Businesses today have to choose between traditional hosting software and cloud computing. In the traditional model, companies would purchase physical software applications on which they would store their data.

On the other hand, cloud computing involves the purchase of storage space from a third party. With cloud applications, you will not physically own the servers but will be able to use them remotly and when needed. More and more companies today are abandoning traditional servers for cloud systems, but what exactly would be the total cost of owning cloud application services?

In this post we will explain you the main aspects when calculating TCO for SAP deployments on Amazon Web Services cloud. Keep reading.

To analyse the TCO of cloud applications, we will have to break down the individual costs. These are the capital costs, design and deployment costs, ongoing costs, and training and support costs: 

Capital Costs

The capital costs of cloud hosting services include the purchase of the subscription, the training costs, maintenance costs, and customer support. You will also need to pay for any upgrades networking and administrative services.

In contrast, traditional hosting would require the purchase of software and hardware, in addition to the enhancing network infrastructure. With this form of computing, you will also need to pay for security products, test tools, and monitoring systems.

Deployment Costs

The resources saved in the design and deployment processes should also be factored into the TCO. With cloud applications, your site could be deployed in weeks. This is because users of these services don’t have to spend time testing, acquiring, and installing the infrastructure. They can also access the systems from any location.

With traditional systems, it can take months to deploy your organization. You will need to find and test the systems and infrastructure, and you would also need to spend time finding professionals who can properly handle the systems.

Ongoing Costs

The ongoing costs in cloud application systems are provided as part of the original subscription. These costs include the maintenance of the systems, hardware replacements, network security, and monitoring. The only additional cost you would incur would be in upgrading to larger storage space.

Ongoing costs in traditional systems are a lot higher. If you want to expand your storage space, you will have to purchase additional physical storage space. You may also need to replace the systems every three years. Network security and monitoring costs will also have to be incurred separately.

Training and Support

Support is necessary for all computing services. In cloud application services, it is provided as part of the subscription. On the other hand, with traditional software, you would have to train and pay your own support team.

Conclusion

The total cost of cloud applications has to be calculated at all stages. You have to consider the cost of purchasing the subscription, the cost of deployment, the ongoing costs, and training and support. Cloud applications are generally a lot cheaper than purchasing traditional software. Besides the costs, you will enjoy greater flexibility and scalability with cloud services. 

If you found this article interesting, you can also download this free white paper to learn how to optimize your SAP costs on AWS.