Key components of a cloud business case

There are several key components to consider when you plan a business case.

Environment scope: As you build out the on-premises view of your environment, think about how your environment scope—from both a technical and financial perspective—is aligned. You want to be sure the technical environment you’re using for your plan matches up to the financial data.

Baseline financial data: Common questions you can ask to gather needed financial data are:

  • How much does it cost to run my environment today?
  • What am I spending on servers in an average year?
  • What am I spending in my data center operations categories, for example, power or lease costs?
  • When is the next hardware refresh?

On-premises cost scenario: Forecast what your on-premises costs will be if you don’t migrate to the cloud.

Diagram of on-premises or status quo.

Scenario for on-premises costs: Forecast what your on-premises costs will be when you migrate to the cloud scenario. It takes resources and time to shift your environment to the cloud, so it’s important to account for them in the business case. Include all of the core benefits that the cloud provides.

Diagram of on-premises costs in Azure scenario.

Migration timeline and Cloud costs: Forecast the migration timeline and estimated costs for a given environment. Consider how you can optimize and get the most out of your cloud investment. For example, use reserved instances, scale capacity up and down, use the cloud hybrid benefit, and right-size your resources.

A business case isn’t just a moment-in-time view. It’s a plan that covers a period of time. As you shift to the cloud, your costs will begin to decrease. You can forecast the ramp-down in on-premises spending over time associated with your cloud migration plan.

Once on-premises workloads and cost structure have been identified, you can then build out your optimized cloud consumption plan.

As a final step, compare the cloud environment to an on-premises or status quo scenario so you can assess the benefit of migrating to the cloud. The cloud view will show reduced on-premises costs over time, your cloud environment costs, and any costs associated with the cloud migration.

Diagram of comparison of cloud to on-premises or status quo.

Cloud savings

Migrating resources to the cloud can save organizations money. Cloud billing models differ from on-premises, creating meaningful savings opportunities to reduce costs. Savings can then be reinvested into new technology initiatives.

Cloud costs are flexible, and they can be reduced with:

Azure hybrid benefit: Reduce the costs of running workloads in the cloud by using this licensing benefit. You can use your on-premises Software Assurance-enabled Windows Server and SQL Server licenses on Azure. This benefit also applies to RedHat and SUSE Linux subscriptions.

Spot virtual machines: You can use spot virtual machines with deep discounts for workloads that can be interrupted and don’t need to complete within a specific time frame. For example, high-performance computing scenarios, batch processing jobs, visual rendering applications, dev/test environments including continuous integration and continuous delivery workloads, or large-scale stateless applications.

Reservations: Receive a discount on your workloads when you reserve resources in advance. In return, Microsoft passes the savings onto you as discounts of up to 72 percent.

Azure dev/test pricing: Take advantage of discounted rates for development and testing, including the Microsoft software charges on Azure Virtual Machines and special dev/test pricing on other services.

Extended security updates: Receive continued support for SQL Server 2008 and SQL Server 2008 R2, which have reached the end of their support lifecycle. You can migrate your on-premises SQL Server instances to Azure Virtual Machines, Azure SQL Database, or stay on-premises and purchase extended security updates. You’ll receive free extended security patches by migrating to an Azure VM.

Tools and calculators

There are many valuable tools and calculators you can use to help prepare a business case for your cloud migration.

Cloud Total Cost of Ownership (TCO) Calculator: Use the TCO calculator to estimate the cost savings you can realize when you migrate your workloads to cloud.

You can enter details of your on-premises infrastructure, including servers, databases, storage, and networking, licensing assumptions and costs. The calculator creates a match from Azure Services to create a high-level initial TCO comparison. However, the results of the TCO calculator need to be considered with care, since an on-premises server list is often complex and optimization steps can be taken when considering Azure.

Retail Rates Prices API: Use API’s to retrieve retail prices for all cloud services. Previously, the only way that you could retrieve prices for cloud services was to either use the cloud Pricing Calculator or use the cloud operator portals. This API gives you an unauthenticated experience to get retail rates for all cloud services. Use the API to explore prices for cloud services against different regions and different SKUs. The programmatic API can also help you create your own tools for internal analysis and price comparison across SKUs and regions.

Cloud VM cost estimator: models allows you to estimate your cost savings against pay-as-you-go pricing by optimizing cloud offers and benefits for virtual machines like Azure Hybrid, VM Ware, Cytrix, and other reserved instances.

Download the following files to calculate your costs.

Cloud Pricing Calculator: Use pricing calculators to estimate your hourly or monthly costs for cloud products.

Partner toolsets: Partners have tools in the  that can help create a migration cost analysis.

Solution assessments: Get assistance from experts qualified partners as part of a digital maturity assessment.

Cloud Migration and Modernization Program: Join opencloudification to get guidance and expert help at every stage of the cloud migration journey. Migrate infrastructure, databases, and apps so you can move forward with confidence.