Total Cost of Ownership
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1h 13m

This course covers the core learning objective to meet the requirements of the 'Implementing effective Cost Management solutions in AWS - Level 1' skill

Learning Objectives:

  • Understand aspects of AWS Cloud economics, including OpEX, CapEX and TCO
  • Understand the various AWS account structures in relation to AWS billing and pricing practices
  • Understand which operations will reduce costs by moving to the AWS cloud
  • Analyze and contrast the various pricing models for AWS, such as On-Demand EC2 Instances, Reserved Instances, and Spot Instance pricing

Welcome to this section about TCO or Total Cost of Ownership. TCO was already mentioned a few times. TCO stands for Total cost of ownership and is a comprehensive assessment of IT's total costs or other costs over time.

For IT, TCO includes hardware and software acquisition, management and support, communications, end-user expenses, and the opportunity cost of downtime, training, and other productivity losses.

Comparing the TCO of different environments is not an easy task. Especially in the "old world," the on-premise world, many factors play a role in this assessment, as this overview shows.

Let's take the facility costs for example. Something like space, power, cooling. It's nothing you have to worry about when using AWS resources. 

Using the cloud has greatly simplified the TCO assessment.

Because most additional costs are included in AWS's service prices, there are far fewer factors to take into account.

As someone who started his IT career by assembling servers and configuring switches, I can assure you that physical IT operation involves a lot of effort, costs, and stress.

Today, an EC2 instance can be started with just a few clicks; in the past, a server had to be assembled, installed, mounted in the data center, and wired. Also, there were costs for maintenance, cooling, space, power, licenses, and other factors.

Understanding TCO improves the overview on the business and helps you recognize issues and opportunities at an early stage.


About the Author
Learning Paths

Stuart has been working within the IT industry for two decades covering a huge range of topic areas and technologies, from data center and network infrastructure design, to cloud architecture and implementation.

To date, Stuart has created 150+ courses relating to Cloud reaching over 180,000 students, mostly within the AWS category and with a heavy focus on security and compliance.

Stuart is a member of the AWS Community Builders Program for his contributions towards AWS.

He is AWS certified and accredited in addition to being a published author covering topics across the AWS landscape.

In January 2016 Stuart was awarded ‘Expert of the Year Award 2015’ from Experts Exchange for his knowledge share within cloud services to the community.

Stuart enjoys writing about cloud technologies and you will find many of his articles within our blog pages.