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Capital Expense or Budget for SaaS FM Software

by James McDonald on August 26, 2015

Should your SaaS FM software costs come out of the CapEx budget or the OpEx budget? As businesses invest more in SaaS services, this issue is growing in importance. Though traditional software packages often fall firmly in the capital expense category, SaaS services are different. Here are the reasons why the OpEx budget is likely the best place to pull from when investing in SaaS FM.

SaaS FM Software Does Not Require a Significant Upfront Cost

Most capital expenditures carry a large upfront cost, either in a full payment or in a substantial down payment. SaaS FM does not. One of the beauties of this software is that it carries a very reasonable monthly charge instead of a big cash outlay. SaaS is much more like paying for power, Internet, or telephone services, making it an easy and natural fit for the OpEx budget.Pic1-1

You Cannot Resell Your SaaS FM Software for a Profit

Capital expenses are usually those investments that could one day be resold to recoup all, some, or perhaps even more than the original purchase price. As a low-cost, long-term solution, SaaS FM isn't a commodity that would be resold. This software can be included in a listing of your digital assets, because it does hold value in terms of improving operations, lowering costs, etc. However, it is not an asset you would someday resell, so it works much more like a monthly budget item.

SaaS FM Can't Be Amortized or Depreciated on Tax Returns

One reason why CIOs like to place as many items as possible in the capital expense budget is because items of substantial value can be amortized or depreciated. The value of SaaS FM, however, does not go down over time, and actually tends to appreciate in worth the longer it is in use. Since this product is sold and consumed more like a service than like a commodity, it does not fit well into the CapEx section of the business' tax returns. It is, however a deductible business expense in the same way that you deduct the costs of cleaning services, HVAC maintenance, contract workers, waste management and recycling services, legal services, utility bills, etc.

SaaS FM is Most Like a Daily Operational Cost

SaaS FM fits nicely within the other services and contracts you engage in for regular operations. Like the aforementioned services, SaaS FM is a regular service that you use to lower costs, increase performance, streamline operations, save energy, maximize the usage of available space, and make better decisions. As such, it shares more similarities with the items on your OpEx budget than with the purchases that come out of your CapEx budget.


This handy guide is also useful when choosing how to budget other IT services you purchase as SaaS, including IWMS, CRM, ERP, and other such services. Facility management software can help you make processes and procedures simple and fast when they have traditionally been complex and labor intensive. Electing to acquire this SaaS saves even more money, dramatically cuts the time it takes to implement the system, helps optimize the use of your critical resources, and eliminates problems associated with incompatibility issues among your current software solutions. 

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