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When comparing AWS with on-premises Total Cost of Ownership (TCO), a comprehensive evaluation should include all relevant costs across both options. These can be broadly categorized into:

Capital Expenditures (CAPEX):

• Hardware costs for servers, storage, networking equipment, etc.
• Software licenses for operating systems, databases, applications, etc.
• Facility costs for data center space, power, cooling, and physical security.
• Installation and setup costs for deploying and configuring the infrastructure.

Operational Expenditures (OPEX):

• IT Staff costs for managing and maintaining the infrastructure, including software updates, security patching, and troubleshooting.

• Power and cooling costs to run the equipment.

• Bandwidth costs for internet connectivity and data transfer.
• Backup and disaster recovery costs for protecting data and ensuring business continuity.
• Software maintenance costs for ongoing support and updates.
• Licensing costs for ongoing software subscriptions.

Additional Considerations:

• Scalability and agility: AWS offers the ability to easily scale resources up or down as needed, while on-premises infrastructure may require upfront investment for future capacity.
• Flexibility: AWS offers a wide range of services that can be easily provisioned and deprovisioned as needed, while on-premises infrastructure may be less flexible.
• Downtime and outages: AWS has a highly reliable infrastructure with multiple redundancies, while on-premises infrastructure may be more susceptible to downtime and outages.
• Security: AWS provides a secure platform with a variety of security features, while on-premises infrastructure may require additional investment in security measures.

Here's a helpful table summarizing the cost components:

Cost Category	AWS	On-Premises
CAPEX	- Pay-as-you-go model for most services. - No upfront hardware or software costs. - Potential for lower costs if usage is predictable.	- High upfront costs for hardware, software, and facilities. - Potential for lower long-term costs if usage is high and stable.
OPEX	- Variable costs based on usage. - No IT staff costs for managing infrastructure. - Potential for lower costs if usage is unpredictable.	- Fixed costs for IT staff, power, cooling, and bandwidth. - Potential for higher costs if usage is low or variable.
Additional Considerations	- Highly scalable and flexible. - Secure and reliable infrastructure.	- May require additional investment for scalability, flexibility, and security. - May be more susceptible to downtime and outages.

 

Ultimately, the best option for your organization will depend on your specific needs and requirements. A thorough TCO analysis that considers all of the relevant costs and factors can help you make an informed decision.

 

Here are some additional resources that you may find helpful:

• AWS Pricing Calculator: https://docs.aws.amazon.com/whitepapers/latest/how-aws-pricing-works/aws-pricingtco-tools.html

Five things you should do to create an accurate on premises vs cloud comparison model: 

• https://aws.amazon.com/blogs/publicsector/tco-cost-optimization-best-practices-for-managing-usage/

By Siju