Broadcasters and service providers seem keen to invest in new technology once again, although the Arena TV scandal means that the banking sector is seeking tougher safeguards, writes David Davies.
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“I think it’s the case that more businesses [in broadcast & media] have tended to take an OpEx approach in recent years,” confirmed Craig Bury, CTO of Three Media, a technology consultancy that specialises in designing and implementing efficiencies for broadcasters and telcos. “Obviously, a lot it has to do with the availability of cash resources and [lending options]. It does all tend to be determined by the way the finance side of the business drives things.”
CapEx vs OpEx: Technology investment drivers…
Putting recent challenges and issues to one side, it is Bury’s view that “one of the major drivers of approaching technologies with regard to new investment in technology is whether the business has a reason to make it a CapEx investment. For example, do they get the depreciation over time” – depreciation being an accounting method employed to allocate the cost of a tangible or physical asset over its operational life. “If they don’t need the tax benefits, they may be more inclined to take it as a straight OpEx line.”
But in the longer-term, it’s likely that OpEx is proving more popular because of its simpler ongoing accountability…
“More and more companies are using OpEx as it makes it easier from a management perspective,” he said. For example, “if you know you are going to have a quiet half-year, then it’s much clearer if the [expenses] show up in a direct line with regard to what you are doing [and when].”
He agrees that migration to the cloud is another contributory factor to the increased reliance on OpEx investment, but even that is not necessarily clear-cut. “There can be lots of different ways to pay for the services – whether it be PAYG for multiple years or paying upfront [for a certain period]”; therefore, choices made in that area need to be taken in accordance with each business’ specific requirements.
More generally, David Radoczy, COO of Three Media, thinks that new technology investments will continue to be driven by customers attaining “peace of mind” about their overall direction of travel – no small feat given the enormous change in every area of the business these past few years. “If you are committing to a certain way of working – for example, if you are going to have everything driven in the cloud – then you need to be confident about every aspect of what you are doing,” he said.
This article first appeared online with IBC 365 – click here to read the article in full.