This content originally appeared on DEV Community and was authored by Celestina Odili
Maximizing Cost Management with TCO and Pricing Calculators
Total Cost of Ownership (TCO) and Pricing Calculator are effective tools for management of business cost in today's world. They ensure profitability and sustainable growth in businesses. These tools when used accurately help business owners to make more informed financial decisions by providing a comprehensive understanding of all costs associated with acquiring, operating, and maintaining an asset. In this article, we will be using Azure TCO and Azure pricing calculator.
Azure TCO at a Glance
Azure TCO (Total Cost of Ownership) is a calculation tool provided by Microsoft to help businesses estimate the cost savings and benefits of migrating their workloads to the Azure cloud platform. The TCO calculator allows users to compare the costs of running on-premises infrastructure to using Azure services.
The Azure TCO calculator is a valuable tool for businesses considering migrating to the cloud. It provides a detailed comparison of costs, helping them understand the financial implications and potential savings of moving their workloads to Azure. By leveraging Azure TCO, companies can make informed decisions and optimize their IT infrastructure for cost-effectiveness and scalability.
Key Components of Azure TCO
-
Capital Expenses (CapEx):
- Initial costs of hardware, software licenses, and infrastructure setup for on-premises deployments.
- For Azure, these costs are significantly reduced or eliminated since infrastructure is managed by Microsoft.
-
Operational Expenses (OpEx):
- Ongoing costs such as power, cooling, maintenance, IT staff, and data center operations for on-premises infrastructure.
- Azure operational costs include subscription fees for various services, which are typically more predictable and scalable.
-
Cost Savings:
- Reduction in hardware and software costs.
- Lower maintenance and operational costs.
- Improved efficiency and productivity.
Steps to Use the Azure TCO Calculator
-
Define Your Current Infrastructure:
- Enter details about your current on-premises setup, including the number of servers, storage, and network components.
- Include information about software licensing and other relevant costs.
-
Specify Your Azure Deployment:
- Select the Azure services you plan to use for your workloads, such as Virtual Machines, Storage, Databases, and Networking.
- Configure the services according to your requirements.
-
Calculate and Compare Costs:
- The TCO calculator will estimate the costs of running your workloads on-premises versus on Azure.
- It will provide a detailed comparison, highlighting potential cost savings and benefits.
Example Scenario Using Azure TCO Calculator
Company: Contoso Ltd.
Current On-Premises Setup:
- 10 physical servers (average cost $5,000 each)
- 5 TB storage (RAID 10 configuration, cost $2,000)
- 3 SQL Servers (licensing cost $3,000 each)
- Operational costs (power, cooling, maintenance): $2,000/month
Objective: Migrate to Azure to reduce costs and improve scalability.
1. Define Current Infrastructure:
- Servers: 10 (cost $50,000)
- Storage: 5 TB (cost $2,000)
- SQL Servers: 3 (licensing cost $9,000)
- Operational Costs: $2,000/month
2. Specify Azure Deployment:
- Virtual Machines: 10 VMs (D4s v3 instances)
- Storage: 5 TB (Standard HDD)
- SQL Databases: 3 SQL Database Managed Instances (General Purpose tier)
- Networking: VPN Gateway and Load Balancer
3. Calculate and Compare Costs:
-
On-Premises Costs:
- Initial Setup: $50,000 (servers) + $2,000 (storage) + $9,000 (SQL Server licenses) = $61,000
- Monthly Operational Costs: $2,000
-
Azure Costs (Estimated Monthly):
- Virtual Machines: ~$4,000/month
- Storage: ~$100/month
- SQL Databases: ~$1,500/month
- Networking: ~$250/month
- Backup and Monitoring: ~$150/month
- Total Estimated Monthly Cost: ~$6,000
-
TCO Comparison:
- On-Premises Total Monthly Cost: ~$4,500 (considering 3-year amortization of initial setup costs)
- Azure Total Monthly Cost: ~$6,000
Azure Pricing Calculator at a Glance
The Azure Pricing Calculator is an online cost estimation tool provided by Microsoft to allow users estimate the cost of using Azure services. Users can configure and price a wide range of Azure services tailoring it to their specific needs and providing a detailed cost breakdown. This tool is essential for planning and budgeting cloud deployments, invaluable for anyone planning to use Azure services. It provides a clear and detailed estimate of costs, helping users make informed decisions and optimize their cloud spending.
