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How to determine how much your cloud costs

How to determine how much your cloud costs

Because I am a long term supporter of cloud computing, and I try to spread the idea that moving to the cloud will help any company lower costs and better leverage resources, I am often asked, how much the cloud actually costs. People fear that the initial investment and their ongoing expenses will be difficult to be amortized in time and are wondering overall if the cloud investment is worth it.

From my own experience, I would say it is a definite yes.

I believe that in order to determine the costs of implementing and using cloud computing, you should divide your efforts into 2 main categories: setup and migration costs and the ongoing costs.

During the first phase, you need to determine which applications and business units you will be moving to the cloud, which systems consume the most demands.  If then it is time to go cloud shopping! When choosing the provider you need to choose one that fits your requirements, (attention: not the cheapest one), and test all of their services. After migration, ongoing expenses should not be difficult to calculate.

In the migration phase, the most obvious advantage is that there is no cost for hardware. Therefore, you are saving capital equipment expenses.  You do need to take into consideration the loss of value of the hardware you will be moving away from.  If the hardware needed to be replaced, then there is no loss.

In terms of the ongoing expenses, the most common ways to pay for cloud computing services are for CPU time, GB of Ram and TB of Storage.  These approaches have the great advantage of billing only for what is used, making the payment utility based.

Therefore, the key for a successful and profitable cloud computing implementation lays in picking up the right provider, careful planning of the migration and attentive testing – perhaps starting with a pilot project, and then moving more the infrastructure to the cloud. Obviously, there is also the element of some risk required whenever deciding to try something new, such as implementing a new technology in your company. If you decide to go this route, take your time and you will be on your way to reaping the benefits of cloud computing.

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