Question

Difficulty: MediumConsumption-Based Model (CapEx vs OpEx)

Transitioning a disaster recovery solution from a physical, on-premises secondary datacenter to Azure virtual machines that are kept in a deallocated state until a failover drill or outage occurs shifts the associated compute costs from a Capital Expenditure (CapEx) to an Operational Expenditure (OpEx) consumption-based model.

Answer: Answer

Answer

The statement is true because migrating a physical secondary disaster recovery datacenter to Azure virtual machines that are deallocated until needed shifts the costs from upfront capital expenditures (CapEx) to a consumption-based operational expenditure (OpEx) model.
On-premises datacenters require upfront hardware purchases (CapEx). By using Azure virtual machines that are deallocated until needed, the organization avoids upfront physical hardware costs and only pays for compute resources when they are active, shifting the cost to an operational expense (OpEx) under a consumption-based model.

Step-by-Step Solution

1
Analyze the on-premises disaster recovery cost structure.
Maintaining a secondary physical datacenter requires purchasing hardware upfront, which is classified as Capital Expenditure (CapEx).
CapEx involves upfront spending on physical infrastructure that is depreciated over time.
2
Analyze the Azure virtual machine disaster recovery cost structure.
Azure virtual machines that are deallocated only incur storage costs and do not incur compute charges until they are started during a drill or outage.
Cloud compute resources are billed under a consumption-based model, which is an Operational Expenditure (OpEx).
3
Compare the change in cost model after migration.
The shift from physical hardware ownership to paying for compute power only when consumed represents a transition from CapEx to OpEx.
Consumption-based billing aligns expenses directly with active resource utilization, a core aspect of OpEx.

Key Concept

Consumption-Based Model (CapEx vs OpEx)
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