What color is your cloud money?
A weird question, perhaps, but it’s an important question. Because along with changing how we leverage applications, the cloud has also changed the type of money it takes for us to operate those applications.
Different colors of money
To understand this, a brief discussion about corporate finances is in order. There are three distinct types of money that most companies use for various expenditures.
A capital expenditure is the purchase of a physical asset that is expected to be used over a period of at least one year.
For a manufacturing company, the physical asset might be manufacturing equipment or moldings. For other companies, it could be computer equipment and networking hardware. It could be the purchase of vehicles, buildings, or property.
The primary characteristics of a capital expenditure are:
- The asset is relatively expensive, typically a one-time purchase (but the one-time purchase could be…