Cloud migration enables unmatched flexibility and resource effectiveness, but accurately assessing its costs can be challenging. With 46% of businesses struggling to compare on-premises and cloud expenses, evaluating cloud migration costs can be even trickier.
At the same time, understanding these costs may become a catalyst for executing the migration. By comparing migration expenses against projected cloud savings, you can estimate ROI and justify the investment. So, what comprises the total cost of cloud migration services, and how can you estimate the needed budget? Let’s break down the main migration costs and discover how to avoid common financial risks during the process.
What cloud migration costs should be factored into your budget?
To get a sufficiently accurate cloud migration cost estimate, you need to consider several key expenses associated with the process. Here is a breakdown of the major migration costs you should keep in mind.
1. The cost of setting up a cloud environment
A large portion of cloud migration expenses stems from setting up a cloud environment. Laying down the foundation of your cloud infrastructure includes establishing and configuring cloud servers, storage, networking, and connectivity tools to prepare a landing zone for your workloads. All these components require skilled labor. In fact, personnel costs make up the majority of expenses at this stage and depend on your project’s complexity. While smaller workloads typically require fewer resources and less effort, large-scale systems demand greater investments in both infrastructure and labor to ensure high performance and reliability.
Your choice of a cloud deployment model also impacts costs. Opting for multi-cloud or hybrid cloud setups is associated with higher initial expenses compared to single public cloud environments. At the same time, these approaches enable long-term savings by reducing vendor lock-in risk and enhancing flexibility.
Lastly, the cloud provider you select influences pricing. All major providers, including AWS, Azure, and Google Cloud Platform (GCP), offer pay-as-you-go models, but their fees and offerings differ. Additionally, each provider has specific cost-saving options, such as AWS Reserved Instances, Azure Hybrid Benefit, and a variety of savings plans. Comparing their services against your business needs is essential to determine the best fit and estimate the required budget.
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2. Workload transformation and data transfer costs
In most cases, inbound data traffic is free, but you may expect outbound transfer fees charged by your current provider when migrating from one cloud to another. Your chosen data transfer method also affects the costs. Depending on your needs, it can range from direct replication to offline shipping, and each of these options requires different levels of investment. For instance, AWS Snowball is a data transport service that uses physical storage devices. It enables you to pay extra for transferring petabyte-scale volumes of data to the AWS cloud quicker than via network connection.
Additionally, using ETL tools and other cloud-based services for data transformation and management can incur additional costs. The scale of such expenses depends on the usage and compute resources required. It’s crucial to factor these potential costs into your migration budget, especially if you have large datasets or ongoing data transfer requirements.
Workload transformation expenses also play a crucial role in determining the cost of cloud migration. While some applications can be transferred with minimal adjustments, others may require extensive re-architecting to function in the new cloud-native environment. The more complex the transformation process, the higher the associated costs.
3. Licensing and software fees
Migration often involves acquiring new licenses, adjusting the existing ones, or investing in new software to replace legacy applications that can’t be effectively transferred to the cloud. As with all major migration expenses, these costs vary depending on your requirements and system complexity. Assessing and including them in your budget is essential to ensure a seamless transition and avoid unexpected financial hurdles during or after the migration.
4. Employee training
Upskilling teams to work with new cloud-based systems is a necessary part of the migration process. Allocating the budget for personnel training before migration lifts anxiety about working with unfamiliar tools, helps your staff build new relevant skills, and promotes employee growth while your company evolves.
5. Post-migration costs
Beyond the initial migration, ongoing expenses are also vital to your cloud budget. These costs are essential for maintaining and improving your cloud environment’s performance, reliability, and efficiency. Here are several key post-migration expenses to consider:
- Cloud service fees: Regular charges for using the cloud platform and services;
- Monitoring, maintenance, and optimization: Personnel costs for ensuring smooth operations;
- Monitoring and governance tools: Investments in automation, security, and monitoring software to streamline and secure operations.
While these ongoing expenses are inevitable, they often result in a significant return on investment (ROI) over time. Strategic post-migration optimization enables you to capitalize on your investments, maximize efficiency, improve resource allocation, and achieve effective cost control.
Read more: 3 essential steps for effective cloud cost optimization
5 steps to estimate cloud migration costs
Once you understand the general categories of migration costs, the next step is forecasting the expenses and designing a clear financial strategy to guide the process. Cloud consulting companies like N-iX specialize in helping businesses achieve these goals. Here’s what we can do to assist you in creating a realistic migration budget:
1. Assess current costs and forecast savings
We start by reviewing your current IT expenses—hardware, software, maintenance, and personnel. Understanding the starting point is key to conducting cloud migration cost analysis to compare the existing on-premises expenses against cloud costs, and it also helps forecast potential savings.
2. Define your objectives and project scope
After discussing your business objectives, we can help you define migration goals and outline the project’s scope. We also help you identify which applications, data, and services need to be transferred to the cloud. Having a well-defined scope at the start of the process is essential for accurate budgeting and smoother execution.
3. Compare cloud models and cloud providers
We evaluate different cloud models—public, multi-cloud, and hybrid cloud—and determine the best fit for your project, depending on your operational needs and financial capacity. Additionally, we help you compare cloud providers, analyze their pricing, and review offerings relevant to your objectives and technical requirements.
4. Estimate the expected cloud infrastructure costs
To help you estimate the average cost of cloud migration, we evaluate the expenses for setting up your cloud infrastructure—computing power, storage, and networking. We also factor in both the initial migration costs and post-migration expenses, such as ongoing charges for using cloud services and maintenance costs. Additionally, we help you calculate how service usage growth can impact your budget to ensure more accurate long-term planning.
