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Azure offers over 200 tools and services, making it challenging to decide the best strategy for your business and budget. While resources like the Azure Pricing Calculator can help you plan your cloud infrastructure budget, it can be difficult to know where to start and what’s realistic for your organization’s budget. The true cost of cloud modernization is unique for each businesses and should be viewed as an on-going investment that fluctuates based on how the business changes.

Unfortunately, there isn’t a one-size-fits-all amount and every organization’s needs are different. The total cost can be highly flexible depending on motivations, available skill sets, technical requirements and available budget. Some teams may be able to start for free with an Azure Free Account and available Azure Free Services.

Larger organizations, or ones with complex requirements, may require a multi-year, enterprise-wide initiative where the cost can climb to $1,000,000 or more. Many medium organizations with standard requirements seem to spend between $20k-$200k for initial architecture design activity, build activity, and initial run-time costs. 

Cloud Modernization - Azure Services
Figure 1

Gain a better understanding of your needs, your budget requirements, and how you can reach your Azure cloud modernization goals with these tips on creating your Azure Cloud Modernization Plan.

1. Define your cloud motivations and desired outcomes 

The first step is to discover, define, and document your motivations and how you intend to use Azure to accomplish your desired results. Capture these motivators front and center so all collaborators have a clear understanding and can refer back to them. 

You may need to inventory existing applications, databases, and/or other elements that are candidates for moving to Azure. Try to clean up existing systems so you are only working with what matters and not incurring additional effort managing obsolete data. Define where the current content lives, what it is, who owns it, and what you intend to do with it. Will you be migrating it as is? Transforming it? Making minor adjustment or updates? These decisions will need to be balanced across your application portfolio and IT footprint. 

Meet with key stakeholders, executives, and financial teams to ensure they are involved in your plan and document outcomes as you define your cloud strategy. This will help guide your organization and collaborators in alignment with your goals as your plan grows. Be as specific as possible about required outcomes and stretch goals. Aligning your cloud modernization team is important to success and tips on building this team are covered in a later section. 

Here is a free downloadable Microsoft Azure Strategy and Planning template to help you start planning. 

2. Understand your budget

There’s more than one way to build a house. When you seek to create a digital home for your organization in the cloud, a realistic understanding of available budget is critical in planning for cloud adoption. By understanding budgetary limits early, you can make more effective decisons on which options should be pursued and which are saved for later or ignored. For many teams, there may be a low-cost, small step to lay the groundwork in the beginning that can help gain efficiencies and open more opportunities in the future. 

For teams with limited budget, there may be opportunities to start in the cloud with basic elements that allow for continuous growth and meeting a few immediate needs. For organizations with larger budgets, more focus may be desired in planning for a robust enterprise architecture that meets the needs for many different stakeholders.

Azure changes how many organizations account for IT budgets by transferring costs from CAPEX to OPEX pricing models which can be an advantage for financial managers. This allows for fluctuations based on utilization and will help your organization to only spend on what it needs, when it needs it and as avoid large, lump sum investments. 

Be aware that there’s more to cloud adoption than just licensing and resource costs. By understanding your budget before cloud modernization planning begins, you’ll be better prepared to make decisions as challenges or new opportunities arise.  The examples below can help during your budget planning.

3. Costs to consider in your Azure Modernization budget 

Infrastructure Costs 

Instead of managing your own infrastructure you’ll use Microsoft’s Infrastructure as a Service (IaaS). You’ll save on expenditures like paying for the physical space, electricity, servers, backup hardware, backup power, etc. but you’ll still need to consider related costs for run-time, storage, backups and networking resources in Azure. 

Data Transfer Costs 

Azure charges for data transferred in (known as ingress) and out (known as egress) of the cloud. In many cases ingress, or uploading your data to Azure, is free. If your applications require a large amount of data transfer, such as accessing large databases, transferring large files, a high frequency of transfer, or high download rates of publicly available assets, you will need to consider the cost for bandwidth. You may also need to consider an additional cost if your data resides in another platform with similar fees such as AWS. 
Microsoft Azure Bandwidth Pricing 

Microsoft Azure Bandwidth Pricing
Figure 2

Software and Operating System Costs 

Azure offers various operating system and data storage options. Some of these may come with additional costs that you need to consider when moving your applications to Azure. 

