Seven specific ways to deliver on the cloud cost savings promise

Moving to the cloud should enable you to save more, do more and execute at a higher speed. But the road to achieving these benefits is by no means automatic for most well-established companies. Mature enterprises tend to have entrenched governance processes and company cultures as well as sizeable legacy footprints, which means their migration to the cloud is a transformational journey that must be carefully planned and executed.

IT top line budgets have not been meaningfully growing, so organizations are looking for savings to invest in innovative programs. In planning a move, most IT organizations hope to shrink the cloud hosting costs as much as possible so that they can have the budget flexibility to invest in more digital innovations. Here are seven specific ways that help deliver the significant cost savings promised by cloud. We have used Amazon Web Services (AWS) terminologies, but in most cases, you can find similar tools and concepts with other cloud providers.

1. Establish a clear target-state cost / budget baseline.

AWS offers a Simple Monthly Calculator and a TCO Calculator to estimate bills and calculate savings. For complex hybrid cloud architecture, I would highly recommend working with a systems integrator with access to advanced toolings from Turbonomic and CloudGenera that can accurately model workloads in relation to cloud providers’ dynamic pricing schemes. Having a clear cost/budget baseline is critical to making sound decisions about cloud workload placement and treatment.

2. Establish a well-paced application migration cadence to retire the data center.

In general, migrating a maximum of 10 to 20 applications per data center per week is quite achievable. At that pace, average-sized legacy data centers can be retired within 6 to 9 months.

Beyond that, managing dependencies typically becomes so great that it outweighs the benefits of faster migration.

3. Develop a data migration strategy and test it through a pilot.

Cloud providers offer a variety of data migration tools, such as AWS Snowball for large-scale offline data migration and AWS Direct Connect and Storage Gateway for on-going data synchronization. You will want to test out the sustained data migration bandwidth per day through a selected number of pilot applications. Often the limitation is not a cloud provider’s ability to import data, but the ability of the legacy environment’s aging network and storage devices to export data at scale without materially impacting production performance. According to AWS, an offline data migration tool like Snowball is up to 80 percent cheaper than Direct Connect data transmission, so you should give it serious consideration upfront.

4. Simplify and align governance processes to the cloud’s capabilities.

Since most IT governance processes are executed manually, greater agility often translates directly into cost savings. Eighty percent of the elapsed time in a typical IT governance process is for the handoff processes between IT siloed teams. The cloud can automate the remaining 20 percent, but to get to meaningful time-to-market improvement, it us usually necessary to upgrade the governance process itself. The migration is also an opportunity to standardize IT service catalogs and finally clean up some of the messy process integration points that have crept in since you last implemented ServiceNow or other service management tools. You can simplify upfront governance, knowing you retain control in the cloud post-deployment to scale down and hibernate workloads in minutes. Free tools like AWS Trusted Advisor provide you insights to improve governance by actively monitoring and optimizing usage and spend in the cloud.

5. Right-size your cloud compartment.

In a legacy data center environment, compute capacity is typically utilized at 30 percent or less and storage is often 30 percent or more over-allocated. Common root causes for this poor utilization are the long lead time of traditional IT procurement and provisioning processes, rigid architecture with limited scalability and the lack of automation to manage capacities. When you go to the cloud, the need to over-provision upfront in most cases is not justified.  You often can safely size a computing environment 50 percent smaller, with storage 30 percent smaller, while delivering the same performance and availability. Also, not all data need to be migrated to a higher cost Cloud Block Storage environment. Most storage vendors offer tooling to identify storage segments that have not been accessed for the past few years. Depending on your data retention policies, this storage may be better suited to migrate to a cloud archive storage environment, such as Amazon Glacier, for a significantly lower cost.

6. Use a variety of pricing programs to maximize savings.

AWS offers on-demand, reserved and spot pricing. Reserved pricing can be up to 75 percent lower than the manufacturer’s suggested retail price (MSRP). However, for you to take advantage of the reserved pricing, most production workloads must follow a predictable usage pattern. Large integrators like DXC Technology aggregate cloud purchasing power though alliance partnerships with AWS to achieve additional pricing discounts, which can be passed onto you.

7. Take advantage of the free tooling built into the cloud platform.

Tools like container management, storage management, network management, hypervisor and usage analytics are built into AWS services, free of charge. While it is possible to “lift and shift” your existing tooling — and therefore the licensing costs — onto the AWS environment, significant savings can be achieved by using AWS native tools and simplifying the end-state architecture. Most cloud providers offer mature virtual to virtual (V2V) migration tools and processes free of charge. That means that when using cloud-native tooling, the loss of workload portability across cloud is, in reality, smaller than some IT architects may perceive.


There are other aspects to consider beyond the seven listed above, such as picking the right cloud region, and there is no compression logic for the experience. Certain things can only be learned by going through a real large-scale cloud migration – which is why experienced people and proven methodology matter. One of the easiest ways to achieve the targeted savings is to leverage an experienced integrator with a proven track record, especially one who might be willing to commercially commit to a joint savings target.

Cloud has fundamentally transformed IT’s economics and service delivery models. With discipline and skills, cloud savings are real and achievable.

John Wei headshotJohn Wei is a Digital Transformation Leader and Distinguished Technologist at DXC, with a proven track record of delivering digital transformation at scale, driving double-digit growth, accelerating speed of execution, reducing operating cost and producing customer Net Promoter Scores (NPS) significantly higher than the industry baseline. Prior to DXC, John was the COO of Heiler Software Corporation (an Informatica company), a leading provider of enterprise product information management (PIM) and master data management (MDM) solutions. John holds a master of science degree in computer information systems from University of Detroit Mercy. John has been admitted into Harvard Business School Executive Education Program, with a planned completion date before the end of 2018.

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