How Much Does Cloud Migration Cost? Understand From Experts

Today, Businesses understand the need to be cloud-ready to have a competitive advantage. This is why, 90% of businesses have migrated to the cloud or somehow using cloud-based services. Migrating workload to the cloud helps save them 30-40% of Total Cost of Ownership (TCO) and other Cloud Migration Cost.

But how much does it cost to migrate to the cloud? This has been a top debate question for every business. To help tech businesses like you spearhead innovation, we have highlighted the cost estimation for your cloud migration. 

Let’s dive into the details.

Understanding Current Cloud Migration Landscape

First, you must understand why companies are adopting cloud computing so fast. Here are some reasons.

• Cloud computing drives profitability, with businesses seeing up to 21% higher profits and accelerated growth.
• 65% of companies experienced faster time-to-market.
• Reduces startup costs by up to 30-40%.
• 60% of CxOs say migrating to cloud computing improves security and business resilience.
• Reduce 84% of carbon emissions. 

These benefits are significant for any business to start migrating to the cloud today. As a result, the cloud migration market is projected to grow from USD 232.51 billion in 2024 to USD 806.41 billion by 2029, at a CAGR of 28.24%.

Despite the advantages, the cost of migrating to the cloud is a crucial part of most businesses. It is estimated that 50% of the technology budget goes to cloud spend. 

The cost of cloud migration does not include a single part. It has several things to consider. Let’s understand the basics of cloud migration costs. 

Also read- Cloud Migration: Prepare Your Business to Scale and Evolve

Understanding the Cloud Migration Costs

However, there are no one-size-fits-all scenarios when it comes to cloud migration costs. It depends on several factors, including complexity, workload, data, operations scale, and cloud service provider. 

To understand your cloud migration cost, you must understand these factors and how they play a crucial role in determining your overall cloud spend. 

1. Pre-Migration Costs

To get a clear idea of cloud migration costs, it’s important to understand your current on-premises expenses and system performance. This helps you figure out the right size for cloud infrastructure and compare current costs with future costs.

These costs include:

• On-Premises Data Center Expenses: Costs for rack systems, servers, power, electricity, storage, IT labor, and networking.
• Hardware and Maintenance: Expenses for existing hardware, new hardware, software licenses, support fees, contracts, warranty expirations, labor, running processes, system performance, and updates for both systems and applications.

2. The Cost of Setting Up Cloud Infrastructure

A big part of cloud migration costs comes from infrastructure. This includes expenses for cloud servers, storage, and networking. Many businesses don’t realize how much it costs to set up this infrastructure.

Setting up the cloud means doing several tasks. You need to prepare for computing power and storage. You also have to configure the network. This work is usually done by a DevOps team or an individual. The cost depends on how complex the application is. Simple setups are cheaper, while complex ones need more resources and money.

3. The Cost of the Cloud Provider

Choosing a cloud provider involves understanding their service fees. These fees are usually easy to calculate. When picking a provider, consider the services you need, where they are located, compliance rules, and preferred technologies. This choice is important for your cloud setup.

Different providers have various pricing models. It’s crucial to evaluate your organization’s needs carefully. This helps you choose the most cost-effective option and avoid paying too much or too little.

4. Cloud Migration Costs

When talking to a cloud integration service provider, keep these points in mind:

• Application Migration Costs: The real cost of moving an application from its current location to the cloud.
• Refactoring Needs: Changes needed for application code, infrastructure, and configurations before moving to the cloud. This is known as refactor work.

Make sure to refactor applications before migration to ensure they function properly in the cloud.

5. Post-Migration Costs

Estimating the ongoing costs of applications after cloud migration is important. Here are some of the expected post-migration costs:

• Monthly or yearly costs for infrastructure and software, including licenses and support.
• Expenses for system operations and maintenance.
• Administration costs.
• Monitoring costs.
• Costs for alerting.
• Expenses for system updates.
• Costs for software version patches and updates.
• Training expenses.

These are the costs that a business might incur during migration. But other factors can add up to your cloud migration cost. Let’s explore the factors.

Factors Affecting the Cloud Migration Costs

Cloud migration costs can vary from one organization to another. Here are some key factors that can make your cloud migration more or less expensive:

• Technical Skills: If you have skilled staff, you may save money. You can train your team or hire outside help to move to the cloud. Training costs money but can be worth it in the long run. Today, businesses opt for third-party vendors for seamless cloud migration instead of relying on in-house team experts. So, finding the right expertise also incurs costs.
• Licensing Costs: Software licenses are a big part of the cost. You may need to renew or buy new licenses to ensure they work in the cloud. Always consider ongoing subscription fees for cloud software, as these can add up over time.
• Downtime and Disruption: Moving to the cloud can disrupt your business. This can lower efficiency and profits. Careful planning and testing are necessary, even though they may raise costs. These steps help avoid long outages.
• Security and Compliance: Keeping your data secure during and after migration can increase costs. You may need special software and assessments to meet legal requirements, but these are important to avoid fines.
• Data Backup and Recovery: It’s crucial to back up your data to prevent loss during migration. After moving, check that your data is safe and that your recovery plans are solid. This is key for business continuity.
• Consulting Services: Hiring a cloud consultant can help with planning and execution, but it can be costly. Consultants might suggest changes that cost more upfront but can lead to smoother migration and long-term benefits.
• Data Volume and Complexity: The amount and complexity of your data affect migration costs. More data requires more resources to move and store. Complex data may need special migration methods, so managing this well is important.
• Future Planning: Think about your product’s future when migrating. Planning for growth can require a bigger initial investment. Upgrade and maintenance costs for the cloud environment should also be considered.
• Timing of Migration: When you choose to migrate can affect costs. Rushing may require more workers or faster processes, raising expenses. Also, migrating during busy times can lead to lost revenue, making timing an important factor.

