Total cost of ownership is frequently used to justify the extra cost of hosted services. Steve has been comparing different hosting services for SQL Server, Amazon and Microsoft Azure. His presentation should encourage you to really take into consideration all of the costs involved.
Hosting services will tell you that they handle software updates, backups, installation, maintenance, etc. So, you don’t have to hire those skills. If you already have individuals with those skills, and do not intend to release them, then that is not something you can consider as compensation for a higher cost.
What makes the comparison difficult are the different components for hosting your service. You have fees for instantiation, shared apartment like services, private dedicated virtual services, bandwidth, persistence, maintenance, and data persistence.
If your database performance requirements are fairly small, you could host your database in SQL Azure quite reasonably. That handles the cost of hosting, managing the server, and data persistence. However, you do have to pay for bandwidth into and out of the data center where your SQL is hosted. If the rest of your application is not also hosted in Azure, then you must pay additional fees to access your SQL instance.
The bandwidth cost is a constant if you have virtual machines with your own dedicated SQL Server in either Amazon or Azure. The difference is that you may have better performance, but you are not responsible for maintaining the database instance and failover scenarios, both of which were built into the SQL Azure service.
Don’t forget to include your disaster recovery scenario into account when establishing a Total Cost of Ownership. A final factor you should also consider is how much risk of failure one solution has over another. Another factor you should also take into account is the fact that both Amazon and Azure have had significant outages over the last few years.
Cheers,
Ben