Cloud vs. On-Premises: Cost (TCO) Calculator

Cloud or on-premises? How to understand real cost differences between both technologies? Are the cost savings given from cloud providers reliable?

There are lots of misconceptions when answering to these questions. For example, when thinking about “cloud or on-premises” many business owners focus on well-known and widely discussed raw face value costs. Unfortunately, in that case the user will never get the real picture at the end.

It’s important to understand that for “on-premises” it is not just how much new hardware/software is needed to put a solution into place. And for “cloud” it is not just recurring monthly service cost. The real answer of what’s more beneficial – cloud or on-premises – goes much deeper than the cost of a new server or a year’s worth of cloud service subscription fees.

Good news! Microsoft has just released a tool to help users to compare the Total Cost of Ownership (TCO) for on-premises infrastructure and Microsoft Azure*. It is a great tool to give better understanding of how the cost for both technologies should be calculated.

In this tool users can describe their on-premises environment in terms of physical or virtual server configurations along with disk storage and networking requirements.

Calculator lets the user to choose a desired Azure deployment region and a preferred currency as input. Making the comparison data trusty and close to actual situation.

When calculating on-premises infrastructure costs, tool evaluates the following criteria:

• Hardware costs
• Software costs (for Windows as an OS)
• Electricity costs
• Data center costs
• Networking costs
• Disk storage costs
• IT labor costs
• Virtualization costs

Values for every criterion are based on user’s description. In some indicators the calculator adds additional industry standard information (e.g. power consumption, service provider costs, IT labor, hourly rate etc.) to provide accurate data.

When calculating Azure costs, tool evaluates the following:

• Virtual machine costs – Web direct
• Virtual machine costs – Compute Pre-Purchase (in case the Enterprise Agreement with Microsoft is signed)
• Networking costs
• Disk storage costs
• IT labor costs

Criterions mentioned above also are based on user’s pre-defined values.

*TCO calculator estimates and compares on-premises and Azure costs over a three-year period.

But if you are still thinking about going cloud, here are some facts** about it:

• 59.3% of businesses are currently using cloud
• 20.3% of businesses are planning to adopt cloud within 12 months
• 12.5% of businesses are evaluating and planning to implement cloud
• 8.0% of businesses are not interested in cloud

Data shows that today almost 80% of businesses are deploying or fully embracing the cloud.

** Source: An IDC eBook series

If you are considering going to cloud, we are ready to support you with solution deployment on Azure. Just let us know how can we help you!