Azure TCO Calculator
The Azure TCO calculator has had (more than) its fair share of criticism. It has to be acknowledged that quite a bit of this has come from companies with a vested interest in highlighting its flaws. At the same time, however, it also has to be acknowledged that the Azure TCO calculator, at the very least, has definite limitations. At best, you should see it as loose guidance rather than as a meaningful estimate of what you are likely to pay.
At the end of the day, the purpose of the Azure TCO calculator is to sell you Microsoft Azure
Keep this thought front and center in your mind at all times. The Azure TCO (total cost of ownership) calculator is basically a sales tool. Its job is to present Microsoft Azure in the best possible light without actually lying. This doesn’t mean that it’s without value, it just means that you need to be ready, willing and able to apply “sanity checks” to its output.
Sanity check #1 – remember the T in TCO stands for Total
When you think about the total cost of ownership of Microsoft Azure, remember that a public cloud migration isn’t just about having your apps in the cloud. Those apps are (presumably) going to need storage for data and have networking capabilities as well and so these costs will need to be accurately factored into your calculations in order for your estimates to be meaningful.
You’re also going to need to think about license costs and this is one area where the Azure TCO calculator can get interesting. For example, if you have Microsoft Software Assurance, then you can make use of Azure Hybrid Benefit for Windows Server and essentially make your current license costs do double duty by using them to run Windows virtual machines on Azure at a lower cost. If you don’t, however, then you either need to buy Microsoft Software Assurance or pay for the relevant licenses.
Sanity check #2 – think carefully about performance
Microsoft Azure is in competition with other public cloud vendors, most notably AWS and Google Cloud. Given that decisions to move to the public cloud are often driven by the expectation of cost reduction and the ability to undertake cost optimization, it’s entirely understandable that these companies are all really going to push the potential financial advantages of the move. Just remember that headline figures can be misleading.
For example, two companies could charge different prices for what, at first glance, appears to be the exact same instance type, but if the one with the more expensive price actually offered a much better performance then it could actually end up working out to be cheaper.
It can be difficult to impossible to get this sort of detail from pure TCO calculators, but there are two ways you can get it. The first is to have a good look at studies comparing the relative performance of different cloud operators and the second is to do it yourself. Most cloud operators, including the big ones, give you the opportunity to try out their services for free for a certain length of time. It can be very beneficial to take advantage of this, especially since it can act as a “dry run” for your “proper” migration.
For the sake of completeness, you don’t necessarily have to do two (or more) “lift-and-shift” migrations to run these comparisons. You basically keep your own systems running as they are and then “lift” to the clouds you want to test in order to benchmark them. In order to be fair, however, you have to resist the temptation to correct any issues you may have noticed on your first run. Conditions have to be identical for the test to be fair. There is, however, nothing to stop you noting issues and addressing them later.
Sanity check #3 – remember that pricing structure matters
Broadly speaking, the big cloud vendors all offer three main pricing models, on-demand, reserved instances and spot instances. There may be other pricing variations and factors at play (such as the ability to use Azure Hybrid Benefit in Azure, if you have Microsoft Software Assurance) but these are the three big ones.
As a rule of thumb, in principle, you want to use spot instances as much as possible, with reserved instances being your next choice and on-demand pricing being a last resort. Get this right and you really can enjoy massive cost savings and great flexibility. Get it wrong, however, and you could end up wishing that you’d never migrated to the cloud in the first place.
For the sake of completeness, the other major factors which will influence your cost effectiveness are your ability to monitor costs (and avoid excess usage) and your ability to optimize apps in the cloud (to limit the use of cloud resources).