Dear CFO: It’s Time to Get Your Head in the Clouds
By Mike Jorgensen, Account Executive
In the business world today, SaaS (Software as a Service) or Cloud Technology is not only changing IT, but it is also changing finance. How can your enterprise benefit financially from “getting your head in the clouds” with a UCaaS (Unified Communications as a Service) solution?
Getting Started With UCaaS
The first place to start is to examine your organization’s voice environment. Should you keep an on-premise solution or move to a UCaaS solution? This decision is becoming an increasingly complex one that needs consideration from both a financial and a technological perspective. While legacy or on-premise telephony solutions are an asset that can yield a forecasted return on investment, they are, however, becoming more expensive to maintain. Increasingly, they also divert resources away from the core competencies of your enterprise.
When shifting to UCaaS, it is inherently clear that in most cases, telephony hardware assets in a traditional or on-premise environment are not owned outright; in many cases, they aren’t owned at all.
While an organization does relinquish some control by not owning hardware, the organization benefits tremendously by shifting to the cloud. This move uncovers resources that were previously dedicated to hardware and software maintenance, updates, and repairs. Additionally, UCaaS provides the flexibility to adapt to a technological environment where updates are now occurring faster than most organizations can digest.
UC as an Operating Expenditure
From a financial perspective, the decision to move to a UCaaS solution and shift from a Capital Expenditure (CAPEX) to an Operating Expenditure (OPEX) model can be very challenging.
Since the invention of the telephone, most organizations have utilized a CAPEX model to purchase and account for their voice system expenditures. Every 5 to 10 years (for depreciation and cost recovery purposes), they have habitually involved several layers of management and multiple committees to raise capital for new telephone hardware and software.
However, owning equipment in a voice environment is becoming a thing of the past.
On-premise-based solutions are quickly becoming outdated and are progressively difficult to manage, requiring an increasing amount of maintenance, insurance, and the purchase of supporting systems year after year. Just like electricity, other maintenance contracts, and web costs (hosting, domain registration, etc.), phone service is consumed; because it is a cost of doing business, it may be beneficial to account for it in that manner.
Shifting to an OPEX standard in the Unified Communications environment can provide a rewarding financial and technological change for any organization. In a UCaaS environment, you pay only for what you use—as you use it. There is also price transparency, and all services are scalable and flexible, which allows organizations to remain agile in responding to unpredictable infrastructure needs.
Additionally, aside from a new set of current year tax deductions, eliminating large telephony capital expenditures will “lean out” an organization’s balance sheet and create more cash flow, allowing for short-term operational growth.
With worldwide IT spending on the rise, as you consider where and how your organization spends its resources, you should not overlook the benefits of cloud on your entire organization. Leasing assets and signing a managed services contract provides you access to equipment as a service, shifting and freeing both physical and financial resources across the entire organization. You will do more with less.
Mike Jorgensen is a graduate of Tacoma-based Pacific Lutheran University, where he earned his undergraduate degree in Business (finance), followed by his MBA, where he focused on Technology and Innovation Management. A former business consultant with clients in Dubai, UAE, Jorgensen was one of the nominees for the South Sound Business Examiner’s “40 under Forty” competition.