Do you know, that 32% of the cloud budget went to waste?

Not only this, 49% of cloud-based businesses struggle to control their cloud spend due to lack of visibility, complex cloud pricing, and lack of expertise. Thus, 40% of CIOs consider cloud waste as the top challenge, which leads to overprovisioning and the inability to scale rapidly. 

Thus, you must consider each step and analyze it closely, so you do not end up wasting resources, investment, and expertise.

But the question is how your business will calculate the cloud migration cost? Take a look at simple steps to calculate your migration cost.

Steps to Calculate Cloud Migration Costs

Here are three easy steps to help you estimate the costs of moving to the cloud.

Step 1: Check Current IT Expenses

First, look at what you currently spend on IT. This is called an audit. It helps you see your current costs and what moving to the cloud might cost in the future.

Direct Costs: These are easy to find. They include:

• Hardware Costs: Servers and software you use.
• Maintenance Costs: Warranties and repair materials.
• Network Costs: Internet bandwidth and storage needs.
• Operational Costs: Labor for maintaining servers and facilities.
• Administrative Costs: Expenses from departments like HR and finance that support IT.

Indirect Costs: These are harder to calculate but important. The biggest one is lost productivity when IT systems fail. To estimate this, check old log files to see how often servers went down. Multiply the downtime by your average hourly revenue to find the total loss.

Step 2: Estimate Cloud Infrastructure Costs

Once you know your current IT costs, estimate what it will cost to set up cloud infrastructure. Use your audit to figure out what you’ll need in the cloud.

Cloud pricing can be tricky, but many providers offer simple pricing tools. Use cloud cost calculators that ask for details like:

• Type of server
• Number of virtual machines
• CPU cores
• Memory (GB)
• Storage type and capacity

These calculators will give you a report with estimated costs.

Step 3: Estimate Migration Execution Costs

Finally, calculate the costs to move your IT operations to the cloud. Consider how much data you need to transfer and your current setup.

• Moving Data: Include costs for transferring data and the labor to sync everything with the cloud.
• Cloud Integration and Testing: Some applications may need adjustments to work in the cloud. This involves costs for making changes and testing.
• Consultation Fees: You might need expert help for the migration. Hiring consultants can provide valuable advice and guidance throughout the process.

By following these steps, you can better understand the costs of migrating to the cloud. Also, you can take help of some tools that will help you understand your cloud spend, while you can track and monitor your expenses for optimal usage.

Popular Ways to Estimate Cloud Migration Costs

Now that we know how to calculate cloud migration costs, here are some common methods organizations use to estimate expenses.

Cloud Migration Cost Calculators

Many cloud providers offer online calculators to help estimate costs. Here are a few:

• AWS Pricing Calculator: This tool is easy to use and gives clear rates for both new and experienced users. It helps you find affordable options based on your specific needs and allows you to compare prices globally.
• Microsoft Azure Cost Calculator: This calculator organizes services into categories, making it easy to find what you need. It also has templates for common scenarios that you can modify.
• Google Cloud Cost Calculator: This tool is arranged by product categories. It’s useful for users who know their infrastructure needs. It has a good search feature and provides cost estimates based on your input.

FinOps Cost Optimization

With the increase in cloud spending, companies seek solutions that can help them reduce and optimize cloud spend. 7 out of 10 businesses failed to figure out of where to spend their cloud budget. Thus, it is important to monitor and optimize cloud spending. 

One way is to adopt FinOps cost optimization which is important for managing expenses during and after migration. It helps you adopt cloud services efficiently by finding cost-effective options and scaling solutions to avoid wasting money.

But, how much does a simple cloud migration cost? Let’s understand.

The Cost of Your Cloud Migration

The cost of cloud migration can range from $5,000 to over $100,000. For example, a simple lift-and-shift migration might cost around $5,000. But if you need to make major changes, the cost can be between $20,000 and $100,000. The total cost will depend on the specific factors we talked about earlier.

Challenges in Estimating Your Cloud Migration Costs

By tackling cost estimation challenges with the right solutions, organizations can better predict cloud migration costs. This helps ensure a smoother and cheaper transition to the cloud.

