Cloud migration cost estimate

Moving to the cloud usually brings significant benefits to companies, especially SMBs. For many companies, one of the most important benefits of the cloud is its simplicity.

Indeed, using the cloud is generally a whole lot easier than running in-house data centers. It is, however, also true that cloud migrations have to be managed carefully.

In particular, it’s important to create accurate estimates of cloud costs. Here are three points you need to remember to make that happen.

Everything starts with a full and accurate overview of your current IT costs

Full means that you need to assess both direct costs and indirect costs.

The former should be easy to find. You just need to go through your finances and look for any costs which relate to your infrastructure, applications and network.

This includes extraordinary costs, for example, if you had to pay for consultants to help your in-house IT team. It’s fine to label these as extraordinary costs, but they still need to be included.

Indirect costs may be harder to calculate, but it’s really important to do your best.

Think through all the activities related to your IT infrastructure and see if any of them have generated costs that haven’t been listed already.

Recruitment and retention of staff usually come up here. Then think about any outages you have experienced and how much they have cost you.

Then think of any opportunities you have missed and what they have cost you. Ideally, you’ll want three to five years’ worth of figures.

This will give you your foundation for looking at what you are going to need from the cloud and hence how much it is likely to cost you.

Cloud cost calculators are only as good as the data you enter into them.

If you’re looking at the big providers (like Amazon Web Services and Microsoft Azure) then they’ll have their cost calculator. You can also calculate cloud pricing the manual way.

You may want to do both as a cross-check. The key point to remember, however, is that any calculation is only as accurate as its data.

You should already have most of the data you need. However, there are still two major points to cover.

First of all, you absolutely must get accurate data on real-world usage patterns. You then need to supplement this with any information you have on what is likely to happen in the future.

Cloud costs are based on usage, so you can only estimate them accurately if you know what resources you will need.

Secondly, remember to consider whether or not you’re still going to need an in-house IT headcount to support your users and, if so, to budget funds for it.

The cloud migration itself will carry a cost.

All cloud migrations will carry a cost. How much they will cost will depend on several factors. In many cases, however, it’s very worthwhile to spend extra money on the migration to save money further down the line.

To understand why this is, you need to understand the realities of cloud migrations.

At a very basic level, most organizations could probably just do a “lift and shift” cloud migration. In other words, they could just take everything they currently have and mirror it in the cloud. This is the simplest approach and hence generally the cheapest (in the short term).

Even here, however, you will have to factor in the cost of creating a full inventory and mapping all dependencies.

If you already have an inventory and all dependencies mapped, then make sure it is completely up-to-date and 100% accurate.

If it’s not, you could find yourself dealing with a whole lot of problems you could easily have avoided and these problems will usually lead to additional costs.

In many cases, however, the “lift and shift” approach will end up costing more money than it saves “over the long term”.

The reason for this is that in many companies, IT systems are updated on a combination of need, want and judgment rather than planned mindfully.

This is often true even with larger companies and is especially true with SMBs. Moving to the cloud provides a great opportunity to review what you have and compare it with what you really need and want.

Getting this right may involve enlisting the help of external consultants and if so you will need to budget for the cost.

You may also need to revise your security arrangements to reflect the fact that you will be in a cloud environment. Again, there will probably be a cost for this.

In addition to deciding what needs to be done, you will need to put together a project plan to do it and the hallmark of a good project plan is that it has realistic timescales for each step.

Getting this right will go a long way to keeping your cloud migration costs on the expected track.

See Also

EC2 Instance Types