Key Features of the Azure Pricing Calculator
-
Service Selection:
- Users can choose from a wide variety of Azure services, including Virtual Machines, Storage, Databases, Networking, and more.
-
Configuration Options:
- Each service can be customized based on different parameters such as instance type, storage capacity, region, and usage duration.
-
Cost Estimation:
- The calculator provides a detailed cost estimate based on the selected services and configurations, including monthly and annual costs.
-
Export and Share Estimates:
- Users can export their estimates to Excel or share a direct link to the configured estimate.
-
Regular Updates:
- The calculator is regularly updated with the latest Azure pricing and new services.
Steps to Use the Azure Pricing Calculator
-
Access the Tool:
- Visit Azure Pricing Calculator page.
- click login. This will automatically log you in with your email address.
- To get started, select product, choose example scenarios or open a saved estimate. we will be selecting services according to our identified needs.
-
Select Services:
- Browse for the Azure services you plan to use. Here, we will be using Virtual Machine Scale Sets, App services, Azure SQL Database, Storage account, virtual network and load balance.
- click add to estimate
-
Configure Services:
- Customize each selected service based on your requirements. For instance:
- Virtual Machine scale Sets: Choose the region, operating system, type,tier, category, instance series and instance.
- Customize each selected service based on your requirements. For instance:
- **SQL Database:** Select the tier, compute size, and storage capacity.
- **Storage:** Determine the type of storage and the amount of data.
-
Review Cost Estimates:
- The calculator will display a detailed cost breakdown for each service, including compute costs, storage costs, and any additional features or options.
-
Adjust and Optimize:
- Modify the configurations to see how changes impact the overall cost. This helps in optimizing the setup for cost efficiency.
-
Export and Share:
- Once satisfied with the estimate, you can export it to Excel for further analysis or share a direct link with colleagues or stakeholders.
Example Scenario Using Azure Pricing Calculator
Scenario: A company, Contoso Ltd., is planning to deploy a web application on Azure.
1. Select Services:
- Virtual Machines: 3 VMs (D2s v3 instances)
- Azure SQL Database: 1 General Purpose Managed Instance
- Blob Storage: 1 TB Standard Blob Storage
2. Configure Services:
-
Virtual Machines:
- Size: D2s v3
- Region: East US
- OS: Windows
- Hours per month: 730 (24/7 operation)
-
Azure SQL Database:
- Tier: General Purpose
- Compute Size: 8 vCores
- Storage: 500 GB
-
Blob Storage:
- Storage Type: Standard
- Data: 1 TB
- Access Tier: Hot
3. Review Cost Estimates:
-
Virtual Machines:
- Estimated cost per VM: $100/month
- Total for 3 VMs: $300/month
-
Azure SQL Database:
- Estimated cost: $700/month
-
Blob Storage:
- Estimated cost: $20/month
Total Estimated Monthly Cost: $1,020
4. Adjust and Optimize:
- Explore options such as using Reserved Instances for VMs to reduce costs or adjusting the SQL Database tier based on performance needs.
5. Export and Share:
- Export the estimate to Excel or share a link with the team for review and final decision-making.
Benefits of Using the Azure Pricing Calculator
-
Accurate Cost Estimation:
- Provides detailed and accurate cost estimates based on specific configurations and usage patterns.
-
Budget Planning:
- Helps in budgeting and financial planning by giving a clear understanding of potential costs.