Licensing Costs 

Depending on the applications you intend to use, they may require additional licenses to run. Ensure that you have the right licensing agreements in place when moving them to Azure. 

Some organizations may be able to take advantage of the Azure Hybrid Benefit. This is a licensing benefit that allows customers with active on-premises licenses while using them in Azure at a reduced cost. 

Azure Modernization Hybrid Benefit
Figure 3

Support Costs 

Many organizations leverage additional support from Microsoft Azure specialists to help navigate to success, complete complex activities, or resolve issues. Consider what help you may require from constultants or other specialists and what you need to budget for. Additional insights on building your cloud strategy team are available in the next section. Azure Support Plans are also available from Microsoft. 

Scalability Costs 

Azure provides the ability to scale your applications as your needs change. However, scaling comes at a cost as you require additional resources. You’ll need to consider the cost of scaling your applications up or down to meet your needs as they grow. As you continue with your Azure Cloud Modernization Plan, consider putting policies in place to reduce useless data or operations and the associated costs (i.e. limiting storage of old, un-necessary logs). 

Azure Modernization Scalability Costs

Cloud Management Costs 

Azure provides additional applications or software as a service (SaaS) to manage your cloud resources, however, these services also come at a cost. Consider which additional Azure Services fit in your plan for success, which fit later in your roadmap, and which services do not fit your plan. 

4. Build your cloud strategy team 

In addition to the cost of cloud resources, consider who you need to be involved and the cost or time required from them for your cloud modernization to be successful. Your team may have the skills available and all you need is to align them to your Azure Cloud Modernization Plan. For many teams, hiring specialists is an effective way to augment their team to fill skill gaps, achieve faster results, or ensure effective outcomes. 

When building your cloud strategy team, many roles may be required to collaborate for success. Consider some of the following roles, which skills exist on your team, and where you may need a consultant or new hire as a subject matter expert. Additional roles may also be required specific to your business. Include these roles in your Azure Cloud Modernization Plan and account for any costs of additional help. 

Strategic Stakeholders & Support 

  • Financial stakeholders 
  • Line of business stakeholders 
  • Human Resources 
  • Operations 
  • Executive Sponsors 
  • IT & Infrastructure Lead 
  • Staff Trainers 
  • Governance team 
  • Pilot groups 

Cloud Development & Administration 

  • Database Architects & Administrators 
  • Azure Architects & Administrators 
  • Network & Security Specialists 
  • Developers 
  • Project Managers 
  • Quality Analysts 
  • Product Owners 
  • Business Analysts 
  • Support Staff 

5. Understand Technical Considerations 

A strategic plan is helpful to align and communicate with your team, but at the end of the day it can only get you so far. Once you start your Azure Cloud Modernization, there may be technical obstacles or budgetary limits guiding technology decisions that determine what’s possible. For example, there are Azure subscription and service limits, quotas, and constraints that exist for certain services. Some services may have adjustable limits but these limits for your targeted services should be considered when deciding what plans are right for you. 

As you build your Azure Modernization Plan, flag unknown technical requirements or decisions and try to validate them before fully committing to a particular architecture or service. Keep in mind the some of the following as these will all impact your cloud architecture choices: 

  • Required features and how people interact with the system
  • Current vs. future state alignment and rearchitecture impacts 
  • Amount of data
  • Security requirements
  • Data archiving and/or migration
  • Auditing requirements
  • Desired integrations 
  • Supported platforms 
  • Scaling expectations 
  • Maintenance & support requirements 

A quality Azure architect should be able to help you select the right solutions to meet your specific needs to enable continuous growth as your business scales. 

Additional Resources 

Here are some additional resources you may find helpful if you’d like to learn more: 

Learn about possible Azure Solutions 
5 ways to save costs by running .NET Apps on Azure 
Azure Cloud Adoption Tools and Templates 

What’s next? 

Hopefully this information helps you on the path to Azure success, but if you would like some help, Total Solutions offers an Azure App Modernization Jumpstart to successfully kickoff or continue your journey in the Cloud. Contact us to learn more!