OpEx vs. CapEx

change_300x133Many years ago in the project management software industry there was a hotly contested debate that could have no definite outcome.  What was better, pundits asked, taking the “best of breed” or “all-in-one”.  The timing coincided with the recent release of all new “enterprise” project management systems that purported to do everything you might want all in one system.  This movement wished to displace the trend of the time which was to choose multiple project management tools and try to integrate them all together.

As a publisher of TimeControl, I followed the debate closely and weighed in where I could.  I’ve always thought that what was more important than a list of features was being certain of your requirements.  At the time, those organizations who were clear about the business challenge or challenges they were trying to solve didn’t stress over the debate.  They were certain about what they needed and could articulate that need in a way that whether it was several tools working together or one tool, they could evaluate the offering objectively.

The advent of Software as a Service becoming such a popular method of delivering project and timesheet functionality has reminded me lately of that old best of breed vs. all in one debate.  What has happened in the enterprise project management and timesheet systems industry over the last 5 years or so is that organizations have been able to shift their enterprise project managemetn or enterprise timesheet from a large capital expenditure (CapEx) to a spread-out-over-time operational expenditure (OpEx).  That’s not just an accounting difference in most organizations, it’s a mind set difference.  If an organization intends to drop a large amount of money on a capital expenditure, analysis of that purchase is done in much more detail and with a far reaching perspective.

When you make a large capital purchase of any kind you tend to think about not just the thing you are buying.  You also think about the implications.  Imagine buying a car.  You might think about whether it will fit in the garage (I had to modify the antenna on my last SUV for just that reason).  You might think about the type of gas the vehicle will use.  You might think about maintenance and resale value.

It’s a similar situation when you put out a capital expenditure outlay for a software system that will affect the entire enterprise.  Someone will ask about the “total cost of ownership” about training and maintenance.  When we shift our thinking to just subscribing to an online service, it is common to think operationally.  We think just about the monthly subscription expense and this kind of thinking has been getting more than one organization into trouble they didn’t anticipate.

As I’ve said in these pages and in countless articles many times, the deployment of enterprise systems like a project management system or a timesheet are more of a change management project than a technology project.  The problem with just focusing on the technology cost or speed of access as we do with a SaaS model can take focus away from the aspect of the project that is probably more expensive, more effort and certainly more risk than the technology and that is the training, process and organizational behavior that will be impacted.

If we don’t factor in the time, resources, effort and duration that will be required to get people convinced to work together and creating an environment that will encourage and empower that, then the technology won’t only not be effective, it will be an expensive failure.

I’m not saying that SaaS is bad.  Far from it.  TimeControl itself is available both as an on-premise solution and an on-line subscription so I’m all-in with my support of Software as a Service but with our staff, we take pains with our clients to talk about what business problem they are trying to solve and identifying what it will take for us to solve that problem with our software rather than what it will take to get a sale completed.

So if you are excited that you’ve found OpEx money when there was no CapEx money for your new enterprise project system, make sure that you’ve accounted for all the effort, resources and money you’ll need to make that deployment a success.  If not, you could find yourself like a fish out of water with the right tools at hand but insufficient resources to take advantage of them.