How do you calculate your savings or financial benefits while planning to migrate to the cloud?

Question

Answer

If one expects savings from cloud migration then you are looking at this through the wrong lens and will most likely be very disappointed. Core benefits of cloud are agility and elasticity.

Answer

Agree with Mike. Always start with the why -  the where/what may not end up being a benefit or cost save at all, software can run anywhere, start with why. If you are looking at estimating the potential cost savings of using the AWS cloud vs. running workloads on-premises you may look at this tool - https://aws.amazon.com/tco-calculator/.

Answer

Agree with those that have commented so far. The cloud is less about the direct cost savings on core infrastructure, more about the indirect benefits that can be gained via agility, and ability to redirect internal labor to things that are more strategic.

Answer

For us, it is not about savings, but about reliability and uptime. Cloud isn't going to be necessarily cheaper.

Answer

Agree with all of the prior comments. With the exception of some very one-off and unique use cases such as seasonal applications (eg, flu shots, Super Bowl app, Thanksgiving or Christmas influenced apps), cost savings are not the driver to move to the cloud. Rather, it is flexibility of changes, nimbleness, agility, and a modern platform that can adapt. For that reason, systems that infrequently change are not good candidates for cloud migration. Not is a 100% cloud migration often a good goal. Most companies end up being hybrid, unless they started off cloud-native and never did any acquisitions of companies with “legacy” apps.

Answer

Agree with the above, but also very much depends on how well you can account for your current (on-prem) costs, including indirect costs.  Also, to build on the other comments, how much downtime costs you now and other items that can be much harder to quantify - and therefore we approach them as a philosophy or principle.

Answer

Savings on cost of resources for application support.

Answer

We tend to see savings from increased uptime and smaller impacts for maintenance, but those that have been difficult to quantify.

Answer

We calculate the savings based by scalability and realizability. Cloud infrastructure is just way easier and cheaper to keep up with the latest technology and infrastructure.  We need to be able to rapidly scale up on some of our systems.  The initial costs may be higher but the long term costs are more beneficial to us.

Answer

We look at all aspects of costs to include infrastructure, support costs, any potential rent savings if we no longer need space in a Datacenter or Co-Lo, potential power savings, etc.   There are some decent 3rd party companies that help do those calculations based on Energy usage, space, infrastructure, etc.   You have to be very careful though because there may still be a bottom line cost to the company (Rent for example) that doesn't go away just because you move it to the cloud. You really need to validate which are real savings vs potential savings and then make decisions.  Sometimes its not even costs that are the overall benefits so you need to calculate if it gives you agility or competitive advantage which you can then tie back to a financial uptick.   All in all, if you are ONLY looking at financial savings, you are likely missing many other things to include in the decision making process.

Answer

The biggest factor for us is how much data will we be pulling back?  There are the obvious savings from not having to worry about infrastructure, but at the end of the day you get charged for what you use.  While it's possible to justify savings on the hardware, if your users are always accessing the data - there's no charge for that when it's on-prem.  So the costs for accessing the data have to outweigh the cost of having the data local.  It's, I think, a matter of scale.  Small and medium sized businesses with one location may find it harder to justify then a larger organization.

Answer

Difficult to answer as it depends on what flexibility/scalability/peak requirements you need to plan for.   If looking only at cost it is important to include the full TCO for both environments. I have found a mix of in-house with cloud bursting to be the most cost effective in environments large enough to justify the complexity.

Answer

The biggest cost savings is your disaster recovery cost and security to a certain extent.  At one company I worked for years ago, they moved their email to Google cloud services and realized a significant savings in disaster recovery and administration costs.

Answer

I want to echo Mike D. Kail's response, and also add better disaster recovery and security (which is usually neglected).

Answer

Time and Motion Study with RoI

Answer

based on cloud provider's cost calculator result.

Answer

Difference between my monthly total cost of ownership (depreciation, Maintainence and support) and cost of OPEX  of cloud Never forget the skill cost as well. Also keep in mind how long is your retention policy in your calculations

Answer

It is impossible to calculate exact potential savings so you move a little to the cloud at a time and measure results then.

Answer

For us, the benefits are less than financial. There is always something else that will snap up that financial benefit, and often it seems that the structure of fees passed along to us for cloud services are created by the vendor noting they might see financial losses. ROI is more for us seen in terms of usability and accessibility while maintaining security. This is for both the user and IT. Cloud also can free up IT personnel resources to concentrate on other projects.

Answer

Migration to a cloud infrastructure should not be done solely for financial purposes. Calculating savings and or financial benefits from a cloud migration can be very tricky. It is likely that there will be no recognizable savings in the first few years of a cloud migration. In fact, costs may go up in the short term. However, the best RTO is an improved customer experience, dramatically better disaster recovery, better security and on demand scalability. How does an organization measure these benefits from a purely quantitative perspective?

Answer

We calculate our savings in ease of management and opps to increase security, take some of that off our plate. Not financial savings.