.
The hourly, utility-based payment structure on AWS represents Operational Expenditures (OpEx).
This determines the destination financial model in cloud economics.
3
Correlate the shift with the primary benefit of cloud computing.
Trading upfront CapEx for variable OpEx enables paying only for what is used.
Matching the correct transition and benefit identifies the correct answer.

Key Concept

CapEx to OpEx Shift
Estimated Time:1m 0s
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Understand concepts of cloud economics

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