If you’re weighing up a move to Microsoft Azure for the first time or are looking to add additional workloads as part of your existing environment, the potential cost of any migration is one of the biggest deciding factors and a consideration that needs to be taken before any commitment.
Crucially, this assessment needs to go beyond the upfront cost of facilitating a migration, or even the initial monthly costs incurred for resource consumption. Understanding the full financial implications of a migration requires clarity over the end-to-end cost as part of a Total Cost of Ownership (TCO) calculation.
A well-executed TCO analysis compares the cost of hosting a workload on premises to running it in Azure, accounting for the support costs for both options, as well as the cost of migration. This provides a comprehensive cost-benefit analysis that helps identify the best candidates for migration and enhances decision-making. It works best when you already have a clear view of your current environment and an idea of what your ideal Azure setup would look like.
Understanding Azure TCO
For Azure, TCO runs deeper than comparing the price of a virtual machine with the cost of running an on-premises server estate. It should include the complete cost of running your workload today (including any maintenance overheads), the potential cost of running it in Azure, and the cost of getting there.
That full picture requires a complete understanding of all the factors that impact the final TCO, which fall into three areas:
- Current infrastructure:
- Servers: Details about your existing infrastructure, including quantity, specifications such as CPU, memory and storage, and the operating systems in use.
- Databases: The type and size of any databases needed to power a given workload.
- Storage: The type and amount of storage currently used, including any redundancy or backup solutions.
- Network traffic: Outbound network traffic, along with any associated costs.
- Azure environment:
- Virtual machines: Suitable Azure VMs that match your current server specifications based on CPU, memory, storage and region.
- Storage options: The right storage types, access tiers and redundancy options for the workloads you plan to move.
- Networking: Virtual networks, load balancers and bandwidth needs.
- Operational costs:
- Power and cooling: The costs linked to power and cooling your on-premises infrastructure. For Azure, this is factored into the cost of the VM.
- IT staffing: The time and cost of the people needed to manage and maintain your environment. While direct maintenance isn’t needed in the cloud, internal teams will still need to manage your Azure instance.
- Software licensing: Any software licensing fees that may apply in both current and Azure environments.
A comprehensive view of an anticipated TCO requires input from across the organisation, but is hugely valuable in ensuring any decisions around migration strategy are properly informed and aligned with wider business objectives.
Once you have clarity on these inputs, you can enhance your analysis with additional tools based on your specific needs. The Azure Pricing Calculator provides detailed cost estimations for your planned Azure environment, while the Azure Migrate tool provides a more comprehensive analysis of your cloud migration, including detailed financial analysis to identify the best path forward while assessing Azure readiness.
The Azure Pricing Calculator
Once you have made an assessment based on your target Azure workload, the Azure Pricing Calculator offers an ideal route to accurate costings. A complimentary cost management tool, it helps you estimate the Azure cost for services and products ahead of migration.
Whether used to assess costs before migration or as a tool for further optimising your environment post-purchase, the calculator is a crucial tool for planning. It allows for the modelling and comparison of different sizes, storage tiers, regions, and networking needs, and factors in any pre-existing Azure agreements held by the organisation, allowing for an accurate cost estimate.
The Calculator is essential for providing the Azure end of the TCO calculation, but it does not provide the whole answer on its own. While the calculator shows service-level pricing, it relies on accurate inputs to provide the best results, ensuring that all workloads, storage, and migration requirements are factored in. IT teams should work closely with their counterparts in finance to review and refine the output and investigate which services are best suited for the organisation.
Planning with the Azure Migrate Tool
While the Azure Pricing Calculator provides estimates for service and product costs, the Azure Migrate tool takes a wider lens to calculating Azure’s TCO. It helps gauge Azure readiness, plan a route to migration, and build a business case for cloud, including an analysis of potential ROI.
Azure Migrate follows three phases: Decide, Plan, Execute.
- In the Decide phase, you can explore your current IT estate and generate a dependency map for applications, identifying the resources and services they rely on. This data allows for more accurate cost estimation, including identifying potential savings via the business case (TCO/ROI) feature.
- Next, the Plan phase assesses readiness for migration, delivering recommendations for right-sizing your target Azure environment and selecting the right migration strategy. As part of this strategic process, Migrate helps to break migration into iterative “waves” which include all dependent workloads for an application to move during a maintenance window.
- Finally, the Execute phase concentrates on the actual migration of workloads into a test environment in Azure, working through the plan methodically to ensure a seamless and efficient transition.
Beyond the immediate benefits in supporting cloud migration, Azure Migrate also supports the development of a business case. This gives a full overview of TCO, factoring in potential discounts, savings between on-premises environments and Azure, and considerations for software versions approaching (or past) their end-of-support date.
The Azure Migrate business case tool then constructs a year-on-year cash flow analysis, backed by resource utilisation estimates and quick wins for modernisation that help to unlock the full value of cloud.
Develop your cloud strategy
Understanding the total cost of ownership for an Azure environment is critical to inform any migration decision. Our free Azure Rapid Migration Assessment helps build an end-to-end analysis of your current environment, including applications, infrastructure, and data storage, providing a view of where Azure can add the most value, and a prioritised roadmap to get there.
And, for organisations that have already migrated to Azure, we offer a free Azure Strategy Accelerator Workshop, which supports the optimisation of your environment, recommends cost controls, and opens the door for further innovation.
We also support ongoing refinement through Advania Cloud Insights (ACI), which provides analysis and recommendations for establishing stronger cost controls to open new routes for cost optimisation.
If you’d like to learn more about optimising the cost of your Azure environment, our previous Azure blog explores three ways to unlock additional savings.
