Opex vs. Capex. How your Business Can Take Advantage of Technology and Increase ROI.

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1 Opex vs. Capex How your Business Can Take Advantage of Technology and Increase ROI

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3 Content 4 Opex vs. Capex 8 Take Advantage of Opex With a Hosted Communications System 12 How to Take Advantage of Opex with IT Support Services 16 Benefits of Opex with Cloud Based Software Solutions

4 4 Opex vs. Capex From a tax standpoint, there s a significant difference between the two. Opex vs. Capex Opex With a Hosted Communications System

5 5 When it comes to information technology, many businesses are all too familiar with the technical complications the complexity, the problems related to upgrading, and the downtime! But there s another issue to be concerned about that has nothing to with the commonly felt IT headaches: accounting and your financial processes. Many enterprises have already decided that the technical side of IT and the potential direct cost savings are reason enough to outsource the accounting responsibility to a third party with expertise, but there are considerations that make outsourcing a compelling option from another standpoint as well: OPEX versus CAPEX. Opex with IT Support Services Opex with Cloud Based Software Solutions

6 When it comes to information technology, many businesses are all too familiar with the technical complications the complexity, the problems related to upgrading, and the downtime! But there s another issue to be concerned about that has nothing to with the commonly felt IT headaches: accounting and your financial processes. Many enterprises have already decided that the technical side of IT and the potential direct cost savings are reason enough to outsource the accounting responsibility to a third party with expertise, but there are considerations that make outsourcing a compelling option from another standpoint as well: OPEX versus CAPEX. OPEX vs. CAPEX: The Distinction Explored Capital expenditures (CAPEX) refer to business purchases that have some benefit down the road. These tend to be something tangible investments in production equipment, for example, or a new building. Operational expenditures (OPEX) are money spent on the day-to-day aspects of doing business. For instance, wages and equipment repair fall under the OPEX category. From a tax standpoint, there s a significant difference between the two. Due to their immediacy, expenses in the OPEX category can be fully deducted from tax obligations in the same year that the expenditure was made. When it comes to CAPEX, on the other hand, because the expenditures involve a future benefit, deductions for those expenses are spread out over multiple years. OPEX and CAPEX and Their Application to IT What does the OPEX/CAPEX distinction mean when it comes to information technology? When a company purchases IT equipment, it is classified as a capital expenditure. As the equipment depreciates over time several years, in practical terms the tax deduction is slowly and gradually applied. This is a potential significant negative for Opex vs. Capex Opex With a Hosted Communications System

7 ipromedia.us 7 the cash flow of a business. If, however, a company outsources its IT services to an expert managed services provider, the cost of the service is regarded as an operational expenditure. Each year, the full cost of IT service is tax deductible. Other Benefits of Opex Of course the benefits of outsourcing IT services to a managed services provider aren t limited to a tax advantage. Among the other benefits are: Avoiding Upgrade Headaches. The constant turmoil associated with hardware upgrades is someone else s problem. In effect, you gain the advantage of never having to deal with the problem of obsolete hardware ever again. Reduced Downtime. A managed service provider will be better able to recognize impending problems and solve them before they cause you trouble. Expertise. You re contracting with a firm whose business is information technology. Better Use of Human Resources. Your employees can concentrate on what they do best the substantive nature of their jobs rather than spending their time dealing with IT problems. There are a host of compelling reasons for many businesses to consider outsourcing their IT functions, from direct cost savings to fewer operating and upgrading headaches to fiscal advantages. Contact ipro Media today to see how you can realize all of the benefits. Contact Us Today! Opex with IT Support Services Opex with Cloud Based Software Solutions

8 8 Take Advantage of Opex With a Hosted Communications System...your phone expenses become an operational expense. Opex vs. Capex Opex With a Hosted Communications System

9 9 Any business with a desire to drive more revenue, improve relationships with their customers, and continuously reach new business goals should consider a hosted communications system. Hosted VoIP and Unified Communications provide the most flexibility for growing businesses, allowing your business to order the exact number of phone extensions and features you need for your current organization and to upgrade or downgrade as needed as your business needs change. You save money since you pay only for the service you need, and you gain ultimate peace of mind with a hosted system that ipro Media will design, implement, and maintain for you. Opex with IT Support Services Opex with Cloud Based Software Solutions

