How to Calculate the Cost of Cloud Migration: Consider These Factors! - Stefanini

How To Calculate The Cost Of Cloud Migration: Consider These Factors!

Over the past few years, small and medium enterprises have raised and adopted cloud computing. According to this report, the cloud migration services market was valued at $119.13 billion in 2020. It is estimated to reach $448.34 billion by 2026, at a CAGR of 28.89% over the upcoming years. Cloud migration is the process of transferring the partial or entire digital assets of any business to the cloud. However, cloud migration challenges are also there, such as failure of critical services, exceeding the planned budget, human error, lack of skills, etc.

Now, where one should start when considering cloud migration arises. First, you must have extensive knowledge of cloud migration. Additionally, you must know how to refactor and change the original apps to be more cloud-native since a cloud-native application can reduce infrastructure costs.

Let’s get started on what is required to define before estimating the cost of cloud migration.

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Top 5 Factors Affecting Cloud Migration Cost

1. The Amount of Data: It’s pivotal to consider all the assets you want to transfer and describe the amount of data in its totality. The data may consist of pictures, videos, previous databases, and other critical digital assets. 

2. The Future of Product: One of the critical factors is the future of the product, which determines the future costs of cloud migration. For example, if the product may be developed in the future, it may be worth rewriting the app and pooling more resources to make it more cloud-native.

3. Time of Migration: The time of migration is the key, which is essential to define the total cost of cloud migration. The faster the company can fully migrate, the sooner the on-premises infrastructure can be decommissioned. Doing this helps save valuable money since old premises infrastructure no longer needs to be maintained.

4. The Cloud Provider: One of the essential things is determining the cloud provider before even beginning cloud migration. In general, any professional company can help in this; however, cloud architecture also plays a vital role.

5. Outside Help: It’s sometimes impossible for a company to manage to complete the process of cloud migration without any outside help. The amount of outside help required depends on the size and scope of the data transfer. Additionally, it also depends on whether you have already hired developers or have time to rewrite the apps. If it is not, then the cost of recruitment has to be factored into the total cost of migration.

5 Steps to Determine the Cost of Cloud Migration

For migrating onto the cloud, the first thing you need to take care of is initial budget investment plus ongoing regular payments. In general, the initial project tasks require collaboration between IT group staff members and cloud vendors. You should also consult the selected cloud provider to get the right estimates.

It’d be a great help for your business if you can go with cost optimization and budgeting software for cloud migration.

All you need is an applied cloud migration strategy. The AWS pricing calculator is a web-based cloud migration cost calculator to estimate the costs of AWS service and products to see how monthly expenses will look like in the AWS clouds. Moreover, you can check similar tools below:

  • Google Cloud Platform Pricing Calculator
  • Microsoft Azure’s Pricing Calculator
  • Rackspace’s calculator
  • IBM Bluemix’s calculator

Step 1: Current Application Inventory: The first step is to audit the application’s current IT hardware and software assets. However, relevant departments can handle this process. All you need to do is make sure that all application resources are included. You should gather all asset specifications, performance data, and the details of running processes and network connections. AWS offers its APS (Application Discovery Service) that introspects the workloads on the app’s servers. APS helps customers plan migration projects by collecting information about on-premises data centers.

Application dependency mapping provides visibility into interdependencies of services and apps, including software, servers, storage, security, networking infrastructure, and data.

Step 2: Calculate Current Infrastructure & Software Costs: We can calculate the current direct and indirect costs for purchasing, operating, and maintaining the app. There are two ways:

1. Direct Costs: It includes purchase prices, software licenses & support, operational, maintenance, and administrative expenses.

2. Indirect Costs: It includes less obvious expenses such as loss of productivity due to app downtime.

It is best to work with the accounting and purchasing department to gather invoices and relevant documentation regarding direct costs. Do not forget to include all data center costs for hosting the app’s IT infrastructures, such as storage, servers, rack infrastructure, network connectivity, and IT labor.

On the other hand, indirect costs include loss of productivity for employees, customer dissatisfaction, and damaged reputation.

Step 3: Estimate Cloud Infrastructure Costs: Talking about cloud infrastructure costs can be tricky if you are not aware of your application hosting in a cloud environment. However, each cloud provider has its cost calculators that can help estimate the costs associated with running an app on the cloud.

For instance, if you are migrating to AWS and need a quick view, you may start with Simple Monthly Calculator. First, it allows you to input details about future cloud infrastructure environments. After that, one can estimate the monthly AWS bill.

Step 4: Evaluate Cloud Migration Costs: The next step is to determine the costs of migrating workloads to the cloud environment. The first step is to review your migration plan. It must include an assessment of the cloud-readiness of the app so that you know which ones can easily be moved to the cloud and which ones may require redesign.

If the staff does not have the expertise or time to handle app redesign, you need to outsource some tasks to third-party companies. The estimation is the key to accounting for such charges. In addition, consider potential costs for maintaining legacy systems that could not move to the cloud.

Determine the migration method for moving cloud-ready workloads. Whichever way you pick, make sure to build in contingencies to cover unexpected issues that may arise.

Step 5: Estimate Post-Migration Costs: Once the cloud migration is completed, there might be continued integration and application testing costs. In addition, administration, training, labor, and other expenses are likely to emerge. Be sure to account for them in cost analysis and budgeting for the project.

The bottom line is that one of the main benefits of moving to cloud services is cost savings. However, bear in mind that your previous data center will also continue to generate upkeep costs. Therefore, turning off this if migration succeeds is vital to saving money in this area.

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Factors to Consider While Calculating the Cost of Migration

1. Rewriting Apps: It all depends on the programming language or database used, which tells whether apps may need to be rewritten to work as a cloud-native or not. One of the high costs to consider is estimating the amount of time that the developers need to rewrite the apps.

Since a more comprehensive rewrite leads to a higher cost, it is hard to tell one of the most challenging costs to estimate as it is almost impossible to say how long it takes to rewrite the code. However, it can take seven days to several months or more.

2. Massive Data Migration: If there is an unexceptionally large amount of data to migrate to the cloud, the network might be insufficient for this task. For instance, AWS Snowmobile offers a service that moves data in 100-petabyte increments using trucks.

3. Consulting & Backup: Depending on the level of in-house cloud expertise, it’s essential to hire a consulting company specializing in planning and managing cloud migrations.

When it comes to backup, it is assumed that cloud data storage is more reliable than on-premises storage. However, you can still back it up on-premises or to another cloud region or cloud.

Cloud Cost Estimation Methods

Here are two methods that calculate the gross cost of each part of cloud migration:

  • Cloud Cost: The cloud is one of the more straightforward methods and can be calculated using cloud calculators to total the transfer price of the data and the storage price for the amount of data transferred. For example, Google provides an excellent cloud estimation service.
  • Labor Cost: The labor cost can vary. It all depends on the rewriting of the code by hired developers and DevOps team members. It essentially varies depending upon app size and scope.

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You’ve just gone through with the different variables and ins and outs of cloud migration cost estimation. However, the truth is that there is no easy way to reduce cloud migration costs. Cloud migration is a sensitive approach as it can cause mistakes and result in more time and cost.

The best way to safely migrate the cloud is to keep following the do’s and don’ts, plus following a good cloud migration strategy can make things safe and more accessible to move to a new cloud.

About the Author: Hardik Shah is a Tech Consultant at Simform, a firm that provides custom software development services. He leads large-scale mobility programs that cover platforms, solutions, governance, standardization, and best practices.

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