5. Evaluate the costs of leveraging cloud expertise
The final point to include in your budgeting considerations is the cost of employing cloud expertise and the resulting long-term savings. While collaborating with migration experts adds to initial expenses, it ensures a smooth, error-free migration and helps prevent costly mistakes further down the line.
Hidden cloud migration costs and risk mitigation strategies
Migration is a complex process with hidden financial risks, especially without a well-defined strategy and solid cloud expertise. Partnering with cloud consultants helps you avoid common pitfalls, prevent cost overruns, ensure compliance, and optimize resources. Here’s a look at the main financial risks associated with migration and how we at N-iX help our clients keep their cloud migration cost in check.
1. Downtime and business disruption losses
Significant operational downtime is a common result of poorly planned migration efforts that can lead to substantial financial losses. During migration, business-critical processes may pause temporarily, potentially resulting in lost revenue, reduced productivity, and customer dissatisfaction.
To minimize downtime and prevent costly operational disruptions, N-iX experts focus on the following:
- Developing a phased migration strategy and prioritizing workloads from the least to the most mission-critical.
- Creating a detailed migration roadmap to outline timelines, steps, and potential risks.
- Scheduling migrations during low-traffic periods to reduce operational disruptions.
- Designing reliable failover mechanisms to revert the migration in case of unforeseen errors.
- Determining how to deploy workloads based on your requirements. For instance, to minimize downtime and migrate fast, canary, blue-green, shadow, and cutover deployment methods are the most suitable.
2. Financial losses in the event of data corruption
Even with the best planning, no migration strategy is immune to risks. Network errors, hardware failures, or configuration issues can lead to data loss or corruption during the process. The consequences may include costly recovery efforts, regulatory penalties, and disruptions to operations, all of which can severely impact your bottom line.
Ensuring your data integrity by creating backups and designing recovery mechanisms is one of our priorities during migration. At N-iX, we implement failover strategies, validate backups, and implement real-time data replication to protect your assets. These measures minimize risks, ensuring a secure and seamless migration without compromising critical information.
3. Mid-migration project scope changes
Prior to migration, it’s not uncommon to underestimate data volumes, dependencies, and hidden workloads, leading to the so-called kitchen sink syndrome. Insufficient preparation can result in an unexpected scope creep that can skew your cloud migration cost estimate in the middle of the process. Such unforeseen changes often bring on additional expenses, delays, or even project stalls.
Before starting the migration, conducting a thorough architecture assessment with a cloud consultant helps reduce the risk of such setbacks. We collaborate with your team to define the project scope by evaluating workload dependencies and identifying priorities. This careful preparation enables a more reliable cost estimate and minimizes surprises along the way.
4. Potential cybersecurity issues and mitigation costs
Neglecting security during cloud migration can expose your systems to breaches, unauthorized access, or compliance violations, depending on what kind of data you’re transferring to the cloud. Cyberattacks, misconfigurations, or vulnerabilities during and after migration can compromise sensitive data, leading to financial losses, reputational damage, and regulatory penalties.
At N-iX, we prioritize your security at every step of the migration journey and help ensure your applications stay resilient and compliant in the cloud. Here are several safeguards our specialists implement:
- Robust data encryption (in transit and at rest);
- Monitoring tools to identify anomalous behaviors quickly;
- Audit tools to help you observe regulatory compliance;
- Network segmentation that allows isolating sensitive data;
- Multi-factor authentication (MFA) to control who can access the data;
- Identity and access management (IAM) strategies for precise access control.
5. The cost of post-migration optimization efforts
Previously, we’ve discussed how optimizing your cloud environment post-migration can deflate operating costs. Continuous monitoring, maintenance, and improvement are vital to avoid wasteful spending and maximize ROI. At the same time, these efforts often require specialized teams, adding to the average cost of cloud migration and straining your budget.
Cloud consulting offers an alternative to establishing such teams in-house. For instance, with N-iX, you gain access to comprehensive post-migration support that stretches past the completion of migration. After the transition to the cloud, we provide continuous maintenance, proactive monitoring, tailored optimization, and FinOps services to keep your operations efficient and profitable.
Wrapping up
Estimating cloud migration costs isn’t just about crunching numbers—it requires a thorough understanding of the entire process. From upfront expenses like infrastructure setup and data transfer to ongoing operational costs, each factor is an important brick in the total cost of migration.
If you have doubts about where to start, partnering with an experienced cloud consulting firm can help you create a realistic budget. Their expertise in cost optimization and cloud platforms helps businesses navigate migration complexities, avoid overspending, and maximize long-term benefits.
Why should you partner with N-iX to optimize cloud migration costs?
- N-iX is a global technology partner with 22 years of experience that delivers cloud projects for businesses across diverse industries, from energy and finance to manufacturing and retail.
- As an AWS Advanced Tier Services Partner, a Microsoft Solutions Partner, and a Google Cloud Platform Partner, we follow industry best practices to seamlessly complete your cloud migration.
- The N-iX team of 400 experienced cloud professionals has delivered reliable and scalable solutions as part of over 200 successfully completed cloud projects.
- Committed to security, we are GDPR-compliant and ISO 9001-certified, ensuring the highest level of protection for your data and applications.
- Beyond cloud expertise, our engineers offer proficiency in FinOps, DevOps, security services, and CI/CD automation.
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