20 TCO Questions to Ask Before Migrating to the Cloud

These questions look at three areas—on-prem TCO, cloud TCO, and migration costs—to set you up for cloud migration success.

The success of your cloud migration depends on your cloud migration TCO analysis—you can’t afford for it to fail.

Why is this analysis so crucial? As you plan your organization’s migration, you need to ensure that no opportunity for savings is missed, you have a complete inventory of your infrastructure, and you have a defensible cost basis so you can measure the success of your migration. It’s essential to establish a complete understanding of your infrastructure and total cost to set your organization up for success.

Cloud migration requires insight into the on-premises IT you are retiring (or repurposing) and cloud adoption. The transition from on-prem to the cloud isn’t a quick switch either. Organizations need to know how long both solutions must be operational for—for example, consider a migration of a database serving multiple applications supported by various resources. Before on-premises resources can be decommissioned, the database must be rebuilt in the cloud. The dependent applications must be reconstructed, reconnected, and tested before the cloud versions are ready for production.

Our 20 essential questions for cloud migration TCO look at the three areas individually—on-premises TCO, cloud TCO, and migration costs. These guidelines make it much easier for IT leaders, IT Finance, and FinOps teams to build a turnkey quarterly analysis process, thereby building trust with a defensible model for ongoing migration.

Step 1: Review TCO of on-premises infrastructure and platform services

Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) providers claim a significant cost savings compared with on-premises alternatives, but organizations need an on-premises TCO baseline to measure against that promise. Calculating infrastructure and platform TCO is difficult. Organizations struggle to deliver IT cost models using assumptive cost allocations from finance through operations to a service catalog. Each step requires information from separate source systems and mapping tables, and dedicated staff to manage and update these models as the IT landscape changes.

It’s important to consider how you can automate this process, as automation of these steps can make TCO calculations scalable and repeatable.

When reviewing TCO of on-premises infrastructure and platform services, ask:

  1. What is the fully burdened (indirect and direct) spend for on-premises infrastructure?
  2. What is the remaining useful life of our on-premises assets and infrastructure?
  3. Do we have an exhaustive list of all the applications and workloads we are running?
  4. What are the infrastructure costs per application?
  5. How are those costs broken out by environment (productions vs. staging vs. dev)?
  6. Which applications have no infrastructure costs associated with them?
  7. Which applications are we planning to move?
  8. Are those applications ready for the cloud?
  9. Will we spend time before migration to ensure our apps are well suited for the cloud before we migrate, or will migrate first and optimize later? (I.e., How can we use IaaS, PaaS, and SaaS to scale our services, optimize performance and cost, etc.?)

Once you’ve built comprehensive answers to these questions, you’ll have established a solid foundation and inventory for your current on-premises infrastructure and operational costs. This information will give you a benchmark to compare to as you set your migration strategy for each application.

Step 2: Review TCO of public cloud infrastructure and platform services

Physical labor, software, and other non-provider costs are not in a cloud bill, but they are required to deploy and maintain public cloud services. With no limit on what you could spend (the operational capacity is, ostensibly, limitless), organizations need to optimize their public cloud spend to leverage the benefits of migration.

When reviewing TCO of public cloud infrastructure and platform services, ask:

  1. What do we pay for cloud services today?
  2. What are the future-state costs of each application in the cloud?
  3. Are we rightsizing/optimizing our application to ensure we are minimizing costs in a pay-for-what-you-use cloud world?
  4. What are the utilization patterns for these applications, and how are we planning to use Reserved Instances/Savings Plans to reduce costs for our consistent usage?

Once you’ve developed a strategy and cost estimate for your applications in the destination environment, you can then proceed with planning and estimating costs for the actual migration process.

Step 3: Review migration costs

The benefits of public cloud cannot be assessed solely by comparing the TCO of public cloud with the TCO of on-premises alternatives; you must consider the fully burdened costs of performing the migration itself, too.

When reviewing migration costs, ask:

  1. Who is going to manage the migration of applications and shutdown of resources? Us or a partner?
  2. What on-premises hardware needs to be retained to support legacy apps that can’t be moved?
  3. What are the sunk costs from decommissioned on-premises assets?
  4. Are these assets still on a depreciation schedule? What is the plan for underutilized on-premises hardware still on a depreciation schedule?
  5. Which migration costs can be capitalized or deferred to later periods?
  6. What are the overlapping costs to support transitional-hybrid (e.g., duplicate environments in on-premises and public cloud during migration)?
  7. Do we have the right processes in place for cost control in a pay-for-what-you-use world of decentralized purchasing?

These 20 questions can guide your cloud migration TCO analysis, but only if you can answer them on a repeatable, real-time basis.


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