Cloud Digital Leader Why cloud technology is transforming business Practice Question
A traditional retailer currently maintains its own data centers, purchasing servers every 3–5 years and paying for facilities, power, and staff regardless of demand. When it migrates its workloads to the public cloud, which change in cost model does it experience?
⚠ Common exam trap
The GCDL exam often tests the misconception that moving to the cloud simply changes cost from variable to fixed, when in fact the fundamental shift is from CapEx (capital expenditure) to OpEx (operational expenditure), with variable costs replacing fixed, upfront investments.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
From capital expenditure (CapEx) to operational expenditure (OpEx)
When a retailer migrates from owning and maintaining its own data centers to using a public cloud, it shifts from a capital expenditure (CapEx) model—where it buys servers and pays for facilities upfront—to an operational expenditure (OpEx) model, where it pays for cloud services as a recurring, usage-based cost. This change eliminates large upfront hardware investments and replaces them with predictable monthly or consumption-based billing, aligning costs directly with actual demand.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
From operational expenditure (OpEx) to capital expenditure (CapEx)
Why it's wrong here
This reverses the actual financial transformation. In a traditional on-premises environment, organizations make large upfront purchases of servers, storage, and networking hardware, which are classified as capital expenditure (CapEx) and depreciated over years. Moving to cloud replaces those upfront purchases with recurring, usage-based subscription or metered payments, which are classified as operational expenditure (OpEx). Therefore, the shift is from CapEx to OpEx, not the reverse.
- ✓
From capital expenditure (CapEx) to operational expenditure (OpEx)
Why this is correct
This correctly captures the core cost-model shift of cloud adoption. In an on-premises model, you must buy and capitalize expensive hardware, software licenses, and data-center infrastructure upfront, and then depreciate those assets over their useful life. Cloud providers own the infrastructure and charge variable usage fees, so customers avoid large capital outlays and instead book monthly cloud bills as operating expenses. This improves cash flow and aligns costs with actual business consumption, which is exactly the CapEx-to-OpEx transition.
- ✗
From variable costs to fixed monthly costs
Why it's wrong here
This is the opposite of what actually happens. On-premises capacity requires a fixed cost base, including hardware purchases, licensing, depreciation, and maintenance, that you incur regardless of actual workload utilization. Cloud pricing is highly variable because it scales with your real-time usage — more virtual machines or read/write operations mean higher charges, and idle resources can be deprovisioned. Therefore the shift is from fixed on-premises costs to variable cloud costs, not from variable to fixed.
- ✗
From consumption-based billing to annual depreciation cycles
Why it's wrong here
This option also reverses the direction over time. Cloud services use consumption-based billing in which you pay only for the compute, storage, and network resources actually used, typically by the second or minute. Annual depreciation cycles are an accounting convention applied to physical assets you own and capitalize; in the cloud there are no purchased hardware assets to depreciate, so depreciation does not appear in your cloud spending. The shift is from annual depreciation schedules to consumption-based billing, not the other way around.
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Related to this question
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Cloud Digital Transformation
Key term
CapEx
CapEx (Capital Expenditure) is the money a company spends upfront to buy, build, or improve physical assets like servers, buildings, or equipment, which are then owned and depreciated over time.
Key term
OpEx
Operational Expenditure (OpEx) is the ongoing cost for running a business, like paying for cloud services monthly instead of buying hardware upfront.
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JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This GCDL practice question is part of Courseiva's free Google Cloud certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the GCDL exam.