Federal financial professionals strongly support moving IT from CapEx to OpEx. Seventy percent of financial professional respondents agree that OpEx IT will benefit their agency overall. Fifty-nine percent believe that operational budgets will enable their agency to maintain a better grasp of the overall IT portfolio.
Federal IT managers split the vote when it comes to changing IT from CapEx to OpEx. Though just 36 percent of IT managers are currently considering changing their funding model, consideration jumps significantly (to 46 percent) among those who are actually aware that such a shift is possible. In fact, 21 percent of Federal IT managers are unaware that a move from CapEx to OpEx funding is possible, let alone encouraged, in the President’s FY2013 budget.
“Looking at IT as an operational expense opens up new avenues of savings, control, and simplicity for Federal IT managers, but like most new concepts it takes time to truly understand the value and how to unlock it,” said Anthony Robbins, vice president federal sales, Brocade. “Looking at near-term changes in Federal discretionary spending, now is exactly the right time to start embracing new approaches to both funding and savings in IT.”
The survey results reveal that Federal IT managers are starting to see the funding mix for IT programs shift from CapEx to OpEx. While 66 percent of Federal IT managers report the same or increased operational budgets for the current year, 82 percent report that approved funding for IT capital investment are the same or lower. Of Federal IT managers who have shifted funds from CapEx to OpEx, 33 percent did so to advance a project that would otherwise have been unable to proceed.
Federal IT professionals also tie adoption of cloud computing directly to operationalizing IT funding. Seventy-two percent of survey respondents state that conversion from CapEx to OpEx is necessary to implement public or community cloud computing, primarily to align the cost of supporting infrastructure to the recurring cloud service cost.
As a new approach to funding IT programs, Federal IT managers already see some obstacles to converting CapEx to OpEx. Thirty-five percent have already obligated all of their OpEx budget to maintaining current systems, and 26 percent will not know what their available operational budget is until the end of the fiscal year. At the same time, even the Federal finance professionals are unable to reach a consensus on what types of IT contracting arrangements could even be categorized as an OpEx.
“The Color of Money” is based on an online survey of 102 Federal IT managers and an online survey of 102 Federal finance professionals in April 2012. To download the full study, please visit http://www.meritalk.com/colorofmoney.
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