10 Benefits of Hosted Communications Systems Upgrading your business phone to a hosted communications system offers a variety of benefits, including: Scalability Your phone system expands or downgrades easily based on your organizational needs. You only pay for the services and features that you need at the time. Security and Reliability Redundant hosting means your communications are safe from natural disasters and equipment failure. If your network goes down, you can rest assured your communications are backed up and accessible from the cloud so you can operate business-as-usual even through the chaos. Simplified Management With a hosted phone and communications system from ipro Media, there is no need for anyone at your organization to maintain or support the communications system as it is fully hosted by ipro Media with a 24/7 support contract. Automatic Updates and Always New Equipment As new calling features and communications tools are released, you ll have access to them automatically without needing to buy additional software or equipment. The cost of your equipment is included and you are automatically upgraded to new physical equipment every three years. Lower Maintenance Costs Reduce the cost of maintaining your phone and communications systems when you use a hosted PBX from ipro Media. Make changes or additions to your phone network through an administrative interface, quickly and easily, while all other maintenance needs are handled by ipro Media under your monthly service agreement for a flat rate. Hosted phone and communications solutions put an end to surprise repair fees. Opex vs. Capex Opex With a Hosted Communications System

11 ipromedia.us 11 Improved Collaboration and Mobility All employees can use their phone system and all of the features of the communications system regardless of their physical location. Keep multiple offices or remote workers connected, and provide everyone with the same communications tools no matter where they re working. Improve Customer Service Improve your ability to respond and react to client needs when your communication system provides anywhere/anytime access. You can establish better relationships with your clients, which translates to more revenue opportunities and higher customer satisfaction. unpredictable phone expenses and maintenance costs to upgrade your system as needed, you suddenly have a predictable expense you can budget for. Every year, the full cost of your phone service and maintenance becomes 100% tax deductible. We want to partner with you so we can create an environment to better serve your clients, and we can do that with a hosted VoIP and communications system. Benefits of OPEX Hosted Communications With a hosted phone and unified communications systems, your phone expenses become an operational expense. We make it available to you with no upfront capital outlay. Instead of having Contact Us Today! Opex with IT Support Services Opex with Cloud Based Software Solutions

12 12 How to Take Advantage of Opex with IT Support Services The end result is a dramatic reduction of downtime and that means greater profitability for the business. Opex vs. Capex Opex With a Hosted Communications System

13 13 Most business owners are at least vaguely aware of the fact that downtime negatively impacts their bottom line, but how many are aware of the magnitude of the effect? The phrase time is money has become something of a cliché, but that doesn t mean it isn t true. In fact, downtime caused by network outages and hardware malfunctions, among other things can cost your business dearly. Opex with IT Support Services Opex with Cloud Based Software Solutions

14 The Monetary Impact of Downtime: An Example Consider a hypothetical business with three million dollars in annual revenues. If that business operates on a traditional forty hour per week schedule, it operates a total of 2080 hours per year. (In reality, the base annual total of hours is almost certainly less because this doesn t account for days lost to holidays.) By dividing three million dollars (total revenue for one year) by 2080 (total hours of operation in a year) we can calculate the per hour rate of revenue for the business: approximately $ That s what s at stake every hour this business is impacted by Information Technology downtime. Let s assume that this business suffers from an average of one hour per week of downtime, or 52 hours per year. That would mean that it is leaving $75,000 on the table over the course of a single year, or 2.5% of its gross annual revenues. An average of two hours of downtime per week would mean a practical loss of $150,000, or 5% of gross revenues. Depending on the margins of a business, that could be the difference between profitability and insolvency. Even if a business is able to remain profitable despite its downtime experiences, additional profits are being lost. Eliminate downtime and a money losing business might become profitable; a profitable business would be even more lucrative. Managed Services IT Support Providers: A Solution to Downtime One effective way to solve the downtime problems that your business is experiencing is to contract with a managed services provider (MSP) or IT Support services like those offered from ipro Media. An MSP can assist your business with a variety of tasks that all lead to the prevention of downtime, including: 24/7/365 Network monitoring and management Network design, implementation and maintenance Software support Hardware maintenance, support and troubleshooting IT Security IT Support services offered from ipro Media are all-inclusive, and go above and beyond what you will find offered from the typical Managed Services provider. ipro Media s Managed Services/IT Support offering includes all physical hardware, software, networking, support, and maintenance for Opex vs. Capex Opex With a Hosted Communications System

