A digital marketing firm, LeadFlow, is migrating its ad-tracking application to the AWS Cloud. Currently, the company owns and maintains physical servers in a private colocation facility, which requires significant upfront investments and multi-year lease agreements. By moving to AWS, LeadFlow wants to replace these fixed technology costs with variable expenses that scale in real time based on active ad campaigns. Which of the following describes this economic transition?
- AReplacing variable operating expenses (OpEx) with upfront capital expenses (CapEx)
- BUtilizing cloud elasticity to convert variable operational costs into depreciable capital assets
- Replacing upfront capital expenses (CapEx) with variable operating expenses (OpEx)Cevap
- DReplatforming the application to establish permanent, fixed capital expenditures
Cevap
Replacing upfront capital expenses (CapEx) with variable operating expenses (OpEx)
The correct answer is replacing upfront capital expenses (CapEx) with variable operating expenses (OpEx). In cloud computing, instead of investing heavily in physical data centers and servers before knowing how they will be used, businesses can pay only for the resources they use, which transitions costs from capital expenditures (CapEx) to operating expenditures (OpEx).
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Shifting from Capital Expenses (CapEx) to Operating Expenses (OpEx) in Cloud Economics