Microservices Drive Capex

Here’s a potentially fascinating argument for microservice architectures, most applicable for those of you in corporate environments where the difference between expense and capital expenditure categories in your budgets make a difference.

How do you define a capital expenditure?

A specific project that involves either new development, creating new software or features that do not previously exist, or a significant enhancement that renders the old software obsolete. Cap Projects result in a product or asset that will create long term value for the company.

Long-term value means beyond the current tax year. In contrast, time spent on planning and preliminary work, and any post-implementation costs including all maintenance work is counted as regular expenses that are deducted from the year’s net revenue.

Deductions from net revenue mean that the company is less profitable. Therefore, the more work that you do that is capitalizable, the more profitable your company for the year. Or something like that, because I’m not an accountant.

Are Microservices Are Always Capitalizable?

What I find interesting is that if you write immutable microservices, it stands to reason that they are by definition always new development that render the old software obsolete. Not only that, but they are new development in a way that can be clearly explained to non-technical people. Like accountants.