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Developing a Cloud Migration Cost Estimate for Small Business

Is your startup or small business looking to make the transition to the cloud? Check out our guide on how to calculate your cloud migration cost estimate.

6 min read
Developing a Cloud Migration Cost Estimate for Small Business

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What should your business take into account to produce a migration cost estimate when moving infrastructure, databases, servers and other resources to the public cloud?

Adopting cloud computing offers advantages like reduced overheads and scalability. Yet, many who have been through a cloud adoption believe they don't have an optimized cloud strategy, having inaccurately calculated the total migration cost.

This article offers an overview of creating a cloud cost estimate for your infrastructure and what you need to consider before moving to the public cloud.

Discover the main factors that contribute to up-front and ongoing expenses. See which cloud computing services will replace your on-premises systems.

Read on to calculate the price of cloud computing for your small to medium-sized business. And the best way to optimize those costs by utilizing a certified AWS cloud consulting partner.

Moving to the Cloud

Did you know that 30% of all IT spend now goes towards cloud computing?

Companies of all sizes recognize the benefits of the cloud, with 83% of enterprise workloads now using cloud services. Even SMBs join the revolution as 94% see the benefits of increased security and reliability, and lower costs.

However, migrating legacy systems and infrastructure is a daunting task. And the chief concern isn't the savings that you could make but the total expense needed to achieve them.

Migrating to AWS

Pilotcore is a huge proponent of AWS or Amazon Web Services, the world's largest cloud provider.

We are an AWS partner and believe that our clients can achieve the best results through the AWS platform. Yet, it takes a properly executed plan to achieve a successful migration.

The remainder of this article details the various factors you must consider before moving infrastructure, databases, and applications to the cloud.

We explore everything from analyzing your existing systems to consultancy, configuration, and refactoring. We also consider post-migration costs like support and management. And we share some tips on how to reduce expenses further through optimization.

How to Create a Cloud Migration Cost Estimate

Below are six factors that form the basis of every successful cloud migration strategy:

Each requires careful research. Some can be handled in-house by your IT staff and executives, while a cloud expert should conduct others.

All the above factors help to form the bottom line of the total expenditure of adopting cloud computing. Comparing them with your current IT spend will act as the basis of whether moving to the cloud is the right avenue to take.

On-Premises Costs

What direct cost and indirect cost obligations does your company have for it's current IT setup? This step requires you to scour your expense reports and add up all associated outlays.

Don't just stick to the current financial period. Go back several years to review unforeseen issues that factored into your monthly bills. This retroactive analysis will give a better average and a clearer picture to compare with a cloud alternative.

If your business has a CFO and CIO, bring these executives together to gather their input. Break your costs into capital costs, operating costs, and indirect costs to make this task a little easier.

Capital Expenditure

CapEx or capital expenditure is often a company's single most significant IT expense.

Purchasing new server and networking equipment involves planning, sourcing, purchasing, installation, maintenance, and support. Networking a site or multiple sites takes considerable person-hours and can impact liability insurance, sick leave, and other human-resources-related factors.

Capital expenditure also covers upgrading and replacing hardware.

Damaged computers due to a power surge may require a complete replacement. Out-of-date systems and software like Windows XP PCs at their end of life need an upgrade. Both also incur a labour cost.

Take time to make a list of your company-owned hardware by type and your software licenses and how much they cost to repair or replace.

Operating Expenditure

OpEx or operating expenditure relates to ongoing expenses like:

  • IT facility costs, including rent, maintenance, and power
  • IT staff salaries and related costs
  • Training and onboarding for tech staff and end-users
  • Subscription software licenses

Remember to average these expenses by basing your calculations over several years. This averaging will give a more accurate picture of your monthly expenses.

Indirect Costs

These 'hidden' costs could include administrative time to process IT staff payroll. Office furniture and supplies for IT buildings also fit this category.

Indirect expenses are often difficult to spot and quantify. Therefore, it's advisable to add a percentage to your total costs to cover them.

