1.1.5 Define the Consumption based Model

Detail on the consumption based model.

Consumption-based Model

To compare IT infrastructure models, two costs should be considered:

• OpEx : Operational Expenditure : spending money on services or products over time like renting a convention center or leasing a company vehicle.

• CapEx (Capital Expenditure) : typically a one-time, up front cost to purchase or secure a resource. A new building, repaving the car park, buying a company vehicle are examples of CapEx.

Cloud Computing is considered OpEx as it is a consumption-based model. You pay for the IT resources you use, rather than paying for the physical infrastructure etc. This has many benefits:

• No upfront costs.

• No need for costly infrastructure.

• Can pay for more resources if needed.

• Can stop paying for resources if not needed.

In a cloud-based model, you don't have to worry about getting resource needs just right. If you need more VMs, you add more. If demand drops, you remove more.

Compare Cloud Pricing Models

You typically only pay for services used, which helps:

• Plan and manage operating costs.

• Run infrastructure more efficiently.

• Scale as your business needs change.