New York – Dec. 19, 2018 – Companies are often disappointed when promised efficiencies and savings just don’t materialize after they’ve migrated their workloads to the public cloud.  A new report from Bain & Company and TSO Logic, Rightsizing Your Way to the Cloud, which includes results from an analysis of more than 60,000 workloads, found that when companies don’t do the necessary preparatory work, direct-match migration to the public cloud can be 10-15 percent more expensive that keeping the work in a legacy, on-premise environment. In other words, for all the vaunted promise of the cloud, it can be cheaper to actually keep things unchanged.

Bain & Company asked more than 350 IT decision-makers what aspects of their cloud deployment had been the most disappointing and under-delivered on their expectations.  Their top complaint was that the cost of ownership had not declined. 

“Our analysis reveals that 84 percent of on-premise workloads are over-provisioned, meaning that when companies migrate a workload to the cloud they’re sending excess computing and storage capacity right along with it,” said Mark Brinda, a partner in Bain & Company’s Technology Practice. “Instead of becoming more efficient, they’re merely transferring their existing inefficiencies to a new location – a practice known among IT experts as‘lift and shift’.”

The research found that companies that have mastered the art of migration to the public cloud take a disciplined approach to “rightsizing” their workloads.  They view migration as an opportunity to do a thorough assessment of computing and storage practices across the company, which often reveals a great deal of fragmentation and duplication, with workloads scattered across machines and data centers. Records can be incomplete and outdated. Some companies discover “zombie servers,” computers that are no longer needed but which have never been purged or deactivated.  Bain’s experience shows “rightsizing” can cut costs by as much as 30-60 percent when they migrate their workloads to the public cloud.   

According to Bain, companies that rightsize the right way take two key actions in advance of migrating their workloads:

1)      Carefully assess usage patterns.   This includes studying the intensity and duration of average peak computing demand, so that they can make informed decisions about downsizing server capacity and accommodating some of that excess demand with burstable instances.  They also evaluate storage patterns, evaluating average and peak memory usage and proximity to the server so they can more effectively downsize. Finally, they aim to rationalize the number of core processors they need so they can optimize spending on software licensing fees that are tied to processor counts.

2)      Recognize that migration doesn’t treat all workloads equally. Companies are likely to save more when they migrate non-production workloads to the public cloud than when they migrate production workloads. That’s because the computing usage in non-production workloads tends to be more volatile and thus more likely to benefit from the flexibility the public cloud provides. In addition, companies can usually achieve greater savings migrating non-virtualized workloads compared with virtualized workloads, as virtualization offers many of the same benefits the public cloud provides in terms of more efficient utilization and improved flexibility.

Rightsizing creates opportunities for vendors as well. Customers are increasingly able to put in place a cloud transition roadmap that identifies and eliminates unused capacity in their on-premises environment.  This creates a headwind for technology vendors, since rightsizing reduces demand for their systems and software.  It also presents an opportunity for those vendors that are well-positioned to help their customers face the enormous challenge of managing in a hybrid environment, with a mix of cloud and on-premise technologies.

“The results of our analysis demonstrate that migration to the public cloud doesn't have to be disappointing,” said Mr. Brinda.  “The public cloud offers great benefits to companies trying to keep pace with digital innovation, but they first need to do the requisite work and assessments before they migrate their workloads.  Those that rightsize stand to reap all these benefits of the public cloud and actually save money in the process.”

Editor's Note: To arrange an interview, contact Dan Pinkney at dan.pinkney@bain.com or +1 646 562 8102

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