How to Think about Total Cost of Ownership (TCO) for a Cloud Analytics Migration

Considering a move to cloud analytics? You’re not alone—and if you’re like many businesses, your IT budget is a major reason why. Lowering costs is one of the reasons that companies most often cite as motivation for moving to the cloud.

 
Before you dive in headfirst, however, it’s important to understand what a cloud analytics migration will mean for your IT expenses. In this article, we’ll discuss how organizations should approach the question of total cost of ownership (TCO) when debating a move to the cloud.

What are the Costs of Cloud Analytics?

The costs of cloud analytics will vary depending on your technology stack. However, the list below covers the expenses that will make up the cloud analytics budget for most businesses:
Storage (data warehousing, data lakes, data archiving, etc.)

• Analytics compute
• Data migration and integration
• Streaming analytics
• Business intelligence and reporting
• Machine learning (ML) and artificial intelligence (AI)

Is Cloud Analytics Cheaper Than On-Premises?

Most companies find that cloud analytics is indeed cheaper than its on-premises equivalent. The contributing factors here include:

• Support and maintenance obligations: Because cloud services are hosted from a remote server, rather than on your own infrastructure, you don’t have to worry about support and maintenance. Fixing technical issues and updating software and hardware are all obligations of the cloud vendor. This saves you from having to hire in-house personnel or a third-party IT managed services provider.
• Flexible pricing models: Most cloud services use a “pay as you go” business model that bills you only for the resources that you actually consume. By contrast, on-premises infrastructure requires you to predict your needs in advance, and then buy more resources than your estimated maximum capacity—which means that most of the time, these additional resources will go unused.
• Utility costs: One often-overlooked IT expense for on-premises infrastructure is the cost of managing the physical equipment. This involves powering and cooling the hardware as well as renting or buying space for the server. On the other hand, as with support and maintenance, the cloud provider assumes all costs of expenses such as electricity and real estate.

TCO for Analytics: Cloud vs. On-Premises

While the numbers in your IT budget may be smaller after a move to cloud analytics, this is just one component of a thorough total cost of ownership (TCO) analysis.

For example, when calculating the long-term financial impact of a cloud analytics migration, don’t forget to consider performance gains. If you’re still using aging on-premises infrastructure, you’ll likely find that switching to the cloud provides a significant speedup. This increased performance translates into getting insights faster to the people who need them—and the value of faster, better, data-driven decision-making is priceless.

If executives are leery about the question of cloud analytics cost, emphasizing the business case can be an excellent way to bring them on board. Healthcare organizations, for example, might choose to examine how a cloud analytics migration can help drive better patient care and outcomes. Not only are these achievements worthy targets in themselves, the healthcare provider will see benefits in the form of greater patient loyalty, higher employee satisfaction, and fewer malpractice lawsuits.

Finally, when calculating TCO for cloud analytics, be sure to use the right metric. Most cloud analytics providers use a pricing model in which users fundamentally pay for compute resources as a function of time. However, providers may use a wide variety of metrics to make their offerings appear less expensive. The right metric to use when comparing the cost of cloud providers is price per query, also known as dollars per query-hour. This quantity measures the normalized cost of running an analytics workload.

Conclusion

Before migrating their analytics from on-premises to the cloud, every organization should consider both the TCO and the return on investment of a cloud analytics solution. Yet understanding the issue of cloud analytics TCO is just one concern for businesses pondering a move to the cloud. You’ll also need to weigh questions such as:

• Which should you move to the cloud first: applications, databases, or analytics?
• What factors should you consider when selecting a cloud analytics provider?
• How should you integrate multiple on-premises data sources?
• What are the benefits you expect to receive by moving to the cloud, and how can you measure them?

 
For assistance answering these questions, it’s an excellent idea to join forces with a knowledgeable, experienced cloud migration partner like Datavail. With services ranging from databases and application development to data management, analytics and business intelligence, we’ve worked with thousands of clients, with an average partnership length of over 7 years.

Datavail’s list of cloud analytics certifications includes:

• Microsoft Gold Partner (with 17+ years as a trusted Microsoft Partner)
• AWS Advanced Tier Consulting Partner for Analytics
• Oracle Specialized Partner for Business Intelligence

 
If you’re in need of the cloud analytics services below, Datavail can help:

• Cloud readiness assessments of your IT hardware, software, and integrations
• Roadmaps and strategic planning for minimal downtime
• Total cost of ownership (TCO) analyses for the most cost-effective solution
• Migrations and upgrades for your data warehouse or data lake
• Integrations and connections for your on-premises and third-party data sources
• Real-time dashboards and reporting for up-to-the-minute insights
• Ongoing long-term support and maintenance

 
Need more inspiration for your cloud analytics migration? Start by downloading our white paper “Real-Life Examples and Best Practices for Your Journey to Cloud Analytics,” which is packed with advice from industry leaders who have successfully moved to the cloud themselves. Next, schedule a call with our team of cloud analytics experts for a chat about your business situation, needs, and objectives.