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Difficulty: MediumUnderstand concepts of cloud economics

A boutique architectural design firm is moving its local rendering workload to AWS. Instead of purchasing and maintaining expensive physical workstation hardware that sits idle between projects, the firm plans to run rendering jobs on Amazon EC2 instances and terminate them as soon as the rendering is complete. Which of the following describes the primary cloud economics benefit of this approach?

  1. It replaces upfront capital expenses (CapEx) with variable operating expenses (OpEx), aligning costs directly with actual resource utilization.Answer
  2. B
    It reduces operating expenses (OpEx) by converting them into fixed, predictable capital expenses (CapEx) through AWS infrastructure ownership.
  3. C
    It relies on scalability to guarantee that compute resources automatically resize without changing the overall operating expense.
  4. D
    It requires committing to long-term Dedicated Hosts to eliminate variable billing and secure fixed-rate capital investments.

Answer

Replacing upfront capital expenses (CapEx) with variable operating expenses (OpEx), aligning costs directly with actual resource utilization.
The correct option correctly identifies that by moving from physical workstations to AWS EC2 instances, the firm replaces capital expenses (CapEx) associated with purchasing hardware upfront with variable operating expenses (OpEx) based on actual run time.

Step-by-Step Solution

1
Analyze the business scenario described in the stem.
The firm is moving from owning physical hardware (idle cost) to provision-on-demand compute resources (EC2) that are terminated when not in use.
This establishes that the resource utilization is variable and avoids upfront hardware investments.
2
Identify the financial transition occurring in this scenario.
The shift from buying physical hardware to paying for compute utility represents moving from Capital Expenditures (CapEx) to Operating Expenditures (OpEx).
CapEx involves upfront spending on physical assets, whereas OpEx involves ongoing costs to run a business day-to-day.
3
Evaluate the options to find the one matching this shift.
The option stating that it replaces upfront capital expenses with variable operating expenses aligns with this shift.
This matches the AWS cloud economics principle of trading capital expense for variable expense.

Key Concept

Shifting from Capital Expenditures (CapEx) to Operating Expenditures (OpEx) through utility-style cloud pricing.
Estimated Time:1m 0s
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Topics

Understand concepts of cloud economics

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