• Choosing the Right Team: having the right team will help you decide the right migration strategy throughout till migration and support. Think about the special skills needed and how they affect costs and the migration process.
• Evaluating Applications: Checking if your applications are ready for the cloud can be hard. Evaluate each application to see what changes are needed so they run well in the cloud.
• Designing a Good Landing Zone: Setting up a landing zone for your cloud that is scalable and secure can be tricky. Invest in a good design that meets both current and future needs to avoid extra charges and costs later.
• Managing Dependencies: When moving connected systems, bottlenecks can happen, leading to higher costs. Consider all indirect costs, like lost revenue and productivity, to create a realistic budget.
• Data Transfer Processes: The amount and complexity of data transfer can affect costs. Use efficient data migration methods to save time and money.
• Security and Compliance: Finding secure and compliant solutions can be expensive. Include security and compliance planning early to avoid extra costs and stay within regulations.

Also Read- On-Premise vs Cloud Benefits, Risk

Common Mistakes That Can Inflate Your Cloud Migration Budget

It’s important to know the mistakes that can cause you to overestimate your cloud migration budget. Here are some common ones.

• Lack of Proper Cost Estimation and Planning: Many organizations forget to consider all the extra costs when moving to the cloud. To avoid this, carefully assess your current setup and create a realistic budget that includes all costs, like infrastructure, data transfer, software licenses, and training.
• Ignoring Data Transfer Costs: Transferring data can be expensive, especially if you have a lot of it. Many companies overlook these fees. To manage this, think about how much data you need to move, use data compression, and choose services that have lower transfer costs.
• Using Too Many Resources: If you use more cloud resources than you really need, your costs will go up. To avoid this, make sure to size your resources correctly. Regularly check your usage and adjust resources as needed.
• Neglecting Cost Optimization: If you don’t regularly optimize costs, your cloud expenses can quickly increase. Make cost optimization a part of your process. Turn off non-production resources during off-hours, use reserved instances, and explore serverless options. Tools for cloud management can help with this.
• Underestimating Vendor Lock-In Risks: Relying on just one cloud provider can lead to higher costs. To avoid getting locked in, design your systems for portability, use multiple cloud providers, choose open-source solutions when you can, and consider containerization.

Take experts help to avoid these mistakes and to migrate to the cloud within your budget.

Expert Tips to Optimize Your Cloud Migration Costs

As we mentioned, most companies struggle to allocate cloud costs accurately, as they do not understand what drives the cloud costs. But, that problem of yours must have been solved as we have mentioned some factors, and cost criteria that can help you decide on your cloud spending.

But, as the company grew, visibility became a crucial challenge. This brings us to the need to adopt robust cloud cost optimization tips.   

• Assess your current infrastructure thoroughly to understand all costs involved in the migration.
• Create a realistic budget that includes all potential expenses, like data transfer, licensing, and training.
• Use data compression techniques to reduce transfer costs when moving large amounts of data.
• Right-size your cloud resources to avoid over-allocation and unnecessary expenses.
• Regularly monitor your cloud usage and adjust resources based on current needs.
• Implement cost optimization strategies, like scheduling non-production resources to turn off during off-hours.
• Consider using reserved instances or savings plans to lower ongoing costs.
• Explore serverless computing options to only pay for what you use.
• Avoid vendor lock-in by designing for portability and using multiple cloud providers.
• Keep your cloud management tools updated to help identify and eliminate wasteful spending.

Let’s start with these tips. But make sure you hire cloud migration experts to take care of that for you.

Let OnGraph Handle Cloud Migration Cost For You

Moving your operations to the cloud is a smart choice for many businesses, but it can also pose logistical challenges—especially if you lack sufficient DevOps resources to ensure everything runs smoothly.

Luckily, you don’t need to hire new employees or seek out costly contractors to build the tools you require. Ongraph can be your reliable partner in simplifying this process. More than just cost estimation, Ongraph’s Cloud Migration solution effectively connects legacy systems to the cloud, guaranteeing a seamless, efficient, and secure transition.

FAQs

Q: How can companies estimate cloud migration costs effectively?

Companies can use tools designed for estimating cloud costs. They should also review their current IT setup and workloads, work with cloud providers for quotes, and keep an eye out for hidden costs.

Q: What methods can help estimate the cost of cloud migration?

You can use cost calculators from cloud providers, do a cost-benefit analysis, use automation tools for estimates, and create a detailed migration plan.

Q: What hidden costs might come up during cloud migration?

Hidden costs can include fees for transferring data, reworking applications, training staff, ensuring security and compliance, and ongoing management costs.

Q: How can businesses avoid overspending during cloud migration?

To avoid overspending, businesses should set a clear budget and track their costs. They can use tools to optimize spending, review costs regularly, and adjust their cloud usage as needed.

Q: What challenges do businesses face when estimating cloud migration costs?

Challenges include predicting how much cloud capacity is needed, figuring out total costs from different providers, dealing with changing prices, and managing changes in the project scope.

Q: Why is cloud infrastructure cost important in total migration costs?

The cost of cloud infrastructure—like computing power, storage, and network services—plays a big role in the overall migration cost. It’s important to compare these expenses carefully when estimating how much the migration will cost.