DZone
As cloud computing rapidly proliferates enterprise IT and organizations migrate more of their traditional workloads and on-premise data in the cloud, the cloud will remain one of the fastest-growing segments of IT spend.
According to Gartner, by 2024, more than 45% of IT spending on system infrastructure, infrastructure software, application software, and business process outsourcing will move from traditional IT infrastructures to the cloud.
Enterprises are struggling to scale their infrastructure to the insatiable demands. They are adding up costs to hardware procurements, issue software updates, secure infrastructure, train staff, etc. On top of that, the ongoing pandemic is holding available human resources, limiting data center facilities, and shrinking hardware supply chains. Cloud computing brings much-needed relief.
No doubt, Flexera State of the Cloud report indicates 61 percent of organizations plan to focus on cloud migration this year. However, against what marketing pages of AWS and Microsoft Azure make you believe, cloud migration is more than moving VMs and databases in the cloud. You have to understand app dependencies, access technical feasibility, select the best instances, just to name a few. And then there are post migrations woes.
These challenges translate to added cost and not all of them are conspicuous until very later. To estimate the real cost of cloud migration for your business, you need to take a thoughtful, disciplined approach. The first step is to evaluate your current infrastructure.
The Real Cost of Current Infrastructure
If you don’t know how much your organization is paying for all those servers, software licenses, maintenance contracts, extended warranties, networking equipment, security contracts, then a visit to the accounting department will ease your day.
Also, you can gather data on network bandwidth, storage, and database capacity, etc. In a typical SME setup with a five-year hardware upgrade cycle, the first-year cost can be $40000-$50000 considering these variables:
In addition to the first year’s costs, there are recurring costs. You may not buy new servers every year but must maintain them. The same goes for all the pieces of hardware and software running your IT infrastructure and resources managing it. Your recurring cost should be anywhere between 10-20% of your first-year cost.
However, the real cost of your current IT implementation is more than direct, operating, and administrative costs. Did you know you lose money every time there is downtime? When a power system in British Airway’s data center failed, the airline lost roughly $68 million in fare refund alone, not to mention a 2.8% dip in their stock prices. If your on-premise setup has a 98% uptime, then you’re giving up 14 hours of productivity hours every month. Most cloud vendors guarantee a 99.9% availability and compensate for any additional downtime based on your contract. According to a Forbes report, for an hour of downtime, you could be losing thousands of dollars. However, for most SMBs, you could be losing anywhere from $3000 to $5000 per month in downtimes.
So the cost of total ownership of your on-premise setup for three years is approx. $75000 to $85000.
The Real Cloud Infrastructure Cost
So the long story short: once upon a time, it was next to impossible to estimate cloud infrastructure cost up until the actual migration. There was little competition and cloud computing was all about AWS and little of Google Cloud and Microsoft Azure here and there. Now we have every major tech firm in the cloud business and the competition is at an all-time high.
The pricing of major cloud vendors is still a little too complicated, but they now provide an approachable price estimation tool. Every major cloud vendor, along with AWS, offers some form of Total Cost of Ownership (TCO) Calculator, including Google Cloud and Microsoft Azure.
Mostly, it is a simple tool that asks you a few basic hardware questions like your required bandwidth, RAM, processor core, storage, etc. If the tool feels a little arbitrary, then there is an advanced tool too that asks enough questions to cover your entire infrastructure, but the estimations are more accurate.
So I ran estimations on TCO tool for AWS, GCE and Azure respectively for a typical SME setup consisting 32 vCPUs and 128 GB RAM.
Source: DZone
