Investment Planning
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The CAPEX→OPEX shift: what it means for Finance
Section titled “The CAPEX→OPEX shift: what it means for Finance”Cloud transformation changes the balance sheet structure. On-premises infrastructure is fixed assets (CAPEX) — capitalised, depreciated over 4–5 years. Cloud spend is operating cost (OPEX) — recognised as expense immediately.
Implications for Finance:
| Aspect | On-premises (CAPEX) | Cloud (OPEX) |
|---|---|---|
| Balance sheet | Fixed assets (capitalised) | No capitalisation |
| P&L | Depreciation over 4–5 years | Immediate expense |
| Cash flow | Large initial outflow | Steady monthly payments |
| Budget flexibility | Low (committed) | High (scalable) |
| Budget type | CAPEX budget | OPEX budget |
Important for budget planning: Cloud spend requires adequate OPEX budget. Organisations that have historically worked with CAPEX budgets for IT infrastructure must adapt their budget process — OPEX budgets for cloud are not the same category as traditional IT CAPEX.
Phase budget: what costs when?
Section titled “Phase budget: what costs when?”Phase 1: Advisory (Months 1–4)
Section titled “Phase 1: Advisory (Months 1–4)”| Cost item | Description | Budget |
|---|---|---|
| CCoE build-up | Recruitment or internal redeployment (4 FTE) | TEUR 40–80 |
| External consulting | Cloud strategy, business case modelling | TEUR 80–150 |
| Training Advisory phase | Track A + B for leadership team | TEUR 15–30 |
| Tools & licences | Cloud assessment tools, IaC toolchain setup | TEUR 10–20 |
| Phase 1 total budget | TEUR 145–280 |
Phase 2: Adoption — Foundation (Months 5–10)
Section titled “Phase 2: Adoption — Foundation (Months 5–10)”| Cost item | Description | Budget |
|---|---|---|
| Landing zone build-up | Platform Engineering (internal + external) | TEUR 60–120 |
| Training technical teams | Track C/D/E for Platform + Security | TEUR 50–90 |
| STACKIT production licensing | First production environments | TEUR 80–150/year |
| Migration Wave 1 (pilots) | 3–5 workloads, often with migration partner | TEUR 50–100 |
| Phase 2 total budget | TEUR 240–460 |
Phase 3: Migration (Months 11–24)
Section titled “Phase 3: Migration (Months 11–24)”| Cost item | Description | Budget |
|---|---|---|
| Migration waves 2–N | Per wave, lift-and-shift + optimisation | TEUR 30–80/wave |
| Parallel operation (dual-run) | On-prem + cloud simultaneously, temporary | TEUR 40–100/month |
| Optimisation & FinOps | Cloud cost optimisation, reserved instances | Self-financing through savings |
| Phase 3 total budget (10 waves) | TEUR 400–900 |
Total budget overview: 24 months
Section titled “Total budget overview: 24 months”| Scenario | Total investment |
|---|---|
| Conservative (small organisation, <50 workloads) | TEUR 400–600 |
| Mid-size (50–150 workloads) | TEUR 600–1,200 |
| Large (>150 workloads) | TEUR 1,200–2,500+ |
FTE resource plan
Section titled “FTE resource plan”| Phase | CCoE core | External support | Total effort |
|---|---|---|---|
| Advisory (3 months) | 2–3 FTE | 1–2 FTE consultants | 3–5 FTE |
| Adoption foundation (6 months) | 4–6 FTE | 2–3 FTE | 6–9 FTE |
| Migration (12 months) | 5–8 FTE | 1–3 FTE | 6–11 FTE |
| Steady state (post-migration) | 3–5 FTE | As needed | 3–5 FTE |
Important: FTE resources are the most common bottleneck, not the budget. The ability to release or recruit the right people for the CCoE largely determines the speed of transformation.
Financing strategies
Section titled “Financing strategies”Option 1: Fully OPEX
All cloud spend within the running budget. Simplest option, no CAPEX request required. Requires adequate OPEX IT budget.
Option 2: Migration investment as CAPEX, ongoing cloud spend as OPEX
Initial migration and CCoE build-up costs as a one-time CAPEX investment — capitalizable as a transformation project. Ongoing cloud consumption costs as OPEX. Advantage: separation of one-time vs. recurring costs.
Option 3: Grants and subsidies
For healthcare: KHZG funding for cloud digitalization projects. For SMEs: KfW digitalization funding (Programme 362). For public institutions: various EU digitalization funds.
Practical steps
Section titled “Practical steps”- Align budget categories with Finance and CFO: CAPEX vs. OPEX classification
- Anchor OPEX budget planning early in the annual planning cycle
- Align FTE plan with HR and workforce controlling — who is released, who is recruited?
- Check funding opportunities (KHZG, KfW, EU funds)
- Formalise investment approval in the Cloud Strategy Board