Understanding the total cost of ownership (TCO) of a cloud solution is valuable for your customer. It is a strong indicator of the financial feasibility of a cloud solution and prevents unpleasant surprises afterward. But how do you provide insight into all costs of a cloud solution?
The first step, of course, is to determine the ‘cloud needs’, now and in the future. Does your customer opt for an Infrastructure as a Service (IaaS) service? How many virtual machines, RAM, storage and virtual CPUs does he need now? And how much in three years? Knowing this makes it fairly easy to find out the cost of these resources through the provider’s website.
Need help calculating the total cost? Then you can use the TCO calculators from, for example, Microsoft and Amazon. These calculation tools also demonstrate the cost savings of migrating an on-premises solution to the cloud. This allows you to remove any doubts about the cloud from your customer.
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The beauty of the TCO calculators mentioned is that they do not base their calculations solely on the costs of ‘computing’. There are many more cost items that you must include in a TCO calculation. Some examples:
Migration to the cloud entails ‘start-up costs’, for example for transferring data, synchronizing systems, and extensive testing of the new cloud environment. These costs must be transparent for the customer.
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Scalability is an important advantage of the cloud. Additional virtual machines are easy to start up if needed. What is sometimes forgotten is that your customer does not only pay for the extra resources. Software license fees may also increase.
The renowned cloud providers put a lot of effort into the security of their cloud platforms and services. However, there is always a shared responsibility in the cloud. Your customer remains responsible for the security of the applications and the data that end up in the cloud. That responsibility comes with a price tag.
In the case of IaaS, the cloud provider manages and maintains the hardware in its data centers. Management and maintenance of the data and applications in the cloud remain with the customer. He can do this himself or outsource it. In both cases, there are costs involved.
After a cloud migration, the corporate network and the internet connection are taxed differently than before. Business applications are now accessible via the internet. Is there insufficient capacity on the connection between your own network and that of the cloud supplier? Then an upgrade is inevitable.
Whether there are more ‘hidden costs’ also depends on the situation. For example, is additional training required to deal with the new cloud environment? Or does your customer have extremely high demands on uptime? Then that will also affect the TCO of the cloud solution.