Cloud computing is the future. You no longer have to worry about setting up software, buying expensive computers, keeping it all running smoothly, or the big one – data storage.
By 2025, 95% of data workloads will be hosted in the cloud, up from 30% in 2021.
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Any business that moves to the cloud is taking a big step. Before you start, you might want to think about a few things, such as the costs and actual advantages of cloud migration. You would want to know what the existing hosting infrastructure is costing you on-premises to compare it with cloud costs to do an apple-to-apple comparison. However, it’s not always easy to determine how much these costs will be. Using a TCO analysis, you can consider migration’s direct and indirect costs and benefits.
Understanding Cloud True Cost of Ownership TCO
Cloud TCO is the total cost of using cloud services on a per-user, per-month basis. It includes all costs associated with running your business, such as hardware, software, and labor.
The main advantage of cloud TCO is that it gives you a clear picture of how much it will cost to use cloud services over time. Cloud TCO can also help you compare different cloud providers to determine which solution would offer your business the best value.
Cloud providers offer different pricing models for their services. Some services are charged by the hour, others by the gigabyte or terabyte, and others by the user or server instance. You can also commit to using a resource over a period of time to reduce costs significantly. Cloud licenses can also come in various flavors to suit specific needs. The same is the case with DR options in the cloud. Cloud TCO considers all these factors and provides an overall view of what it costs to use the provider’s services over time.
Calculating Cloud TCO
Before evaluating the cloud TCO, the TCO of every existing on-premises asset must be taken into account. When moving an application to the cloud, certain expenses will be eliminated, including:
Every three to five years, physical servers are typically upgraded and replaced.
Ancillary hardware such as racks, networking hardware, load balancing hardware, storage devices, and the ongoing support, upkeep, and replacement of these components over time
Electricity, Heating, and Cooling utility costs
Waste as a result of having to overprovision servers to handle peak demand
Costs of physical real estate or equipment rentals for data centers
Asset and inventory management
Time and efforts required for upgrades and switching platforms
Maintaining and retaining good employees and resources required to run services locally
Security is also a huge cost, which needs to be considered because often the perimeter devices are costly and so are the resources managing security
The TCO for both on-premises and cloud-based solutions can be accurately determined by comparing these costs to the predictable monthly or annual costs incurred by moving operations to a cloud provider. In doing so, you will have an accurate picture of the end result, create the right business case and make the right decisions in your cloud adoption journey.
Cloud costing Done the Right Way
In 2022, cloud services will be used by 94% of businesses. A significant shift in 2020 is partially to blame for this enormous percentage. 61% of companies moved their workloads to the cloud due to the COVID-19 Pandemic, which increased the reliance on remote work. Additionally, even at 94%, cloud adoption will continue to rise in 2022.
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Most businesses quickly realize numerous benefits as they calculate their TCO for moving data to the cloud. Here are some of the advantages of adopting the cloud:
The ROI of Cloud Adoption
Cloud-based solutions offer a high return on investment because they are scalable and pay for themselves over time. Building a strong business case for cloud adaptation and modernization requires understanding how much the company spends on-premises. Since many workloads, on-premises are decommissioned, and data centers are closed out to cut costs and the carbon footprint, we have seen customers save 10x more than anticipated.
Reducing Infrastructure Costs
Cloud computing helps businesses save on infrastructure. With the cloud, companies do not need to invest in costly hardware and software and the human resource required to maintain this infrastructure in tandem. Instead, they can use a service provider’s infrastructure to run their applications and store data. The costs associated with procuring and maintaining these resources are also eliminated. Moreover, when companies outsource the management of these infrastructure peripherals, they also outsource the pain of securing it.
Cost Savings from Outsourcing IT Services
Another benefit of cloud computing is that it allows companies to outsource their IT services. Companies can hire external service providers to take care of these things instead of hiring staff or contractors to perform tasks like network management, security maintenance, or data storage. Often cloud managed service providers have skilled resources to manage and maintain services for multiple clients and prove to offer the best value for money.
The key benefit is that businesses do not need to spend money on hiring people or making capital investments like buying new equipment or software licenses. They can instead focus on other aspects of their business — areas where they can add more value than what they would get out of outsourcing their IT needs.
Upskilling Existing Team Members
There is a need to upskill the existing members of your team who are responsible for managing cloud costs. They need to understand how each cloud service works and how they affect your overall budget. This will allow them to make informed decisions about which services should be utilized and which should be avoided at all costs.
Tools to Calculate Public Cloud Platforms and On-Premises
Some tools allow you to calculate costs associated with public cloud platforms and on-premises solutions alike. This helps you determine which solution is best for your business by comparing associated costs. This makes it possible for you to make an informed decision on what type of solution would work best for your company without hiring expensive consultants.
Final Words
When comparing the costs of on-premise and cloud solutions, it’s important to consider the total cost of ownership, considering both the costs of moving to the cloud and the advantages of better scalability, agility, and increased business productivity. The secret sauce to success here is having an expert partner review your current state and future state, compare costs and work with you to develop a business case which would add value to your cloud adoption journey.
Despite all the benefits, there will still be instances where some data and applications must remain on-premises, particularly in highly regulated environments. Fortunately, a hybrid cloud is also an option that makes sense and should unquestionably be taken into account as you prepare for the constantly evolving future of cloud technology.
To reiterate, it is best to talk to a credible partner who can take you through possible cloud solution permutations and combinations which would be less painful and help you align with business priorities rather than just selling fancy tools. Transpire Technologies would love an opportunity to work with your internal team to provide the ideal cloud computing solution for your business requirements.
