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This is a personal pet peeve: people classifying the build-out of facilities as "CapEx." You can classify portions of your AWS bill as capital expenditure with
by QuinnyPig 9y ago
This is a personal pet peeve: people classifying the build-out of facilities as "CapEx."
You can classify portions of your AWS bill as capital expenditure with a bit of effort, and none of it requires breaking ground on a new facility. It's not entirely clear how much of that type of maneuvering goes into the underlying numbers.
- cloudwalker 9y agoUm, what is CAPEX if not the build-out of facilities?
- QuinnyPig 9y agoIn some instances, "your AWS bill." See: https://www.quora.com/Back-in-2011-Joe-Weinman-noted-that-Netflix-is-treating-AWS-reserved-instances-as-CapEx-How-are-they-doing-that-What-is-the-accounting-justification https://www.quora.com/Back-in-2011-Joe-Weinman-noted-that-Ne...
- late2part 9y agoHow do you classify portions of your AWS bill as a capital expenditure? I'm not familiar with this, assuming your context is as a user of AWS?
- QuinnyPig 9y agoYes, that's the right context. In short form, you have to go with dedicated tenancy on your instances, 3 year RIs, and get your auditors on board with it first. It's not worth the hassle for most shops until they're looking at a seven to eight figure annual AWS spend.
- late2part 9y agoI know lots of folks doing mid to high 8 figures and I haven't heard of anyone capitalizing the leases like that. But maybe. Thanks for expounding.
- QuinnyPig 9y agohttp://www.datacenterknowledge.com/archives/2011/03/10/are-there-tax-breaks-in-the-cloud/ http://www.datacenterknowledge.com/archives/2011/03/10/are-t... <-- NetFlix does it, as one of the few public examples of this. If you read the AWS economics page, they go into it slightly, but are quick to defer to the customer's finance and audit teams.
- hn_throwaway_99 9y agoIANACPA, but based on your "In short form" sentence, I guess I see what you mean and how it could be treated as capex. Still, from a layman's point of view, it seems sketchy as hell to me in that the primary goal looks to be making the operating budget look more profitable than it really is if the AWS spend can be amortized over a couple years.
- QuinnyPig 9y agoYou're not at all wrong. Changing how things reflect on the income statement is a bit of smoke and mirrors; it doesn't change the underlying truth, but does change how they're represented. It's a weird, weird world.
- iamacynic 9y agohe's talking about amazon and other cloud providers classifying their money spent on infrastructure as capex, not their customers.
- QuinnyPig 9y agoAbsolutely-- but internally to these providers, the CapEx model doesn't cover what most people think it does. It's a very, very rough analog for infrastructure spend. GAAP is a fun thing to play with...