Azure CapEx vs. OpEx

Capital Expenditure (CapEx)

• Upfront cost on physical infrastructure
• You need to plan your expenses at the start of a project or budget period.
• CapEx computing costs:
  • Server costs – server clustering, redundant power supplies, and uninterruptible power supplies.
  • Storage costs – centralized storage and fault-tolerant storage for critical applications.
  • Network costs – cabling, switches, access points, routers, wide area networks, and Internet connections.
  • Backup and archive costs – backup maintenance and consumables like tapes.
  • Organization continuity and disaster recovery costs – recover from a disaster and continue operating using backup generators.
  • Datacenter infrastructure costs – costs for construction and building equipment.
  • Technical personnel – technical expertise and workforce to install, deploy, and manage the systems in the data center and at the DR site.

Operational Expenditure (OpEx)

• No upfront cost but you pay for the service/product as you use it
• OpEx is particularly appealing if the demand fluctuates or is unknown
• OpEX computing costs:
  • Leasing software and customized features –  responsibility to de-provision the resources when they aren’t in use so that you can minimize costs.
  • Scaling charges based on usage/demand instead of fixed hardware or capacity – plan for backup traffic and disaster recovery traffic to determine the bandwidth needed.
  • Billing at the user or organization level – when using a dedicated cloud service, you could pay based on server hardware and usage.

Sources:
https://docs.microsoft.com/en-us/azure/cloud-adoption-framework/strategy/business-outcomes/fiscal-outcomes
https://docs.microsoft.com/en-us/learn/modules/principles-cloud-computing/3c-capex-vs-opex