Cloud Migration Costs and Other Things You Did Not Know

Cloud Migration Costs and Other Things You Did Not Know

Companies are increasingly wasting more time discussing how to expand the server’s capabilities rather than spend that time improving the software codes. Many of these companies have already taken a call to move their operations to a better cloud infrastructure. But the said process is much easier said than done.

The cloud migration services market is expected to increase from $3.2 billion back in 2017 to an astounding $9.5 billion by the end of 2022, at 24.5% CAGR (Compound Annual Growth Rate). This throws a fair amount of light on the current scenario. Several factors will drive the increasing demand for cloud services, such as flexibility, lower costs, security, and agility. Cloud migration services are a combination of innovation and research know-how, with a complete lifecycle of solutions ready for the cloud to enhance operation.

Cloud migration is a complicated and challenging process. Hence, it is imperative to strategically and holistically determine the cost of cloud migration and the benefits. For that, cloud integration services must understand the value areas and account for these factors before migrating.

Areas of Cloud Migration Costs

There are considerable costs involved in moving to the cloud. Based on the on-premise data center, you may have to spend the IT budget on the latest hardware upgrades, new software licenses, maintenance, support, and other related factors. Likewise, moving to the cloud infrastructure means you need to get into cloud application development, which involves investment.

There are some primary areas of costs involved in cloud application development and migration. It is imperative to understand the current pre-migration expenses and compare it to the future costs to clarify the cloud migration costs. There would also be the actual cost of cloud migration – the effort and hard work it takes to move applications from the on-premise to the cloud.

1. Pre-Migration Costs

To present an accurate cloud migration estimation, it is essential to gain complete details about the present on-premise expenses and system performance data. It is crucial because it would allow you to determine the correct cloud infrastructure size and provide a near-accurate comparison highlighting the cloud’s current and future costs.

The costs include on-premise data center expenses like rack infrastructure, servers, power, electricity, storage, IT labor, and network. Expenses related to the hardware specifications and maintenance, new hardware, software licensing, support costs, purchase contracts, warranty expiration, labor contracts and costs, running processes, system performance, network connections, system updates, and application updates.

2. Post-Migration Costs

Cloud migration estimation involving runtime costs of migrated applications are important. Noted below are some of the estimated post-migration costs:

  • Monthly/annual infrastructure and software costs involving licensing and support
  • System operations and maintenance costs
  • Operations
  • Administration
  • Monitoring
  • Alerting
  • Maintenance
  • System updates
  • Software version patches and updates
  • Training

3. Cloud Migration Costs

When you consult a cloud integration service provider, it would be best if you keep these pointers in mind:

  • Cost of application migration, including the real cost of moving an application from the present location to the destination cloud.
  • Application code, infrastructure, and configuration changes are required before moving to the cloud. These are also called refactor work.
  • Application refactor to be done before migrating to the cloud to ensure that it works in the cloud.

On Premise to cloud cost of migration

Read More : 11 Expert tips for successful enterprise cloud migration

Do you know because of the COVID-19, 59% of the enterprises are expected to increase cloud usage? Click To Tweet

How to Calculate Cloud Migration Cost?

Step 1: Audit the Present IT Infrastructure Expenses

An in-depth understanding of the current operations is critical to assess the costs involved. Infrastructure audit is one of the first things to do. An audit would reveal the status of IT costs and the future costs of a cloud environment. With this analysis, you can further analyze the potential expenses of cloud resources in the future. Here, it is vital to approach holistically and consider the costs of using and maintain the existing IT investments in due time. The calculation must include both direct as well as indirect costs.

  • Direct Costs: It is relatively easier to calculate the direct costs, as they are glaring in the balance sheet. Direct cost begins with the hardware used and the software engaged in running the show. Cost of physical servers, licenses of the software, warranties, maintenance costs, materials, spares, and everything else that immediately affects the budget should be added here. Ensure these costs are documented thoroughly, and your account department can access them by pulling invoices, payment records, and purchase orders.

    Besides, you must consider the network bandwidth, database capacity, and storage consumed with the servers, along with the necessary technology. Identify infrastructure details like the total number of servers, database types, and total storage capacity. Using this information, you can calculate the estimated infrastructure costs of moving to the cloud.

