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What are the costs of Cloud Computing ?

Cloud Computing, when compared to an on-premise deployment, in most cases, can end up being less expensive and more valuable.

Cloud Computing however does not come free, there are costs, but it would be expected that any savings made by moving workloads to the cloud would outway any additional incremental costs incurred by moving to the cloud.

What are the items that you will need to consider for a like-to-like comparison?

Capital Expense (CAPEX) Items such as;

  • On-premise Hardware including Servers, storage, switching, routing, UPSs, racks, PDUs and any annual maintenance for hardware support or firmware updates etc.
  • On-Premise software including Microsoft Windows, Office and other licenses, backup software and any annual maintenance for those software items.
  • Cost of Money - CAPEX spent on the on-premise hardware and software itself has value, don't forget to include the opportunity cost of putting that cash into hardware versus investing it elsewhere in the business. (ie. a crane hire business could buy another crane to generate more revenue)
  • Facilities - How much space (and therefore rent) does your server hardware and equipment take up? 1 rack, several racks, perhaps an entire server room, or maybe you have your equipment in a colocation data centre already? These costs all need to be added.

Operational Expense (OPEX) Items such as;

  • Telecommunications links for internet OR dedicated point to point links - dedicated point to point links direct to the cloud data centre can deliver a lot higher bandwidth at a much lower cost versus an internet connection with internet being delivered through the cloud data centre.
  • IT Support - There is no longer the requirement to service on-premise hardware
  • Insurance - Less equipment on-premise equals lower insurance premiums
  • Power - The average physical server will consume about $80 worth of power each month
  • Off-Site backup - Once you have migrated to the cloud, there is no need for off-site backup, your cloud provider should be performing regular proper backs as part of the service.
  • Traditional telephony versus Cloud IP Telephony - A properly configured and deployed business Voice Over IP (VOIP) PBX service can provide many benefits and much costs saving versus a traditional PABX/PBX system.
  • Any business specific costs - Each business has specific operational cost items - what are yours?

Every business is different and this is why you should undertake a complete cost comparison analysis, we can help you with this if you need some assistance.


Recently, we undertook a very comprehensive ICT Architecture Scoping Study for a health service that will be operating across 12 sites with over 230 staff across some of the most remote areas of Australia. The study required us to compare three complete deployment options including full cost comparisons for each over a 36 month period.

Some of the results along the way actually surprised us but the outcome was not surprising with the Private Cloud solution working out more than $350,000, or about 8% less over 3 years than the next closest option.

If you would like to view a summary 'extract' of the financial section of this report (obviously with many private and identifying comments deleted), please contact us at