Fundamental
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Fundamental
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On-Premises to Azure Cost Comparison Tool
Free sample question, answered and explained below. The AZ-900 Microsoft Azure Fundamentals Exam practice bank has 688 more like it. Try 10 free: instant score, no account.
An enterprise currently operates its infrastructure inside a private on-premises datacenter. The leadership team wants to perform a comprehensive financial comparison to evaluate potential cost savings before migrating to the cloud.
The analysis must account for several distinct factors:
- Physical server hardware, maintenance, and storage infrastructure
- Software licensing and virtualization software
- Datacenter operational expenses such as electricity, cooling, and floor space
- IT administration and operational labor costs
Which tool should the organization use to compare these on-premises costs with the projected cost of running equivalent workloads in Azure?
Explanations
Azure Pricing Calculator
Azure Pricing Calculator
What the Azure Pricing Calculator is
The Azure Pricing Calculator is a web-based tool used to estimate the ongoing consumption and monthly subscription costs of specific Azure services and architectural configurations prior to deployment.
Why it doesn't meet the requirement
While the Azure Pricing Calculator helps estimate the cost of individual cloud services (such as Azure Virtual Machines, Storage accounts, or Azure SQL Database), it does not model or factor in existing on-premises datacenter costs, such as physical server acquisition, cooling, facility electricity, floor space, or IT administrative labor. It cannot produce an automated side-by-side on-premises vs. cloud cost comparison.
Key characteristics and limitations
- Focuses Exclusively on Cloud Meters: Calculates estimated cloud resource costs based on selected regions, SKUs, tiers, and usage metrics.
- No On-Premises Modeling: Lacks fields to input existing datacenter infrastructure, facilities overhead, or on-premises staff costs.
- Pre-Deployment Tool: Used primarily to architect and budget new cloud deployments rather than build a business case for cloud migration.
This answer would be correct if
The organization needed an itemized monthly cost estimate for a new cloud architecture composed of specific Azure services, such as VMs, App Services, and storage configurations.
Additional context
The Azure Pricing Calculator and the TCO Calculator serve complementary roles: the TCO Calculator demonstrates why migrating to the cloud is cost-effective compared to on-premises datacenters, whereas the Pricing Calculator estimates what the specific cloud deployment will cost each month.
Azure Advisor
Azure Advisor
What Azure Advisor is
Azure Advisor is a personalized cloud consultant service integrated into Azure that analyzes active resource telemetry and configurations to provide actionable recommendations across reliability, security, performance, operational excellence, and cost optimization.
Why it doesn't meet the requirement
Azure Advisor evaluates existing, deployed cloud resources to identify optimization opportunities, such as right-sizing underutilized virtual machines or purchasing Azure Reserved Instances. It does not perform pre-migration financial modeling and has no capability to evaluate on-premises infrastructure or physical facility costs.
Key characteristics and limitations
- Telemetry-Based Recommendations: Scans existing Azure resources over rolling 7-day to 30-day windows.
- Identifies Waste: Flags idle VMs, unattached disks, and underutilized database instances.
- No On-Premises Scope: Operates entirely within existing Azure subscriptions and does not estimate datacenter hardware or labor comparisons.
This answer would be correct if
The organization had existing workloads in Azure and wanted automated recommendations to reduce monthly expenditures by resizing underutilized virtual machines or adopting reservations.
Additional context
Azure Advisor is an essential tool for continuous post-deployment optimization rather than initial migration feasibility and total cost modeling.
Total Cost of Ownership (TCO) Calculator
Total Cost of Ownership (TCO) Calculator
What the Total Cost of Ownership (TCO) Calculator is
The Total Cost of Ownership (TCO) Calculator is a specialized financial estimation tool designed to help organizations calculate and compare the comprehensive cost of running workloads on-premises versus migrating them to Microsoft Azure.
How it meets the requirements
- Comprehensive Cost Modeling: The TCO Calculator specifically models both direct costs (such as physical hardware and licenses) and indirect operational expenses (such as facility power, cooling, rack infrastructure, network maintenance, and IT administration labor).
- Side-by-Side Comparison: It generates a detailed financial report outlining the estimated cost savings an organization can achieve over a specified time horizon (such as 1, 3, or 5 years) when moving from an on-premises datacenter to Azure.
- Customizable Assumptions: Users can adjust baseline assumptions regarding electricity rates, virtualization maintenance fees, hardware replacement cycles, and labor costs to match their specific enterprise environment.
Key advantages and capabilities
- Broad Expense Factoring: Evaluates compute, storage, networking, and database workloads alongside facilities, licensing, and IT labor.
- Executive Reporting: Produces downloadable visual graphs, charts, and breakdowns suitable for stakeholders and financial decision-makers.
- Cloud Optimization Modeling: Illustrates the economic transition from capital expenditures (CapEx) to operational expenditures (OpEx).
- Customizable Workload Inputs: Allows detailed entry of existing servers, processor cores, RAM, storage tiers, and database engines.
Why this is optimal
Unlike calculators that only estimate monthly cloud consumption meters, the TCO Calculator is the only Azure tool built specifically to analyze total on-premises datacenter operational costs against cloud deployment expenses.
Microsoft Cost Management Cost Analysis
Microsoft Cost Management Cost Analysis
What Cost Analysis is
Cost Analysis is a native feature within Microsoft Cost Management in the Azure portal that enables organizations to explore, analyze, and monitor accrued cloud spending across active subscriptions, resource groups, and management groups.
Why it doesn't meet the requirement
Cost Analysis only reports and analyzes actual, historical, or forecasted spending for resources that have already been deployed in Azure. It is a post-deployment management tool, not a pre-migration comparison tool, and cannot capture or model on-premises datacenter expenses like electricity, hardware lifecycles, or physical maintenance.
Key characteristics and limitations
- Post-Deployment Visibility: Tracks invoiced and amortized charges for active cloud resources.
- Organizational Grouping: Filters spending by tags, resource groups, subscriptions, and departments.
- No Physical Datacenter Ingestion: Cannot accept manual inputs or metrics for non-Azure physical facility costs.
This answer would be correct if
The organization had already migrated resources into Azure and needed to analyze current month-to-date spending, view accumulated costs by service, or track adherence to allocated cloud budgets.
Additional context
Cost Analysis works with telemetry generated by Azure resource meters to deliver showback and chargeback capabilities across teams.
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