How can you measure private cloud cost savings compared to traditional IT infrastructure?

Traditional infrastructure will be more costly than the cloud, but if a business needs the ownership that traditional IT allows it could be the best decision of the two. On the other hand, if a business is trying to remain cost-conscious, cloud infrastructure would be the best option

A cloud operator by its very definition takes away a large portion of the capital and operating expenses of running a traditional IT shop. However the quantum of those savings depend on many variables. The longer the period of time an organisation plans to be in the cloud, the higher the savings in general.

1. Total Cost of Ownership (TCO): Compare all costs associated with each solution 2. Hardware and Software Costs: Analyze the expenses 3. Resource Utilization: Evaluate how efficiently resources 4. Scalability and Flexibility: Assess the cost implications of scaling resources up or down as needed 5. Operational Costs: Compare the costs of managing and maintaining 6. Energy Efficiency: Calculate the savings related to energy 7. Downtime and Redundancy: Consider the cost of downtime and the need for redundancy 8. Licensing and Software Costs: Evaluate software licensing and maintenance expenses 9. Security and Compliance Costs: Account for the expenses related 10. Return on Investment (ROI) and Payback Period: Determine the time it

This cost will be different for each application and Use Case. Some platforms offer better terms for SaaS vs Onprem. My suggestion is do not look general but put together the business case for specific.

To truly gauge the cost savings of a private cloud, particularly when utilizing AWS, it's essential to not only define a comprehensive baseline but also to project the long-term value. AWS’s cost-management tools, such as Cost Explorer and Trusted Advisor, provide deep insights into cost optimization, going beyond TCO and ROI. These tools can reveal hidden costs and potential savings areas by analyzing usage patterns and suggesting reserved instances or scaled-down resources. Incorporating these predictive analytics into your baseline can yield a more nuanced understanding of cost savings over traditional IT infrastructure.

There are four main types of cloud computing: private clouds, public clouds, hybrid clouds, and multiclouds. There are also three main types of cloud computing services: Infrastructure-as-a-Service (IaaS), Platforms-as-a-Service (PaaS), and Software-as-a-Service (SaaS). Choosing a cloud type or cloud service is a unique decision. No two clouds are the same (even if they’re the same type), and no two cloud services are used to solve the same problem. But by understanding the similarities, you can be more informed about how the caveats of each cloud computing type and cloud service might impact your business.

Cloud cost optimization ensures the most appropriate and cost efficient cloud resources are allocated to each workload or application. It balances required performance, cost, compliance and security requirements, to ensure cloud investments are optimal and appropriate to organizational requirements.