Cloud migration cost calculator: What's the total cost of ownership (TCO)?
Moving to the cloud will realise untold benefits with significant cost advantages.
But the reality is that cloud migration can be complex, and without effective analysis and planning, it can leave you facing unexpected costs and a bit of a runaway train.
Why is this? Firstly, it is important to understand the common pitfalls to avoid with any cloud migration.
So let's dive into a few important points.
There is a fairly well-trodden path to cost out any proposed cloud services:
However, there are a couple of important flaws in this process.
The broad assumption is that you will replicate your existing infrastructure, services and application workloads in the cloud—a 'lift and shift’ cloud migration.
Then any services with sub-optimal utilisation will transfer inefficiencies as your cloud utilisation expands.
The missing step is to analyse your existing applications and business processes to see how best they should be optimised and utilised in the cloud. Then you will get a true reflection of the Total Cost of Ownership of your cloud services.
By first identifying the cost of your current IT infrastructure, you can help identify areas where savings can be made and determine what your future cloud environment will look like.
You will need to evaluate direct costs (hardware, software, maintenance contracts & licences) and indirect costs (operational costs, staff, housing, energy consumption, security etc).
While compiling the direct costs of your on-premise IT infrastructure, it is highly useful to document compute capacity, data storage requirements, etc., to calculate the Total Cost of Ownership (TCO).
This is the critical step. Not every application or workload will be suitable for a 'lift-and-shift' migration strategy. Optimising and reworking business applications for a cloud consumption model can unlock substantial cost benefits.
To develop an accurate and optimal roadmap for your cloud deployment, you need to analyse and understand:
Typically, these questions can be answered with a Cloud Readiness Assessment, which involves a technical discovery to catalogue business applications, processes and operational workload patterns to determine optimal cloud strategy & design.
Only then can you prioritise workloads and applications for cloud migration and design an optimal cloud strategy and deployment model.
Now that you have a detailed understanding of your application workloads, you can more accurately forecast your optimal consumption costs to ensure you only pay for the capacity & resources your business needs and utilises. All at the lowest possible cost.
Calculating Total Cost of Ownership directly compares the Capex costs of an on-premises IT environment and the Opex costs of cloud services. All the leading cloud service providers have a TCO calculator.
There are a few important things to consider when making raw TCO calculations.
The major cloud providers offer three main pricing models: Pay-as-you-go, spot instance pricing, and Reserved Machine Instances (RIs).
Generally, you should estimate costs based on Spot instances, followed by Reserved Machine Instances, then Pay-as-you-Go.
Spot instances use spare computing capacity at significantly discounted rates compared to Pay-as-you-Go pricing. The only difference is that Spot Instances can be interrupted when extra capacity is required, making them best for flexible workloads.
Reserved Machine Instances help active customers save on long-term VM usage by committing to longer-term deals.
Allocating cloud resource models in this priority order will help you ensure the lowest Total Cost of Ownership (TCO), but you should also consider how to optimise cloud usage and monitor resource use.
The world never stands still. Evaluating the benefits of your cloud strategy should be interwoven with your wider business plan, objectives and growth/revenue targets (if applicable).
Having a clear view of the longer-term business strategy makes it easier to "sell” the benefits (and justify investment) to the board, as your cloud strategy is tied to the success of the wider business.
While secondary benefits of maintaining competitiveness, increasing agility or enhancing business resilience in today's fast-moving environment will be important, having a well-costed cloud transformation roadmap will help realise your true cloud potential
At CyberOne, we help develop secure cloud migration plans that deliver a transformational experience and enable you to realise the true benefits of your cloud ambitions—in the short and long term.
Why not book a cloud readiness assessment or talk to one of our cloud specialists to learn how we’ve helped unlock the cloud for some of the UK’s leading mid-enterprise organisations?