Cloud Services Consultancy and Design

AWS has over 200 services available to you. The most popular include:

  • Amazon EC2 - virtual cloud server infrastructure
  • Amazon S3 - unlimited data storage
  • Amazon RDS - scalable SQL database solution
  • Amazon CloudFront - CDN for faster content delivery and caching
  • Amazon Glacier - backup your data online at a low cost

Cloud architecture design and initial planning incur their own expense. You need to factor these into your cloud infrastructure cost estimate.

Don't underestimate the importance of initial planning but don't over-calculate either. Pilotcore be happy to jump on a call with you to discuss your strategy and guide you on the approximate costs relating to consultancy and infastructure design.

Cloud Services Configuration

Configuring AWS isn't for the faint of heart.

System admins can use an online dashboard called the AWS Management Console, the CLI interface, or Infrastructure-as-Code (IaC) tools to set up services. In EC2, they must select the appropriate server instance type for the workload it will host, configure security groups and select the correct EBS volume storage type.

There are many other variables to consider, like load-balancing, autoscaling and geographic distribution. Not to mention that a misconfiguration can lead to poor performance and a hefty bill.

The AWS Pricing Calculator can help identify each service cost, but it doesn't include configuration time. Contact our team to receive an approximate estimation on how many hours these steps require. We love helping clients achieve cost saving.

Data Migration and Workload Refactoring

Once the cloud infrastructure setup is complete, it's time to migrate your existing data and systems to the a new cloud environment.

That thought alone is probably a cause for concern. Not only will it take time to achieve, but what about new data added to your legacy system?

Will both work in tandem, and how will a parallel service work before, during, and after the initial data migration?

To help calculate this, you must consider how much data resides on your on-premises or legacy network. Don't forget to factor in backup and disaster recovery plans and anything hosted with a third party if you want them to migrate too.

You also need to check your Internet connection upload speeds as gigabytes of data will take time to transfer. That may also impact your broadband bill, so check with your ISP first.

DevOps and Application Development

Upgrading a legacy application incurs the cost of any new system you will begin to use.

Many SaaS (Software as a Service) providers offer excellent solutions for you to leverage. Yet, you may still require some custom application development work.

List all of the software your business uses-research cloud alternatives or upgrades. Then highlight the problem areas that will need modernization.

DevOps is the modern framework for automating the building, testing and deploying of applications in the cloud.

By using an Agile methodology, apps need not take months or years to code. You can create an app in less time and at less expense than ever before by harnessing cloud computing.

Management and Support

Once in the cloud, infrastructure requires management and ongoing support.

Ensuring your cloud infrastructure runs smoothly is an essential part of daily business operations. This ongoing management is vital in IaaS setups where your staff relies on cloud technology to run your servers.

One significant advantage of moving to the cloud is that service providers like Pilotcore can manage your systems remotely.

Yes, there's an associated cost, but it pales compared to hiring a dedicated IT systems admin. Backup and storage are simplified too, and those expenses are a fraction of on-premises alternatives. And they're safer too.

Cloud Computing Cost Optimization

By now, your spreadsheet will show two final figures: your current IT average spend and the average public cloud expenditure. But before you make any decisions, there's one more factor that will affect your cost estimate.

Optimizing AWS costs plays an important part when calculating your monthly bill.

Most CFOs won't have access to these potential savings because they aren't aware that they exist. Yet AWS consultants like Pilotcore do. And we can help reduce your IT costs by optimizing each service you choose.

Partner With AWS Experts Pilotcore

The main barrier to adopting cloud computing is the unknown cost.

Most small and medium-sized companies see the benefits of moving to the cloud but are wary of unforeseen expenses. By analyzing existing systems and infrastructure and tallying those costs, you have a base from which to work. The AWS calculator can guide you on approximate costs, but it takes a team of experts to help steer you on the right path.

Pilotcore is a Canada-based AWS solutions provider that specializes in cloud adoption.

We can help your company by creating the road map to cloud migration plan success. That includes examining your current IT costs and alternative cloud infrastructure solutions. We also know how to keep costs low and will pass those savings onto you.

Contact us to discover how Pilotcore can assist your firm.

Lean on our collective 30+ years experience to ease your company's cloud adoption initiative.

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