-
Cost Optimization:
- Allows users to experiment with different configurations to find the most cost-effective setup.
-
Transparency:
- Enhances transparency by showing a detailed breakdown of costs for each service.
-
Ease of Use:
- User-friendly interface makes it easy to configure services and understand the pricing model.
Conclusion
The Azure Pricing Calculator is an invaluable tool for anyone planning to use Azure services. It provides a clear and detailed estimate of costs, helping users make informed decisions and optimize their cloud spending. By leveraging this tool, organizations can plan their Azure deployments more effectively, ensuring they stay within budget while meeting their performance and capacity requirements.
Practical Implementation of TCO and Pricing Calculator
Use Case Scenario:
Hypo, a division of Multipro Enterprise Limited (MPEL) is a production company. Hypo e-commerce platform for sales of products struggles with traffic spikes during promo period. Their on-premises infrastructure cannot handle the load, resulting in slow performance and sometimes crashes. Now the company is considering migrating to cloud but first they want to ensure that they make the most cost-effective decision.
Solution Architecture
As a cloud solution architect, prepare a presentation showing the overall cost of migrating to cloud compared to on-premises option over a period of time using TCO and pricing calculator to evaluate.
To create a practical Azure Total Cost of Ownership (TCO) and pricing calculator with an architectural diagram, you can follow these steps:
-
Identify the Requirements:
- Define the workloads and services you plan to use in Azure.
- Estimate the size and scale of your deployment (e.g., number of VMs, storage requirements, database sizes, network bandwidth, etc.).
-
Use Azure Pricing Calculator:
- Go to the Azure Pricing Calculator.
- Add the services you plan to use (e.g., Virtual Machines, Storage, Databases, Networking).
- Configure each service according to your requirements (e.g., VM sizes, storage types, database tiers).
- The calculator will provide an estimate of the monthly cost.
-
Use Azure TCO Calculator:
- Go to the Azure TCO Calculator.
- Enter details about your current on-premises infrastructure (e.g., servers, storage, databases, networking).
- Compare the cost of running your infrastructure on-premises vs. in Azure.
- The calculator will provide an estimate of cost savings over time.
-
Create an Architectural Diagram:
- Use a tool like Microsoft Visio, Lucidchart, or the Azure Architecture Center.
- Define the architecture of your solution, including components like:
- Virtual Networks (VNets)
- Subnets
- Network Security Groups (NSGs)
- Load Balancers
- Virtual Machines (VMs)
- Azure SQL Database
- Azure Storage (Blobs, Files, etc.)
- Other services like Azure Functions, Logic Apps, App Services, etc.
Example Architecture Diagram:
Here's a simple example of an architectural diagram for a web application hosted in Azure:
+-------------------------------+
| Azure Load Balancer |
+-------------------------------+
/ | \
/ | \
+-----------+ | +-----------+
| VM 1 | | | VM 2 |
| Web Server| | | Web Server|
+-----------+ | +-----------+
| | |
+----------+-----------+
|
+-----------+
| Azure SQL |
| Database |
+-----------+
|
+-----------+
| Azure Blob|
| Storage |
+-----------+
-
Calculate TCO and Pricing:
- Use the Azure Pricing Calculator to estimate the monthly cost of the components in your architecture.
- Use the TCO Calculator to compare with your on-premises costs.
This process will give you a comprehensive understanding of the costs involved in migrating to or running workloads in Azure and help you plan your architecture accordingly. If you have specific requirements or a more complex architecture in mind, please share the details, and I can provide a more tailored example.
This content originally appeared on DEV Community and was authored by Celestina Odili
Celestina Odili | Sciencx (2024-07-27T05:03:44+00:00) Practical Use of TCO and Pricing Calculator for Cost Management. Retrieved from https://www.scien.cx/2024/07/27/practical-use-of-tco-and-pricing-calculator-for-cost-management-2/
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