15 ipromedia.us 15 a predictable, flat monthly fee so you can budget for your IT needs effectively. An MSP can supplement an IT department, or, in the case of small and medium sized businesses with limited personnel, provide technical expertise that no one presently on staff is likely to have. Having a team of IT experts working on your network proactively makes it possible for a business workers to focus on their own jobs and to minimize downtime by solving any problems that might crop up more quickly and efficiently than would otherwise be the case. Most importantly, it makes it far less likely that those problems will come up in the first place. Either way, the end result is a dramatic reduction of downtime and that means greater profitability for the business. offering, because hardware is included in the monthly fee you also benefit from a 100% tax deduction because you turn your hardware expenses into an operational expense (OPEX). Cost Savings Audit ipro Media consultants can work with your business to perform a cost savings audit, which can help you decide exactly what needs to be done to reduce IT downtime and quantify just how much more productive your business can be as a result. Opex and Hardware as a Service (HaaS) In addition to the daily benefits and cost savings your business will experience through ipro Media s managed services Contact Us Today! Opex with IT Support Services Opex with Cloud Based Software Solutions

16 16 Benefits of Opex with Cloud Based Software Solutions You can increase or decrease your services based on your changing business needs. Opex vs. Capex Opex With a Hosted Communications System

17 17 As a small business grows or an established business starts looking for ways to improve productivity and lower expenses, many company owners and IT managers start looking at cloud based software solutions. Cloud computing offers benefits to businesses of all sizes, and can even give small businesses the ability to compete with the infrastructure normally only afforded by larger businesses and without the need for implementing and managing it themselves. Cloud based software solutions also makes it possible to turn your software expenses into operational expenses, and to take advantage of the Opex tax benefits. Opex with IT Support Services Opex with Cloud Based Software Solutions

18 As a small business grows or an established business starts looking for ways to improve productivity and lower expenses, many company owners and IT managers start looking at cloud based software solutions. Cloud computing offers benefits to businesses of all sizes, and can even give small businesses the ability to compete with the infrastructure normally only afforded by larger businesses and without the need for implementing and managing it themselves. Cloud based software solutions also makes it possible to turn your software expenses into operational expenses, and to take advantage of the Opex tax benefits. Benefits of Cloud Based Software Solutions In the past, software and servers pretty much lived in your office building and your IT staff would manage the on-premise technology. In recent years, cloud based software has gained popularity, as it allows companies to access software and servers that are maintained and located with a software provider. The access is delivered over the internet in real time and may be free or subscription-based. Cloud Computing Offers Many Benefits to Businesses, Including: Reduced costs you don t have to buy or maintain servers when you switch to cloud based software solutions. You can increase or decrease your services based on your changing business needs, which means you only pay for exactly what you need. Increased productivity when data and applications are in the cloud, employees can access what they need from any location and any time. This will allow employees to work remotely while also collaborating with team members in real-time. Instead of sending documents back and forth via with changes, documents are updated in real time and easily accessible by everyone. Improved business continuity studies show that more than half of all businesses Opex vs. Capex Opex With a Hosted Communications System

19 ipromedia.us 19 will go out of business after experiencing data loss. When everything is stored in the cloud, you can lose your laptop or even your entire office building in a natural disaster but still get back to work from another computer or location. Tax Benefits of Cloud Computing Let ipro Media work with your business to transition to the cloud. We ll help you ever step of the way, and in addition to the productivity benefits associated with cloud based software solutions, you can also take advantage of turning your software expenses into a tax deduction. When you use cloud based software (sometimes called Software as a Service) the responsibility and expense of maintaining the applications is transferred to the cloud provider, like ipro Media. In exchange for that responsibility, you pay a monthly fee which becomes an operational expense for your business. Operational expenses are OPEX expenses, which means they are 100% tax deductible, like your other operational expenses. When you buy and host your own software on-site, you can only deduct the cost of the software the year you buy it; as opposed to every year like you can when you switch to cloud computing. Contact Us Today! Opex with IT Support Services Opex with Cloud Based Software Solutions

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