‘It all adds up’: Cloud hosting can cut your energy bills

The government’s “It all adds up” initiative started on Saturday December 17^th. The strapline heads a public information campaign designed to encourage households to consume less electricity. According to The Guardian, the campaign can save households between £250 and £400 per year.

But how much can businesses save? Hard to tell, since every business has unique energy requirements. However, since we’re in the cloud hosting business we can provide a ballpark figure of potential energy-related cost savings when moving some on-premise infrastructure to the cloud.

Calculating on-premise energy costs

In this post I provided an easy-to-use formula for calculating server emissions. A part of that formula can be used to calculate the potential energy consumption of a single server. When we know how much energy a server consumes, we can calculate the cost.

Here’s the formula for calculating a server’s energy consumption:

Watts = Volts × Amperes

Add in the figures for each individual server you’re running on-premise. In the aforementioned post I used figures for a typical Storm server:

Watts = 240V × 0.6A = 144W

Since energy prices are billed by kWh of usage, we need to convert watts to kilowatts per hour, or kilowatt-hour:

kWh = Watts ÷ 1000 = 0.144kWh

Next, calculate monthly and annual power consumption:

• Monthly: 0.144kWh × 720 hours (in a 30-day month) = 103.68kWh / month
• Annual: 0.144kWh × 8,760 hours = 1,261.44kWh / year

If we add cooling (about the same as power consumed by the server) , that’s roughly 2,500kWh per year.…which is the electricity that won’t “add up” to local energy consumption when you run workloads in the cloud.

Keep in mind that these are theoretical upper limits. Most servers never run at 100% capacity all year round. Other factors like attached or installed hardware can also influence a server’s power consumption.

Now let’s calculate the cost. Rates may vary depending on your energy supplier, so we’ll use this table for the conversion:

Business Type	Price per kWh
Micro business	21.78p
Small business	20.31p
Medium business	17.74p
Large business	16.61p
Industrial	17.52p

Table source: Business Energy (Updated October 2022)

To get the annual price of powering a single server, we can simply multiply the annual kWh by the relevant price in the table above:

Price = 1,261.44kWh / annum x 17.74p = 22,377.9456p

Powering one server could cost a medium-sized business £223.77 in energy bills over one year. Cooling the server effectively doubles that figure, meaning you could theoretically spend almost £450 per year on electricity costs per server.

Calculating server hardware and maintenance costs

While we’re at it, let’s take a quick look at the cost of hardware and maintenance since these are also absorbed when you move from self-hosted on-premise to cloud hosting. After all, given the economic outlook for the year ahead, spending smartly might become a necessity.

Let’s start off with the physical server. Are you buying a refurbished server or a freshly assembled unit? What specs? For the sake of this post we’ll average the price of an entry-level server at around £2,500.

Servers also require installation and maintenance. Let’s say basic installation comes in at roughly 4 hours, followed by 10 hours of maintenance a month. Let’s also assume our in-house sysadmin has a conservative hourly rate of £14 per hour.

Let’s lump installation costs in with the price of the server since fresh installations occur very seldom: £2,500 + (4 x £14) = £2,556 in upfront costs.

Monthly maintenance will end up costing £14 x 10 hours = £140 per month. That’s £1,680 per year.

Adding the server’s energy bill of £450 to the annual maintenance of £1,680 comes to £2,130 per annum.

Over a theoretical 5-year lifespan of the server, you’ll spend roughly £2,556 + (5 x £2,130) = £13,206 on that server. This doesn’t include upgrades or extraneous events like server crashes, breaches, or any other incident which might necessitate hours or days of extra work. Where we skirted the theoretical upper limits of energy costs, we stuck to minimums where server cost and maintenance are concerned.

By comparison, Storm’s mid-range cloud server is priced at £89.99 (ex. vat) per month. With VAT applied, this cloud hosting package comes to a total of £107.99 per month, or £1,295.88 per year. Since it’s a fully-managed server, many time-consuming server maintenance tasks are also included in the price. This includes maintenance, hardware replacements and upgrades, 24/7 monitoring and proactive response (of running services and security), and support.

Over the same five year period our cloud server will have a total cost of £6,479.40 – less than half the cost of a physical server. Plus, your sysadmin will have at least 10 extra hours to spend on more important mission-critical tasks every month.

Making the most of your move to the cloud

Various surveys point to the cost of cloud for running year-round workloads as a pain point among enterprises. More specifically, the cloud ended up costing survey participants more than they anticipated. But most of these enterprises also admitted that it’s not about the actual cost of cloud, but rather that they lost track of their cloud spend.

To ensure that cloud delivers more than just energy and cost savings, keep the following in mind:

Plan, plan, plan!

Cloud hosting isn’t an all-or-nothing solution. Nor should it be. Some legacy applications, for example, are better hosted on on-premise servers. Figuring out which services you can or need to run in the cloud can go a long way to optimising your IT spend.

Establish performance baselines

How are your apps or services performing on on-premise servers? You can use on-premise performance metrics to establish a baseline that can be used to get the same or better performance in the cloud.

Keep an eye on security

One study found that 81% of respondents found security a crucial challenge as they moved workloads to the cloud. After all, the security requirements for applications hosted on-premise and those hosted in the cloud are likely to differ given a change in infrastructure.

Cloud service providers have their own experienced security teams. Leverage this as an available resource before, during, and after the migration to ensure that you’re covered from all angles. Use detailed analytics to keep tabs of your security and identify areas where improvements or fixes are needed.

Plan your data migration

Migrating data can affect the performance of an application or service. Careful consideration should be given to the synchronisation methods used between on-premise infrastructure and cloud infrastructure to ensure uninterrupted service.

Engage your cloud service provider

Choosing the right cloud service provider means they’ll also act as a resource that can be used to plan and execute your migration, and, importantly, to keep an eye on costs both during and post migration.

Wrapping up

Switching to cloud hosting for suitable workloads will help cut your power consumption and associated costs. But it’s a move that requires careful planning. With Storm you get a dedicated cloud architect to design a perfect fit cloud solution, and to help with complex migration issues. At the same time, we’ll keep an eye on your cloud spend to ensure that you get value for money – before and after migration.