    Next comes operational costs, including labor costs to maintain servers, databases, and technology used; the cost of maintaining IT hardware facilities like real estate and staffing; the cost of internet connectivity; and other costs attributing to IT care.

    Finally, include administrative costs to maintaining the IT department. It has all the resources engaged from various departments in the organization, such as HR, Finance, procurement, etc.

  • Indirect Costs: On the other hand, indirect costs are difficult to sum, but it is equally important. The most significant indirect cost is productivity loss. It happens when the IT infrastructure is compromised. Calculating these costs, however, is a herculean task. You have to review old log files to understand how often the servers were down and how many minutes were affected – multiply the time by the average rate (hourly). Add the estimate of revenue lost.

CTA: Connect with us now if you don’t have the required expertise or human resources to undertake cloud migration.

How to Calculate Cloud Migration Cost

Step 2: Estimate The Cloud Infrastructure Cost

Once you are ready with the present infrastructure costs, calculate the potential cost of cloud infrastructure. The audit should help you understand the network, database capacity, and storage you require to run your applications in the cloud.

Although cloud costs are incredibly complicated, infrastructure service providers are now offering a simplified pricing structure to understand customers easily. Many cloud cost estimate calculators are available to help you with a fair idea of the costs, regardless of the cloud provider’s choice.

A basic calculator allows you to input some of this information:

  • Type of server
  • Number of machines (virtual)
  • CPU cores
  • Memory (GB)
  • Guest OS, Hypervisor, DB engineAlerting
  • Type of storage
  • The raw capacity of storage
  • Infrequent percent accessed

Some of the advanced calculators can let you add more details about Servers, Storage, etc.

Once you submit all this information, the calculator generates a report summarizing the cost in categories with a detailed breakdown.

According to a report 20% of enterprises spend more than $12 million every year on public clouds. Click To Tweet

Amazon Web Services (AWS) has the Total Cost of Ownership (TCO) Calculator and a detailed monthly cost calculator. You can use it to get your estimates.

Step 3: Estimate Cost of Cloud Migration Execution

In the next step, you have to account for all the expenses involved in executing IT operations’ migration to your destination cloud. The scope of present IT infrastructure and the volume of data you want to move to the cloud will also contribute to the migration process’s cost. Consider the following components to calculate the costs of migrating to the cloud:

  • Moving Data: The first step is to move your data to the cloud. Cloud application development services charge fees to transfer data to the systems. Also, account for the labor to ensure your organization’s data is adequately synchronized once deployed to the cloud. It is because you would want to continue using the application when cloud migration is still in progress. Ideally, you must spend your time and resources to ensure the data in your existing systems are not discordant with that of the data in your cloud.
  • Cloud Integration & Testing: Not all applications are cloud-ready. Check your cloud integration services. Whether you are migrating an extensive ERP system with many features and functions, or legacy software, consider the cost of integration and testing the apps when they are moved to the cloud. Understand the interaction between these platforms with the current OS and its infrastructure. After that, determine the necessary changes to make all the systems, ensure it works well in the new environment or the cloud. Finally, make changes to the app and test. All of these steps involve money and time. Prepare a budget.
  • Add Consultation Fee: It may not be possible to do everything together. You may need expert skills and some resources to execute the process of migration. You can consult cloud application development services for expert advice. From mapping the approach strategically to developing cloud architecture and implementing the final migration process, consultants have the knowledge, experience, and expertise across different industries, situations, and technologies.

Read More : The Six Essential Steps to a Successful Cloud Migration


It is quite evident that multiple factors are involved in determining the cost of migrating to the cloud. While it is imperative to have a detailed plan for accuracy, you should also consider ‘Who’ your audience is, ‘What’ your audience wants, ‘What’ your long-term goals are and ‘What’ do you wish to deliver.

Radixweb has a team of cloud experts that can help you better understand your business objectives and challenges. We have developed the requisite know-how and the experience which comes from working on a diverse set of operational challenges.

Tweet References

Don't Forget to share this post!

Jaydeep Patadiya is a senior business development manager at Radixweb and always has the answer to- what's on the mind of the customers? In an industry that is fundamentally changing, he helps customers make the right decisions by connecting the right dots and adopt new technologies. Beyond work, he prepares for upcoming marathon races.