How to Manage Your Data Migration Costs While Moving to the Cloud

Matt Tanner
Developer Relations Lead
September 14, 2022
19
 min read
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What is Data Migration?

The process of moving data from one storage system or computer environment to another is known as data migration. This often occurs when a new system has been built or a location is adopted. Often, the business driver is an application migration or consolidation where old systems are being replaced or upgraded by new applications as part of a digital transformation. Many times these new and old applications will share the same dataset. In order to improve or change a business, data migrations are often initiated when companies transition from on-premises deployments to cloud-based storage and applications.

A good data migration strategy revolves around a robust data migration plan. There are several reasons why your business needs a data migration plan to ensure a successful migration with minimal impact to customers and internal users. Data migration is a critical piece in moving on-premises IT infrastructure and services to the cloud.

Whether you're going to a public cloud, private cloud, hybrid cloud, or multi-cloud environment, you'll need to migrate your data safely, cost-effectively, and efficiently.

Table of Contents

How much does a server migration cost?

It is difficult to determine the end-to-end cost of cloud migration since there are many moving pieces to make it happen. Here is a summary of the expenses you should take into account:

Server Migration Costs

Cost of Data Transfer

The quantity of cloud storage that your business may need should be comparable to the amount of on-premises storage. However, this might vary. Large infrastructures may need different pricing, but if you are uncertain, this usually does not apply to your business.

The cost of data transfer will depend on the data migration solutions you use and how quickly you need to move the data. For instance, you may be able to achieve higher transfer rates with larger servers but that will come at an increased cost. Certain data migration services offered by the cloud providers can also be of great help when moving data but those migration services also come with additional costs.

Calculating this cost can be done by figuring out how much data you need to transfer, how quickly the database migration service or infrastructure you are using can move the data (throughput), and then calculating how long the data will take to transfer. Once you have the hourly estimate, you should then be able to use a cost calculator to get a rough estimate.

Using SSD cloud storage instead of HDD cloud storage may also influence the cost of data migration since SSDs are more efficient when it comes to transferring data but costlier to maintain.

Price of using a cloud provider

Each supplier and application will have a different price, but this is one of the simplest things to determine and compute. The cloud architect should determine the kind of provider used based on variables such as the required programming language and database types. 

This cost will also factor in whether you are going to use a public or private cloud. If you use a public cloud provider, the costs are assumed as part of the infrastructure costs. The only other cloud provider cost that you may take on would be in terms of cloud customer support. There may also be discounts to factor in as well by becoming a leveraging partnership deals and volume discounts which will vary by provider. All of these factor can bring your costs up and down but can still be easily calculated. With a private cloud, you will be paying support costs and also licensing costs for the cloud platform you build your private cloud upon. 

Cost of creating the infrastructure

Depending on the scale of the infrastructure, a DevOps team or a single individual must develop the infrastructure. This may be lower if the infrastructure is less complex, but larger infrastructures will require more labor, thus increasing the price. On a public cloud, teams can spin up and scale servers quite easily, but it still requires some manual work. Eventually as higher environments are deployed DevOps teams plan to automate this. In some heavily regulated industries, this automation will be required.

In a private cloud, these costs are even heavier since it involves building physical infrastructure, adding the cloud platform software onto your servers, and then building your virtual infrastructure after all of these steps. Of course, private cloud environments can lend a massive amount of flexibility to a business but infrastructure creation is more cumbersome than on a public cloud platform.

Cost of the team you're working with

Cloud migration can be very demanding on a team. Many different roles are required to pull off even simple database migration with associated labour costs varying by individual. This is one of the costs that can be easily over or under estimated since small roadblocks can pile up or large roadblocks which lead to more hours required from the team. Consequently, your firm will likely need to engage a Cloud Architect - a professional with expertise in creating cloud infrastructure and knowledge of the necessary technical requirements for the transfer. On larger projects or on multi-cloud migrations, many of these individuals may need to be engaged. In addition, once the infrastructure is up and configured, a development team is required to modify and/or deploy the application. As with any technical project, costs can run up quickly with even minor changes in scope or seemingly small issues.

Post-migration expenses - maintenance and development

The only expenses to consider post-migration, beyond your regular maintenance costs for application support and upgrades, are the provider's recurring fees for cloud storage usage and costs associated with certain cloud services. An estimate may be provided by the service provider for larger deployments but for smaller deployments there are usually calculators available to help. Therefore it does not significantly complicate the calculation of the overall cost of maintenance and running costs.

