CFO: 5 benefits of subscription model for business telephony

Ludovic Leclerc

January 09, 2024

Adopt a subscription model to transform your telephony solution with greater financial flexibility.

As a CFO, you know investing in IT infrastructure is critical for your organisation’s success. But the cost to make that investment is likely top of mind. And if it is, you may be interested in knowing more about how a subscription model for your business telephony can help you ensure greater flexibility and predictability in your IT budget.

So, what is a subscription model? This model falls under operating expenditures (OPEX) and differs from the capital expenditure (CAPEX) model which relies on perpetual software licences. Moving to an OPEX model will give you greater financial flexibility and allow your team to focus on operating accounts rather than balance sheet management.

Here are the top five benefits to adopting a subscription-based model for your business telephony.

1. Limited initial investment

The OPEX model reduces or eliminates the initial investment required when launching new projects. Subsequently, as needs evolve, your organisation has the flexibility to adjust the telephony solution and the rate at which new services are introduced to users.

Freed from the risks associated with an initial financial outlay, the IT department can be a driving force behind proposals to meet the needs of internal teams and promote business development.

Benefit: No financial barriers.

2. Predictable cost

The OPEX model replaces what can be a high initial investment with a predictable and linear monthly, annual or multi-year subscription. All the communications and collaboration services that users need as well as the support and evolutionary maintenance of the solution are included in a single invoice.

Benefit: No hidden costs.

3. Flexibility to terminate

The OPEX model gives organisations the flexibility to adapt costs to business needs.

With the CAPEX model, when you purchase a product with its perpetual licences you are making a full financial commitment – regardless of whether the product is used. The ongoing costs (depreciation or financing costs) must always be absorbed.

Conversely, with the OPEX model, if the service does not meet the need or is no longer required, subscription to that service can be quickly ended.

Benefit: No unnecessary expenditure.

4. Accounting advantage

From a purely financial point of view, CAPEX on a product is recognised in the balance sheet and amortised over the life of the asset.

With the OPEX model, the service subscription is recognised in the income statement, making it possible to track current expenditure as it is incurred with no impact on the balance sheet.

Furthermore, in most countries, OPEX is tax deductible and CAPEX is not.

Benefit: No impact on the balance sheet.

5. Enhanced safety

With the OPEX model, support and upgradeable software maintenance are included in the subscription.

This means that the organisation has all the patches and updates it needs to ensure the highest level of protection and prevent potential cyber threats or attacks. This is an essential point to consider when adopting new technologies, applications and services.

Benefit: No compromise on security.

Discover Purple on Demand

If you've decided to move your business telephony to a subscription-based OPEX model, consider Purple on Demand by Alcatel-Lucent Enterprise. This commercial offer will enable you to transform your existing telephony solution securely and cost-effectively, preserving your past investments and gaining greater flexibility with new services.