How to Calculate Cloud Migration Costs Before You Move


Determining the cost of migrating to the cloud is not easy. Not only do businesses need to consider the differences between on-premises and cloud pricing, but they also need to consider a variety of other factors – many of which are often overlooked.

Some costs are easy to predict. For example, the cost of migrating data from on-premises storage to cloud-based object storage is straightforward. Other migration costs, such as those incurred by workload refactoring, are more difficult to determine. It’s also easy to ignore the expense associated with things like staffing and rolling out new types of services.

Consider the following costs to ensure that a cloud migration will pay off.

Calculate costs on site

The first step in calculating cloud migration costs begins before moving anything to the cloud. Directors should assess cost of existing equipment and software assets, then assess how it compares to a cloud-based environment.

The challenge with this comparison is that the cost models for most on-premises software and hardware are different from the pricing models in the cloud. On-premise computing requires a large initial investment to purchase hardware and follows a Capexcost-based cost model. In contrast, cloud resources rarely require capital expenditure and follow a Opexmodel based on. Customers pay for IaaS-based virtual hardware and SaaS applications as they consume them.

This means that you will need to express your on-premise Capex cost in a way that allows you to compare it to Opex costs in the cloud. To do this, divide the initial cost of your on-premises resources by the length of time you can reasonably expect to use them.

These estimates are not correct. They do not take into account costs such as replacing server hard drives, which may not last as long as the server itself. It also ignores the potential for hardware upgrades, such as adding memory, which could extend the life cycle of the server. However, this approach helps you establish a baseline estimate of the total cost of your on-premises environment and then compare it to the cost of equivalent cloud services.

You should also identify the on-premises resources that you won’t pay for in the cloud. For example, network switches for your on-premises data center are not needed when you move workloads to a public cloud. Uninterruptible power supply units and network attached storage devices are also examples of equipment that you can take out of service when you move to the cloud.

Some on-site operating expenses, such as electricity and physical site security, also disappear after migration.

Refactoring considerations

In the simplest scenario, administrators will take applications that are currently running in on-premises virtual machines, as well as data hosted in on-premises scalable storage, and move them to cloud computing and storage services. public. In this case, the workloads will not require major refactoring and the cloud services will have relatively simple pricing models. The migration costs are fairly easy to calculate.

Comparison of two application migration models

On the other hand, your cloud migration plan may not simply be lift and move your workloads in the cloud, but can also transform these workloads. In these cases, migrating to the cloud will require more development effort to change your workloads.

For example, you can run your applications in virtual machines, but want to migrate some of them to containers and serverless functions. Or, you have monolithic applications that you plan to refactor as microservices. These modifications can be costly. Using a more complex menu of cloud services often requires more expertise to be administered effectively, which can also translate into more expense.

Calculate cloud costs

After estimating the cost of your on-premises environment, you can calculate the costs of the cloud environment you plan to create and compare the two.

Virtually all of your cloud spending will be on operating expenses billed monthly. However, calculating cloud costs is difficult because there are so many variables. Each cloud provider has a different price list for each of their services.

Many prices depend on the region you are using and how many resources you are consuming. You’ll pay a lower per-gigabyte rate for cloud storage costs at high volumes than if you only stored a few gigabytes, for example. Prices for cloud services also vary depending on whether you reserve resources in advance or consume them as you go.

Cloud cost calculators

The best way to calculate cloud costs is to use a calculation tool designed for this purpose. All major cloud providers have their own calculators, such as:

There are also additional tools, such as the Azure Total Cost of Ownership (TCO) calculator, designed to help you estimate the difference in cost between your existing on-premises environment and what you’ll pay in the cloud.

These native calculators only work for each vendor’s specific cloud. If you’re looking for a third-party alternative that will help you estimate or compare costs across multiple clouds, services like Apptio Cloudability and CloudCheckr can help.

However, these platforms are not so much cost calculators as they are cost optimization and capacity management tools that support multiple public clouds. They can help you identify the most profitable cloud for your needs, but they won’t predict your costs as accurately as one of the cloud providers’ own calculators.

Auxiliary cloud services

A second factor to consider is the number of “ancillary” services you will be using when moving to the cloud. Ancillary services include things like content delivery networks to help distribute your content, Availability Zones to improve resiliency, and DDoS protection. These services are typically important for on-premises workloads, and while not strictly necessary in the public cloud, they are valuable add-ons for improving the security and performance of the cloud workload.

While ancillary services are useful additions, the more you use, the higher the operating and configuration costs will be during and after a cloud migration.

Cloud management and administration

Cloud migration costs are also affected by the extent to which your administration and management tools need to be overhauled.

Public cloud services typically require configurations such as identity and access management policies to manage access control. You can also use tools like AWS Stage Functions and AWS Auto Scaling to help you automate your cloud workflows. And for large scale cloud environments, you will probably want to use infrastructure tools as code (IaC) to automate procurement and deployment.

In some cases, you can reuse your on-premises configurations and tools during your cloud migration. If you’re using an IaC tool that works with both on-premises and cloud infrastructure, you can probably take the IaC policies you already have and reuse them in the cloud.

However, configuring other tools and configurations will increase your cloud migration costs. There is usually no efficient way to migrate on-premises access control policies to a public cloud, for example, which will require some expense.

Orchestration costs

Depending on the nature of your cloud workloads, you may choose to host them using a container orchestration platform such as Kubernetes.

Kubernetes adds another cost to your cloud migration plans. If you are not currently using Kubernetes at all, you will need to configure it, which takes a lot of time and money. Even if you already use Kubernetes on-premises, don’t assume that Kubernetes in the cloud will cost the same. Managed Kubernetes services have complex pricing models that you’ll want to take a close look at when calculating your cloud migration costs.

Radiation of infrastructure

When moving to the cloud, you typically need to decommission the infrastructure that hosted your workloads on-premises. While this isn’t a cost in and of itself, it’s worth considering how much value you’ll reduce by stopping using servers and other infrastructure that still have a useful life span.

If your business spent millions on server hardware two years ago, for example, some of that investment will be wasted on your move to the cloud, where you can’t use that infrastructure – unless you choose a cloud architecture. hybrid. The exact “cost” of this write-off depends on the lifespan of your equipment and whether it can be reused or resold.


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