CAPEX and OPEX budgeting for IT operations in Ukraine: risks and best practices in times of crisis

Budgeting IT operations and investments during wartime is a complex and responsible task. At a time when Ukrainian businesses face constant power outages, shifting priorities, and operational risks, it is crucial to plan both capital expenditures (CAPEX) and operational expenditures (OPEX) in detail and effectively.

This article aims to examine the risks, planning horizons, and best practices for budgeting IT operations in conditions of war and uncertainty.

Risks of IT budgeting during wartime:

 •   Infrastructure uncertainty: power outages, unstable internet connections, and infrastructure damage can significantly impact IT operations.

 •   Unforeseen expenses: the cost of goods and services can fluctuate, complicating adherence to planned budgets, especially when purchasing equipment (CAPEX) or paying for cloud and software services (OPEX).

 •   Inflation and exchange rate volatility: the war has impacted the currency market and inflation levels, leading to sudden price spikes that can quickly disrupt well-planned budgets.

 •   Supply chain issues: unstable transport and logistics operations can cause delays in necessary equipment delivery, leading to extended project timelines and additional costs.

 •   Cybersecurity threats: during wartime, there is an increased risk of cyberattacks, which result in additional costs for strengthening IT security.

Is budgeting necessary?

Yes. Budgeting is critically important even during crises. Without a budget, businesses risk:

 •   Overspending: uncontrolled expenses can quickly drain resources, leading to financial instability.

 •   Unpreparedness for future investments: a well-managed budget allows businesses to allocate critical IT investments and prepare for potential post-crisis recovery.

 •   Increased risks from reactive spending: without a budget, companies may make last-minute purchases or decisions that do not align with long-term business goals.

In an unstable situation, businesses must ensure the functioning of their IT infrastructure, including budgeting for unforeseen circumstances and maintaining a balance between short-term needs and long-term goals.

Planning horizon: short-term vs long-term

During crises, traditional long-term planning horizons may not apply. Instead, we suggest focusing on the following planning methods:

 •   Short-term focus: considering volatility, it’s essential to concentrate on short-term budgeting cycles. This enables businesses to respond quickly to changing circumstances.

 •   Scenario planning: prepare multiple budget scenarios (best case, worst case, and likely case) to navigate uncertainty.

Best practices for IT budgeting during crises

 •   Prioritize critical IT infrastructure: ensure the protection of investments in critical IT infrastructure, including cybersecurity, necessary equipment replacement, and backup systems (e.g., UPS systems, backup generators, and remote data centers).

 •   Budget for contingencies: allocate part of the CAPEX and OPEX for unforeseen events. For example, plan for alternative power sources and increased use of cloud services in case of prolonged power outages.

 •   Leverage cloud solutions: opt for scalable cloud services instead of purchasing expensive on-premises equipment. Cloud solutions help quickly adapt to changing demand, minimize initial costs (CAPEX), and rely more on OPEX for flexible IT resources.

 •   Strengthen cybersecurity: given the risk of attacks, invest in strengthening cybersecurity. This should include regular audits, enhanced endpoint protection, and staff training. Many organizations may need to increase OPEX to cover these additional security measures.

 •   Invest in resilience: to mitigate risks from power outages and infrastructure instability, consider investing in IT resilience strategies such as redundancy, distributed infrastructure, and backup systems. These may require initial CAPEX investments but can save money in the long run by reducing downtime.

 •   Collaborate with suppliers: work closely with suppliers and partners to negotiate more flexible contracts that allow payment adjustments and delivery schedule changes. This helps reduce risks associated with price volatility and supply chain disruptions.

 •   Monitor expenses carefully: use real-time expense tracking tools for continuous monitoring. This allows for quicker adjustments and helps avoid budget overruns during rapid changes.

During the war in Ukraine, budgeting CAPEX and OPEX remains critically important for maintaining IT operations and preparing for the future. Adopting a flexible, short-term planning horizon, along with contingency measures and resilience investments, will enable businesses to survive and thrive in these unstable times.

Reliable partners for your business

Metinvest Digital offers a wide range of services to help your business remain efficient and competitive, even in challenging times. Our services include:

 •   SAP solutions
 •   Cybersecurity
 •   Data management
 •   Research and development (R&D)
 •   Business applications
 •   IT consulting
 •   Infrastructure solutions
 •   Microsoft solutions
 •   Industry solutions
 •   Cloud solutions
 •   E-Learning (IT)

Metinvest Digital is the best partner for your business for several key reasons:

1. Comprehensive solutions: we offer a wide range of services, from cybersecurity to cloud solutions, allowing you to obtain all necessary IT services in one place.

2. Expertise and experience: our team consists of highly skilled professionals with extensive experience in various IT fields. We guarantee high quality and reliability of our services.

3. Individual approach: we understand that every business is unique, so we offer tailored solutions that meet your specific needs and goals.

4. Innovation and R&D: we actively invest in research and development to provide you with the latest technologies to stay ahead of competitors.

5. Reliability and security: we pay special attention to cybersecurity and the reliability of our solutions to ensure business continuity even in the most challenging conditions.

6. Support and consulting: we provide ongoing support and consulting services, helping you effectively use our solutions and achieve maximum results.

With Metinvest Digital, you get a reliable partner who will help you adapt to changes, optimize costs, and increase the efficiency of your business.