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The Cost of Cloud Adoption

The Cost of Cloud Adoption

It's no secret that end users are either considering "going to the cloud" or they already have.  What might surprise them is the Total Cost of Ownership (TCO) associated with cloud adoption. Although not cost prohibitive, it is important that the costs are well understood.  As an MSP, you have positioned yourself as a thought leader for your customers and your industry so it makes sense to be able to explain these details to enable your customers to make the best business decision.  Also, as an MSP, full understanding of new technology allows you to position your company for success.

Many CIOs of U.S. organizations have said that the cost of cloud is prohibitive. In a world where the overriding reason for moving to the cloud seems to be cost savings, why do these CIO's feel apprehensive?  Let's see if we can understand what they are seeing that the others may not.

Cloud Price Analysis

To keep this simple, let's consider the cost of moving a single server to a well- known cloud provider.  We can later extrapolate more realistic costs for a larger environment.

Our example will use an instance in the cloud only for failover of a single machine.  This is not an unusual requirement for customers and since this provider does not charge for the compute cycles until the customer needs them, it makes perfect sense.  Cost considerations include:

  • Cost to get the baseline data to the cloud
  • Ongoing cost of data storage in the cloud.
  • Ongoing cost of replicating changed data to the cloud
  • Cost of the VPN connection to the VPC (Virtual Private Cloud)
  • Cost of recovering data from the VPC to the local site.  Number of volumes to be maintained in the cloud.  This is important as it defines not only a cost but also a scalability consideration due to some providers limiting 12 volumes (Boot + 11 volumes) per Instance.


A customer that wants to maintain a Windows server with 2 volumes and 250GB of data, utilizing an average instance size as a failover server in a VPC would pay about $1,909 annually.  This is the cost for the machine while it's not doing anything-it's just data storage at this point.  Spin it up for failover and the added cost is $.23/hour or $5.52/day.  The total cost might be a bit more than many end users expect to see but $5.52 per day for a failed over server is pretty economical considering the alternatives.  The cost for an end user to set up and maintain a comparable physical environment would be considerably more than $1,900 annually.

A larger environment with five servers, each with two volumes and 250GB (5 servers, 10 volumes, 1.25TB of data) would cost about $3,100 annually.  That's about twelve hundred dollars more than it was for a single machine so the cost savings scale in favor of the customer as the environment grows.  This applies to the cost for a "reserved instance".  Providers also offer a month-to-month pay as you go plan as well.

It scales like that because the primary cost is the instance and in the above example (5 servers with 2 volumes each) we only needed one instance.  Add one more server and due to the 12 volumes per instance rule, the price jumps to $4,581 because the extra instance incurred additional costs of $86/month plus a setup cost of $138.  At this point the customer can add more servers/volumes to this instance, up to the 12 volume limitation, without incurring any further per/instance cost.

Is this a good deal?  Each customer will view it differently and the adoption rates prove this.  As mentioned above, many of CIO's are concerned about the costs.  It's not a cookie-cutter solution for every customer and this is the reason MSPs should become familiar with this.

Please note that this discussion is not to present a case why a customer should embrace any one vendor’s cloud pricing, but rather to discuss cloud pricing in general.

CA Technologies ARCserve Replication and High Availability offers Full System High Availability to Amazon EC2, which automates the protection and failover of critical machines while at the same time optimizing the cost and configurations of Amazon EC2.

The Cloud Cost Estimator

CA Technologies has created a Cost Estimator that is helpful in determining the cost of maintaining one or more servers in the Amazon EC2 cloud for the purpose of failover.

At CA Technologies, we are committed to our end-user customers as well as our Partners and MSPs.  The cloud has primed a lot of MSP's to generate sound revenue when fully understood.  By taking steps to participate in the education of the industry, CA Technologies believes our relationship with MSPs will flourish.

Perry Hurtt, is Sr. Principal Product Manager at CA Technologies. Monthly guest blogs such as this one are part of MSPmentor’s annual platinum sponsorship. Read all of CA Technologies’ guest blogs here.

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