The Azure TCO calculator often gets a mixed bag of reviews. Some people find it very useful, other people find it very misleading.  The key point to understand is that the Azure TCO calculator is a tool.  To get the most from a tool, you need to understand how to use it and that starts by understanding what it does and also, and just as importantly, what it doesn’t do.

The Azure TCO calculator basically calculates running costs

The key point to understand about the Microsoft Azure TCO calculator is that it basically calculates what you are likely to pay to run any given set up in Microsoft Azure.  This will obviously play a major role in determining whether or not a move to Microsoft Azure is the right choice for your organization.  There are, however, a lot of other factors involved in this decision and the Azure TCO calculator (currently) does not help with them.  Here are three of the main ones.

The cost of the actual migration

It can take a lot of hard work just to figure out how to move to the cloud in the most cost-effective manner.  Even if you’re using a “lift-and-shift” approach and planning update your apps in the cloud, you may well find yourself faced with the choice of either running a hybrid cloud on a temporary basis, or going 100% public cloud straight away but accepting that this may cause you to lose out in other ways. 

For example, let’s say you have 15 servers.  Five of them are just about at the end of their useful life.  You were going to decommission them anyway, so really, you lose nothing by migrating them to the cloud and sending them for recycling.  Of the other ten, however, five are about halfway through their useful life and five are still fairly new.  You can move these to the cloud and try to sell on the hardware, but you may take a financial hit by doing so.  Alternatively, you could run a hybrid cloud until you need to replace the hardware anyway, but this adds complexity to your IT management and operations and may add to your expenses.

In short, over the long term, using the public cloud will save you the hassle of having to spend money updating your own IT infrastructure, however over the short term, you will still have to absorb the expense involved in the actual cloud migration and the Azure TCO calculator cannot help you calculate this cost, you will need to do it yourself and it is very much recommended to take the time and make the effort necessary to do it properly.

The cost of post-migration work

If you are planning on just doing a lift-and-shift migration or perhaps undertaking a bit of refactoring, then you are unlikely to get the full benefit of having your apps in the cloud.  There is certainly a very decent chance that you will make some cost savings, but containerized legacy apps running on a public cloud are highly unlikely to be able to make the most of the cloud the way cloud-native apps do.  That’s essentially the point of cloud-native apps.

This means that in addition to budgeting for the cost of the actual migration proper, you will also need to budget for the cost of redeveloping the apps in the cloud (or creating new ones).  Again, this is an upfront expense for which you can expect to reap the rewards over the long term, but it is still an expense you will need to factor into your calculations and it’s very much down to you to do the sums properly, the Azure TCO calculator cannot help here.

The cost of failing to undertake proper cost optimization

The Azure TCO calculator basically asks you to input details of your current set-up and gives you an idea of how much it would cost to run the same set-up in the Microsoft Azure public cloud.  This is fine as far as it goes, however, there is a massive degree of nuance.

Firstly, your current set-up is, of course, based on your current usage and if you optimize your apps in the cloud correctly, there is a distinct possibility that you could improve on this, possibly very substantially.  Secondly, it assumes that you will keep a grip on your “cloud hygiene”, basically only run what you need when you need it (and switch it off when you don’t).  If you don’t do this, then your costs will go up and again, that one is on you.  Thirdly, you need to make effective use of reserved instances to get the most value out of the public cloud and again, there’s nothing the Azure TCO calculator can do to help with this.

In short, the Azure TCO calculator is designed to give you “best case” pricing for running your current set-up to the cloud.  It certainly has its limitations, but if you accept it for what it is, it can be very useful.