Comprehensive Total Cost of Ownership and Return on Investment Analysis
The calculator considers the timing of your VMware license renewal vs. migration completion:
This realistic approach shows the true financial impact of migration timing vs. license renewal dates.
Configure hardware refresh settings above to see the schedule.
Add and configure individual AVS clusters with different node types and sizes to match your specific requirements.
Identify workloads that can be modernised to native Azure services instead of running on AVS, reducing licensing and infrastructure costs.
By modernising applications to native Azure services, you can:
Configure migration start date and duration above to see the timeline.
Compare the true business impact of two strategic decisions over the next 5 years. This analysis shows the real cost of inaction versus the investment in cloud migration.
This calculator uses established financial analysis methods to evaluate the Total Cost of Ownership (TCO) and Return on Investment (ROI) for migrating from on-premises VMware to Azure VMware Solution.
ROI = [(Total Savings - Total Investment) / Total Investment] × 100
Where:
Payback Period = Time when Cumulative Savings ≥ Total Investment
Simple calculation showing when the investment will be recovered through cost savings.
Total Savings = Σ(t=1 to n) [Annual Savings in Year t]
Sum of all cost savings over the analysis period, accounting for growth and modernisation.
Gross Investment = (Base Migration Costs × (1 + Contingency%)) + Modernisation Investment
Partner Funding = Migration Funding + Azure Credits + Services Funding + Training Funding + Additional Incentives
Net Investment = Max(0, Gross Investment - Partner Funding)
Where:
Uses a single input for total annual hardware costs.
Simple approach - single annual hardware cost covering all operational expenses. VMware licensing handled separately.
On-Premises Annual Cost = Annual Hardware Cost + VMware License Cost
Simplified comparison - all costs remain constant year over year
Focus on ONGOING operational costs - costs that actually stop when you migrate to cloud.
On-Premises Annual Cost = Infrastructure Support + Operations
Infrastructure Support: Hardware Support + VMware Licensing + Storage Support + Network Support + Backup Support + Maintenance Contracts
Operations: Data Centre + Power/Cooling + Staff + Connectivity
Support Portion: Hardware Support + Storage Support + Network Support
Note: This method excludes hardware depreciation as it represents sunk costs, not ongoing cash flow.
Year Definition: Each analysis year runs from January 1st to December 31st
Analysis Year Numbering:
Example (if running calculator in 2024):
VMware License Logic (Including Commitment Periods):
Real Example:
Refresh Cost = Hardware Portion × Cost Multiplier × (Refresh % / 100)
Refresh Timing: Based on hardware age and refresh cycle
Current Age = (Today - Purchase Date) / 365.25 days
Next Refresh = Ceiling(Current Age / Cycle) × Cycle
Modernisation Start Year = Ceiling(Timeline in Months / 12)
Savings from node reduction and native Azure services begin after this period.
Why VMware Costs Increase Faster:
This inflation makes staying on-premises increasingly expensive over time, improving the business case for migration to Azure VMware Solution.
Monthly AVS Cost = Node Cost × Number of Nodes × Pricing Tier
Node Types Available:
Pricing Tiers:
Azure Hybrid Benefit: ~40% additional savings on compute portion
Annual Azure Cost = (AVS Nodes + Additional Services) × 12
Additional Services: ExpressRoute + Backup + Data Transfer + Monitoring + Storage + Security
| Category | Key Inputs | Impact on Calculation |
|---|---|---|
| Current Environment | Cost method, hardware/software costs, staff costs, facilities | Determines baseline annual costs and hardware refresh schedule |
| Hardware Refresh | Purchase date, refresh cycle, cost multiplier, percentage | Calculates timing and cost of on-premises hardware refreshes |
| Azure Configuration | Node type, count, reserved terms, hybrid benefits | Determines base Azure VMware Solution costs |
| Azure Services | ExpressRoute, backup, monitoring, security services | Additional monthly Azure service costs |
| Modernisation | VMs to migrate, applications to modernise, timeline | Calculates savings from moving to native Azure services |
| Migration Investment | Assessment, tools, services, training, contingency | One-time costs that must be recovered through savings |
| Migration Timeline | Start date, duration in months | Determines when cost savings begin and VMware license obligations end |
| Partner Funding | Microsoft funding, Azure credits, services funding, training funding | Reduces net migration investment and improves ROI |
| Financial Analysis Parameters | Analysis period, growth rate | Controls analysis timeframe and cost growth projections |
ROI = (Total Savings - Total Investment) / Total Investment × 100
Payback Period = Time when Cumulative Savings ≥ Total Investment
Simplified Approach = All costs remain constant each year for clear comparison
License Renewal Timing = VMware cost depends on renewal date vs migration completion date
Note: After calculation, detailed step-by-step breakdowns show exactly how each value was computed.