Keep in mind that your former data center will continue to incur maintenance charges, so if your migration is successful, turning this off is crucial to saving money in this area. Eventually, once the other data center is decommissioned, total cost of ownership for the infrastructure and applications on cloud will be significantly less than the costs of hosting on-premise. 

Cloud migration costs: Definition and Milestones

Cloud migration costs are associated with moving data and application from the old on-premise deployments to the new cloud infrastructure. As you can see from our above breakdown, the procedure is fairly complicated and cost estimations can take a fair amount of time and knowledge to become accurate.

In addition, there are usually many project-specific activities and bottlenecks that are impossible to forecast during the early phases of migration. Generally, as a projects timeline becomes stretched, budgets also tend to balloon. In light of this, it makes sense that fifty percent of businesses that have recently migrated to the cloud reported cost estimation and budgeting as their greatest problem. The cost of migrating to the cloud may be high, but the penalty of not migrating is far greater. Let's examine the cost breakdown.

Cost of Moving to Cloud Environment by Milestones

Before commencing a cloud data transfer project, you must consider all potential problems, create a data migration plan, and anticipate the related risks. In order to make sure you’ve covered as much as you can, you’re best bet is to bring in someone who is familiar with cloud migrations to assist with the planning and execution.

The first step is to choose the cloud deployment model that best fits your organization. This is the point where you will decide if you will move to a public, private, or hybrid cloud environment. The characteristics of each will bring benefits and challenges but each can be customized to the needs of a particular organization.

After choosing your a cloud deployment model, you will analyze your cost allocation and distribution. Data migration from an on-premise architecture requires shifting from capital expenditures (CapEx) to operational expenses (OpEx). As you transition from conventional hardware and software ownership to an “as-a-Service” model, you will no longer need to worry about the capital expenditures of owning and maintaining hardware as well as more flexibility in licensing costs. Leveraging the “as-a-service” model could include utilizing services such as Software as a Service (SaaS), Infrastructure as a Service (IaaS), Platform as a Service “PaaS”, and Artificial Intelligence as a Service (AIaaS). Acquiring standard gear or paying software licensing fees takes a far larger  financial and engineering commitment than these alternatives.

The cost of transferring an application and its data to the cloud may be calculated based on the data migration project's milestones, regardless of the model chosen. Each milestone should be planned and estimated independently to generate a comprehensive strategy and reasonable budget.

Pre-migration

This first phase of a migration often involves determining a few key factors. This includes establishing the purpose for transitioning to the cloud environment, identifying the main pain points, calculating the quantity of data to be transferred, and selecting a cloud provider. These first steps should give you a general idea of the associated expenses of moving your workload and data to the cloud.

At this point, the cost of your cloud migration will depend on the following factors:

  • Costs associated with your current setup - Each day that your current on-premise configuration is still running, you will be actively paying the bills to run maintenance and keep the lights on. If running your applications on cloud and decommissioning your on-premise data center will lead to massive savings, this could be a great business case for moving quickly to get onto the cloud.
  • Database upgrades - your DB must be compliant with the requirements of the new system to which you are migrating. Software upgrades may be required beforehand, either on-premise or in a specified public cloud infrastructure environment. These upgrades vary by requirement and costs can vary based on the scope of changes required.
  • Consultations from cloud migration providers - if you lack in-house experts with knowledge of the whole migration process, this kind of support might be invaluable for your migration project. Experts specializing in cloud migrations tend to be in high demand and can be quite costly to add to the team.
  • Testing demo versions of cloud applications - Just testing out cloud application and services can start adding costs. Even setting up proof-of-concept applications may still run up usage bills. This should also be factored into initial costs when starting the migration or testing for feasibility.
  • Possible Proof of Concepts - It may help you establish how well the data migration plan aligns with your business's actual demands and estimate expenses more precisely before kicking off a full-scale migration.
Migration

At this step of cloud migration, your data and applications should be categorized and prioritized. Mission critical data and applications should be meticulously migrated according the pre-migration plan. This is the most time and cost-intensive part of the operation. At this stage, you will be charged for:

  • The migration itself - the amount you will need to pay the cloud provider for moving to their system such as any licensing costs or initial costs for spinning up new servers or cloud services. If your legacy system continues to function throughout the data conversion, you will incur extra expenditures for system maintenance, utility and premises costs, and possible costs associated with data synchronization.
  • Application and code modifications, new infrastructure creation, and new system implementation based on your business needs. A good chunk of the costs here will be for labor.
  • Refactoring, i.e., making your applications and data compatible with the new system if it could not be done during the pre-migration phase. Again, a large chunk of this expense will be from labor costs.
Post-migration

Post-migration involves providing the necessary ongoing maintenance for your cloud infrastructure and migrated data, which necessitates:

  • Monthly or annual licensing, maintenance, and compute fees for running the infrastructure and associated software.
  • System administration, monitoring, upgrades, and staff training for the new cloud platform.

