Estimating costs for cloud services can be difficult because there are an infinite amount of permutations on how to piece together services and estimate usage. I liken it to being given multiple ingredients and are expected to piece them together to make a recipe. However, this is something that IT Processionals have been doing for years. You’re presented with a technical project or problem and are asked to solve it. Finding a solution involves research and cost evaluation. There’s an additional factor to add to your research, and it is cloud computing providers. The benefit cloud computing providers provide is agile application deployment and cost reduction, especially around hardware.

Staying with the hardware theme, I evaluated a few of the major server hardware vendors and took the average cost of a 4U rack mounted server that would be used for virtualization with the following specifications:

  • OS – Windows Server Datacenter 2012 R2
  • CPU – 4 socket processor (Intel Xeon 2.0 GHz)
  • Memory – 64 GB
  • Disk – 4 TB onboard SAS
  • Redundant Power
  • Default NIC cards

Average cost = ~$21,000

With this configuration we can virtualize SQL Server and other applications with adequate performance.

For example, we can deploy seven (7) virtual machines (VM) assuming we allocate 4 GB of memory to each VM and leave 4 GB for the host.

Additionally there are items to budget for before and after purchasing hardware:

  • Ongoing maintenance costs
  • Hard drive replacement and standbys
  • Memory replacement and standbys
  • Uninterruptible Power Supply
  • Host Bus Adaptors/Fiber Channel Adaptors
  • External Storage
  • Redundancy – e.g. another host to support live migrations and DR
  • Multiple NIC cards
  • Labor costs to deploy
  • Labor costs to create and deploy VMs

Hypothetically all of the costs added up can run over $30,000… assuming you prefer to have 99.9% uptime. If you want VM failover and additional hardware redundancy add another $30,000 for an additional server with the same specs as above. That’s a total cost of $60,000 or more!

Personally, I remember the days when budget time would hit and I’d go through the history of my operational expenses from the past year.  Then I’d estimate expenses in the New Year while adding a modest buffer.

Capital expenses are slightly tougher to estimate because unfortunately, it’s tough see into the future. Depreciation is a factor as well. As hardware depreciates and eventually written off the books, there is an opportunity to replace it.

Businesses typically like capital expenditures because they are considered fixed assets and thus can be tracked, depreciated, and written off. However depreciating hardware is typically a fraction of the cost (depending on your depreciation schedule) of overall hardware maintenance and labor that an organization invests during the life of the asset. When the hardware reaches end of life, the purchasing process starts again and costs increase, especially in year one when the acquisition takes place.

Now let’s look at what it would cost to spin up seven (7) servers, running Windows Server 2012 R2 Datacenter virtual machines in Windows Azure with the same specs as the hardware offered above:

  • Cost to deploy hardware = $0
  • Cost to deploy external storage = $0
  • Ongoing hardware maintenance costs = $0
  • Hard drive replacement and standbys = $0
  • Memory replacement and standbys = $0
  • Uninterruptible Power Supply = $0
  • Host Bus Adaptors/Fiber Channel Adaptors = $0
  • External Storage = $0
  • Redundancy – e.g. another host to support live migrations and DR = $0
  • Multiple NIC cards = $0
  • Labor costs to deploy = minimal
  • Labor costs to create and deploy VMs = minimal
  • Operating System licensing = $0

Let’s breakdown the costs to run the virtual machines with storage in Windows Azure:

Hours in a year?
1 year = 8766 hours

Cost to host seven (7) Windows Server 2012 R2 Datacenter servers?
1 VM = 134/month x 12 = $1608 / year x 7 = $11,256

Cost of storage

  • 3 TB of Geo Redundant Storage (GRS): $255.36 (redundant within a secondary sub region within the same region) x 12 = $3064.32
  • 3 TB of Locally Redundant Storage (LRS): $200.12 (redundant within a sub region) x 12 = $2401.44


Total yearly cost of 7 VMs with 3 TB available as a whole = $11,256 + $3,064.32 = $14,320.32

(Note: the first 5GB of egress (outbound) network traffic is free after which there will be a charge of $0.12 per GB. It’s advisable to research how much egress traffic flows out of your organization to estimate potential costs in Windows Azure.)

That is less than half the cost of the server hardware I configured at the beginning and it provides built-in server and storage redundancy as well as a multitude of other services to leverage.  All of this without having to build out an infrastructure of your own.

Are you still apprehensive about moving to Windows Azure? Take these figures to your CFO and I bet they’ll like what they see.

I encourage you to take a serious look at Windows Azure, especially the potential cost saving it provides vs. traditional datacenter acquisition and management. The following links provide the tools for you to get started today:

Windows Azure calculations referenced from:
http://www.windowsazure.com/en-us/pricing/calculator/?scenario=full

Types of Windows Azure purchase plans:
http://www.windowsazure.com/en-us/pricing/purchase-options/

Security an issue? Are you apprehensive about moving data to a cloud service provider? See the Windows Azure Trust Center and you may change your mind:
http://www.windowsazure.com/en-us/support/trust-center/

Want to get started in Windows Azure?  Sign up for a free trial or utilize your MSDN subscription: http://www.windowsazure.com/en-us/pricing/free-trial/