Total Cost of Ownership Comparison Pre and Post IBM Cloud Migration

In a previous post we presented a cloud migration success story focusing on the challenges and the benefits of migrating in the cloud a project infrastructure which was hosted on a legacy Data Center that was going to be decommissioned.

Now we’ll take a closer look at the total cost of running the project on premises versus running it in the IBM Cloud.

TCO for running the project infrastructure on premises

To calculate the TCO for running the infrastructure on premises, we audited the existing infrastructure. It worth mentioning that the project underlying infrastructure was complex, including IP-based access and LDAP service.

A high level overview of the existing infrastructure: For decent redundancy, two different setups are interlinked and connect to the Internet

• Standard network setup with firewall, intrusion prevention and switching gear
• Typical high density CPU hardware running LINUX as virtualization layer
• Storage cluster used as storage pool for virtual machines
• Database clustered over the 2 sites
• Application development driven by customer
• Write-off of material in 4 years

The technical audit on the existing infrastructure guides us on the factors we need to account for when calculating the TCO.

In a nutshell. the Total Cost of Ownership (TCO) for running the project includes the support and maintenance of hardware and software, running costs and user assistance.

In this post we’re not talking about the hardware choices – including the level of support, marketing costs, security provisions and many other. It is obvious these should have a minor impact on the running costs.

We have not split out the costs per category in detail. The principal reason is that most of these costs vary slightly over the years. They should not differ more the 10% though, providing a good insight in what drives the costs and highlight the obvious cost cuts.

The figure below provides a snapshot of the costs incurred for running the infrastructure on premises.

We have both OPEX costs of EUR 22,000 (recurring monthly) and fixed costs of EUR 1,030,000 paid only once (in advance for 4-years). To simplify the TCO comparison pre and post cloud migration, we calculate these costs on a yearly basis.

The estimated cost to run this setup is EUR 1,021,500 and consists of about 50% hardware and software costs and 50% costs in manpower to manage the setup, including 24/7/365 monitoring as part of a larger setup.

This project has some particular costs that are customer driven such as specific CDN to distribute content and a HSM to provide encryption with a very high degree of cryptographic security (FIPS 140-2 level 3).

With the current data center being decommissioned in less than a year and the costs incurred for running the infrastructure on premises, we contemplated migrating the IT infrastructure into the cloud. But will the cloud secure any cost savings? Let’s take a look at the TCO for running the infrastructure in the cloud.

TCO for running the project infrastructure in the IBM Cloud

We investigated what the cloud migration entails and we discovered that we needed to refactor some web applications to make them cloud-ready and we’ve also learnt that the software is highly database independent, so we’ll to migrate the DB as well.

From a cost-structure point of view, the cloud migration entails data center costs, cloud support costs and internal maintenance and support costs. As we’ve chosen to migrate the infrastructure in the IBM Cloud, the table below contains the costs calculated based on the IBM Cloud services & pricing offering.

Since neither network nor hardware layer needs active maintenance, the support costs decrease substantially.

Two open support channels remain namely the software maintenance and the high level monitoring. One of the key decisions to take is to check if the 2^nd level of cloud support should be delivered from within the organization or should be left to the cloud provider.

Since this support is delivered on demand, the service can be adapted to the needs which brings an additional possibility to cut the costs.

Comparing the TCO between running the infrastructure on premises versus the IBM Cloud, it becomes very clear that migrating the project infrastructure to the cloud has been a wise decision and we’ll make substantial cost savings — 61% cost savings per year.

Are you looking at infrastructure migration, on-premise to one or more cloud solutions, cloud to cloud migration or application migration?

Orchestration, integration and optimization are the key ingredients that we use to ensuring that your cloud journey reaches its destination bringing enhanced efficiency and productivity while being secure, available and scalable.