ACloud Guru Certified Cloud Practitioner Practice Exam

Which advantages of cloud computing includes trading capital expense for variable expense?

1. Benefit from small economies of scale

2. Trade capital expense for variable expense

3. Increase speed and agility

4. Easily predict capacity

The correct answer is: Trade capital expense for variable expense

Trading capital expense for variable expense refers to the fundamental shift in how businesses manage their financial resources when they adopt cloud computing. In traditional IT infrastructure, organizations typically incur significant capital expenses (CapEx) to purchase hardware and software, as well as the physical space to house them. This requires a substantial upfront investment before they can derive any value from the technology. With cloud computing, businesses can transition to a model where they pay for resources as they use them, which is often classified as operational expenditure (OpEx). This variable expense model allows organizations to scale up or down based on demand without the need for large initial investments. As a result, companies can allocate funds more flexibly, leading to improved cash flow and enabling them to invest in other areas of their business. This transformation not only reduces the financial burden associated with upfront costs but also provides better alignment with changing business needs and customer demands, allowing organizations to respond more effectively. By understanding this concept, businesses can make more informed decisions regarding their IT investments and operational strategies in the cloud environment.