The expenses might also be divided into direct and indirect categories. While the first ones are directly associated with the data transfer and migration process (such as the cost of a specialist data migration team or labor costs for spinning up the new resources on the cloud), the second one may reflect mediated expenditures (for example, the cost of supporting your legacy on-premise system during data migration).

Three Tips for Cost-Effective Cloud Migration

Organizations looking to migrate to the cloud often face significant challenges when it comes to cost. In many cases, the upfront investment required to make the move can be prohibitive, making it difficult to realize the long-term benefits of the cloud. However, there are a number of strategies that organizations can use to ensure a cost-effective cloud migration. Perhaps the most important is to carefully assess which workloads are best suited for the cloud. Not every workload needs to be migrated, and moving certain workloads may not make financial sense. 

Additionally, organizations should take advantage of cloud automation and management tools to reduce operational costs. By carefully planning their migration and taking advantage of available resources, organizations can ensure a cost-effective transition to the cloud.

Although there are predictable and less predictable factors that impact the expenses of your data transfer project, there are strategies to reduce them based on our expertise with data migration projects. Let’s take a look at a few ways this can be done.

Define the amount of data you have to move to the cloud

To save money and make your cloud migration more cost-effective, identify the data you want to migrate to the cloud and calculate the total storage needed. You’ll also need to figure out which method works best for loading the data into the cloud, balancing speed and cost. Some data may be able to be exported and loaded in bulk through a batch process, whereas other data may require more elaborate pipelines to ensure business continuity.  This method will enable you to spend less and evaluate how the overall cost savings from moving your data to the cloud.

How do you estimate data migration projects?

  • Conduct an audit of your existing IT infrastructure. At this step, you must examine your present expenses, establish the cost reduction metrics you want to accomplish, and compile a list of the data storage and processing activities that you wish to move to the cloud.
  • Calculate the cost of running your applications and data storage on your preferred cloud provider using a cloud migration costs calculator. Below are the shared calculators of the most major cloud service companies. You may estimate the cost of using their services by describing your required storage, computing power, request processing time, and other criteria. We suggest using the following calculators:
  • Consider contacting a provider of cloud migration services for more accurate quotes. If you want to engage a professional team for cloud migration, their practical expertise might be quite beneficial. You may also request assistance from your in-house specialist and compare their figures. You may create a customized plan where tasks your team is capable of performing can be executed in-house and more challenging or risky tasks can be handle by external specialists. 

Rewriting applications 

Depending on the programming language or database used, apps which are not cloud-native or cloud-friendly (use a technology not supported on the cloud) may need to be rewritten. Estimating the time the developers will need to update or rewrite the program is one of the most important expenses to consider.

There will be higher and less predictable costs associated with a lengthy rewrite. As it is impossible to predict how long a rewrite will take, this is one of the most difficult expenditures to estimate. The larger the rewrite, the more wildly costs can trend upwards beyond the original estimate.

Infrastructure spin-up and scaling

When spinning up your initial resources on the cloud, be as accurate as possible to make sure that infrastructure is not overprovisioned. You will also want to very closely configure your auto-scaling capabilities since having resources scale up and down excessively can also drive costs up. Every time that a resource is scaled back down it will also incur a “cool-down” cost while the resource is still active, even if it is not currently needed or being used.

Select the optimal technique

Several ways to modernize outdated systems include rehosting, re-platforming, etc. Each has its own technical complexities, but selecting the optimal technique will enable you to attain the best efficiency at the lowest expense. These considerations can sometimes be overlooked when larger budgets are available. For those on a tighter budget, here is where certain shortcuts (or less costly techniques) can be taken to control where dollars are spent while still keeping data quality and data integrity high.

Select an efficient price strategy suited to your organization's demands

Since cloud solutions are supplied to businesses in accordance with the Software as a Service business model, you may only pay for the real resources utilized. Using a pre-paid approach can help you to keep cloud costs in check but can run the risk of having services shut off if credits run out. Post-paid usage can leave your organization with a larger cloud bill than you expected, however, critical services will continue to run even as the bill begins to increase.. If you are using a post-paid billing method, make sure to set alerts for runaway usage and monitor month-to-date costs in order to mitigate the scenario of a large and unexpected bill hitting you at the end of the month. Some services are charged for based on up-time, this means that even if you and your customers are not leveraging a service, if it is running then charges are being applied to your account.

