As organizations accelerate their digital transformation initiatives, SQL Server cloud migration has become a critical priority. However, many IT leaders underestimate the true cost implications of this transition, leading to budget overruns and project delays.

In a recent episode of Data Driven, database expert Dave Bermingham from SIOS Technology outlined the four primary cost components that determine your cloud migration budget. Understanding these factors upfront can mean the difference between a successful migration and a financial disaster.

The Four Pillars of Cloud Migration Costs

Compute costs represent the most variable expense, fluctuating based on instance size selection and pricing models. The good news? Both Azure and AWS offer significant savings opportunities. Azure customers can save up to 55% off cloud workload costs through Azure Reservations, where organizations prepay for virtual machines on one or three-year terms. Similarly, AWS provides Compute Savings Plans for flexible spending commitments and EC2 Instance Savings Plans for more predictable workloads.

Storage costs require careful balancing between performance and expense. Premium SSDs and provisioned IOPS can quickly inflate budgets, making right-sizing crucial. The key is avoiding over-provisioning while ensuring adequate performance for your applications.

Data transfer and backup expenses often catch organizations off-guard. Moving data between regions incurs additional charges, and replicating databases for high availability or disaster recovery introduces ongoing costs that must be factored into the total cost of ownership.

Licensing costs frequently become the largest expense component, particularly for SQL Server Enterprise Edition users. With SQL Server 2025 now in private preview, organizations need to evaluate how new licensing models will impact their migration strategy.

Strategic Cost Management

The most successful cloud migrations involve comprehensive planning that addresses all four cost components simultaneously. Organizations leveraging reservation plans and committed spend models are seeing dramatic reductions in their cloud bills, while those who migrate without proper cost analysis often face budget surprises.

As cloud providers continue evolving their pricing models and service offerings, staying informed about cost optimization strategies becomes increasingly critical for IT leadership success.

For more insights on enterprise cloud strategies and database management, subscribe to Data Driven and stay ahead of the technology curve.

Transcript

Swapnil Bhartiya: What are the biggest cost considerations when migrating SQL Server to the cloud?

Dave Bermingham: The biggest cost considerations really come down to just a few things: licensing, compute cost, storage cost, and data transfer cost.

Compute cost can vary based on the instance size selection and pricing models. Both Azure and AWS—most of the cloud providers—offer options to reduce those expenses. In the case of Azure, there are Azure Reservations, where you prepay for a VM for one or three-year terms and save a significant amount of money. Then there are also Azure Savings Plans, where you have more flexibility based upon a committed hourly spend.

The same applies with AWS—you have what they call the Compute Savings Plan, where if you commit to a fixed compute spend, you can use any instance type. Or, if you know exactly the region and the instance type you’re going to use, there’s what’s called the AWS EC2 Instance Savings Plan, which can save you even more money.

Storage is another critical component. So you have lots of options in the cloud, from premium SSDs to provisioned IOPS, which can all drive up the cost. Really, you have to balance the performance versus the expense, and that’s the key—making sure you’re not over-provisioning, but also provisioning what you need.

Then there are data transfer and backups—you can’t overlook those expenses. Moving data between regions, or anytime you’re moving data out of a region, is going to incur an additional expense. Replicating databases for high availability, backup, or disaster recovery are going to introduce those expenses as well.

Finally, licensing is often the most significant expense, particularly for those using SQL Server Enterprise Edition.