Companies Still Picking OpEx spending Over CapEx

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The pandemic led organizations around the world to shift their investments from capital expenditures (CapEx) to operating expenses (OpEx).

Two years later, companies are still picking OpEx spending over CapEx. According to Christopher Gilchrist, a principal research analyst at Forrester, the increase in IT spending over the past two years has shifted much of the IT budget away from CapEx to OpEx spending.

Organisations are now investing more in operational expenditure such as hardware needed by workers to effectively switch to remote roles.

As the pandemic loses its impact on the global economy, Gilchrist identified three potential operating models that could emerge.

This includes the position that traditional, cost-conscious organizations will largely revert to pre-pandemic IT budgeting behaviour by slightly favoring CapEx over OpEx.

The second trend is that organizations that optimize their productivity will continue their pandemic behaviour and technological purchasing behaviour, albeit at a slower pace.

The third trend will be that result-oriented organizations will continue the momentum of IT budget behavior with little slowdown. According to Gilchrist, “these are the organizations that will use the new normal out of the pandemic as a point of significant lift.”

The sources for this piece include an article in CIODIVE.

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