Factors Affecting the Cost of Moving to the Cloud

Before assessing the feasibility for the expenses of cloud migration, you must define the following terminology and concepts relevant to your organization:

The future of the product

The product's roadmap significantly influences future cloud migration expenses. If the product is further expanded in the future, it may be worthwhile to rewrite the program and invest additional resources into making it more cloud-native. Most of this work would have to be done while migrating to the cloud instead of iteratively after the migration has happened. Doing the work to make applications more cloud-native means that cloud services or other cloud-native software can easily be used to open up new use cases.

The quantity of data

Consider all the assets you want to transfer and determine the overall quantity of data involved. It’s important to factor in all data you have, including historical data which is currently not in use. This includes images, archived databases, and other valuable digital assets. This may also be a great time to audit data that can be discarded, although depending on your industry you must be careful to stay within compliance with data retention legislation.

Migration period

When determining overall expenditures, it is crucial to decide on how long it will take to move all of your assets to the cloud. The quicker your organization can completely transition to the cloud, the sooner the on-premises infrastructure can be decommissioned.

Due to the fact that the existing infrastructure on site does not need to be maintained, money is saved. However, moving to the cloud quickly can increase your labor expenditures since you require more resources to complete the job quickly. This could mean hiring outside contractors or additional full-time employees to expedite the process.

Third-Party Support

When a business decides to migrate its data and applications to the cloud, it's a big decision-one that comes with a lot of potential benefits but also some risks.  Any business considering a move to the cloud should factor in the cost of third-party support, as it's unlikely they will be able to complete the process without assistance. The amount of help required will depend on how much data needs to be transferred and if they have developers on staff who can migrate and deploy existing application on the cloud. If not, they'll need to factor in the cost of recruiting new talent with the required skills. 

Another important consideration is security. As data is stored off-site on cloud servers, businesses need to be sure that their information is safe and secure. They also need to consider how they will manage access to the data and who will have control over it. Finally, businesses need to think about how they will maintain and update their applications once they're in the cloud. With so many factors to consider, it's no wonder that many businesses seek out assistance from third-party support providers when migrating to the cloud.

Ultimately, the cost of migrating to the cloud will vary depending on a number of factors, but businesses should be prepared to engage external support to fill in the gaps in knowledge and experience that is not available within their existing team.

Cloud supplier

One of the most critical decisions you'll make before starting a cloud migration is which cloud provider to use to store data and host your applications. Cloud providers vary in terms of features, pricing, and performance, so it's important to choose one that meets your specific needs. For example, if you're looking for a high-performance storage solution, you'll want to use a provider that offers SSDs or NVMe drives. If price is a primary concern, you may want to consider a provider that offers lower prices for data storage and compute hours, such as leveraging AWS Spot Instances. In addition to performance and price, you'll also want to consider other factors such as security, compliance, and customer support when choosing a cloud provider. By taking the time to compare all of your options, you can be sure to choose the best possible provider for your needs.

Potential training expenses 

Due to the rapid evolution of technology and Software, you may need to train and retrain employees to use the cloud's modern methods and solutions.

Employees who do not work in the cloud may fear change and obstruct the cloud migration process at the senior management level. Extensive training may aid in resolving this problem, but it will involve additional expenses. Most cloud providers offer extensive free and paid training as well as certification.

Conclusion

The simple fact is that lowering cloud migration expenses is possible, but it does require a lot of planning and effort. Migration to the cloud is a sensitive procedure that cannot be tampered with or subjected to shortcuts, as this might result in errors that cost even more time, money, and additional risk.

The safest method to move to the cloud is to follow best practices and develop a cloud migration plan to guarantee the safety and security of your assets in their new cloud environment. Data migration costs can be managed by following a few simple tips and taking into account the various factors that will affect the overall price. 

By planning ahead and being strategic in your approach, you can save money while making the switch to the cloud and ensure a successful data migration. If you’re considering an on-premise-to-cloud data migration, or are in the midst of one right now, be sure to keep these suggestions in mind. 

Migrating and replicating data during your cloud migration is made easy with Arcion. Arcion is a cloud-native solution with options to use our SaaS solution, Arcion Cloud, or deploy onto your own cloud infrastructure using Arcion Self-Managed. With support for many of the most popular databases and data warehouses as both data source and data target, Arcion is one of the most robust and fastest solutions on the market. Sign up today to kick off your data migration with Arcion.

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