AWS Cloud Financial Management
How do I manage costs during large scale migrations?
After helping organizations from multiple industries and geographies succeed on their cloud adoption journey, we identified a direct correlation between the lack of mechanisms for cost management with behind plan and stalled migrations. In general, when customers are forced to slow down their migration, there is a significant impact on their expected return of investment (ROI) due to the effort of maintaining both environments simultaneously for a longer period. The solution is to incorporate Cloud Financial Management (CFM) principles during the migration journey. This article will provide three best practices we observe successful companies do when running a large scale migration and modernization initiative.
Getting started with your migration
There are numerous business drivers for companies to migrate workloads to AWS. Reducing costs by only paying for what is needed is a popular choice, as well as improving business agility and staff productivity by adopting new technologies and ways of working, moving faster and transforming customer experiences, modernizing enterprise core applications, and expanding to different regions.
At AWS we divide the migration and modernization journey in three phases:
1. Assess. This is where your company will build the case for change. The assess phase is where your organization’s current readiness for operating in the cloud will be evaluated by analyzing the six dimensions of the AWS Cloud Adoption Framework (CAF): business, process, people, platform, operations, and security. Organizations should be able to identify the desired business outcomes and develop a migration business case during this phase.
2. Mobilize. This where your company will build readiness through experiences. As part of this phase, your company will create a migration plan and refine the initial business case. It will also address gaps in the organization’s readiness that were uncovered in the assess phase, with a focus on building a baseline environment (Landing Zone), driving operational readiness, and developing cloud skills.
3. Migrate & Modernize. This is where your company will accelerate transformation at scale. During this phase each application is designed, migrated, and validated. For many applications, the best approach is to rapidly move to cloud and then rearchitect in AWS. You can use AWS Application Migration Service (MGN) to quickly lift and shift (rehost) a large number of servers from physical, virtual, or cloud infrastructure to AWS.
The most common issues we observe during migrations that result in increased costs are: missing or ineffective customer executive sponsorship, lack of migration success metrics, and finally, unclear ownership for cloud cost management.
How to start managing costs during large scale migrations
1. Define migration metrics | Assess phase
Defining success metrics gives your company the ability to better control costs as the migration progresses. It also enables your organization to discuss these metrics across different teams and perspectives, resulting in a more aligned mission. Some success metric examples include:
- Cost and Productivity – % IT infrastructure spend from annual revenue, $ per user/transactions, # VMs/TBs managed per admin
- General Performance – % programs achieved estimated ROI, # hours to prepare IT resources, average customer/employee satisfaction
- Resiliency and Security – % critical application availability, # hours of unplanned downtime, mean time to detect and resolve
- Business Agility – Avg. time to market, # of production releases without issues, Avg. number of new deployments)
How to define success metrics?
1. What are the existing metrics monitored by your organization? This is an essential question to answer if your organization is looking to compare cost and performance before and after the migration.
2. Which value pillars are more relevant to your business? AWS Cloud Value Framework (CVF) recommends 4 areas: cost reduction, staff productivity, operational resilience, and business agility.
3. Who are the executive sponsors? Identify the leaders that will be most impacted with this migration. If unforeseen events occur, identify who will secure resources and funding to keep the project on track.
4. What is the required effort and cost to track these metrics? Evaluate tooling options and dashboard formats. Define the desired granularity and frequency to review these metrics.
📖 Measuring the success of your transformation
💡 Crafting a robust metrics strategy to quantify your benefits from the cloud
2. Improve migration cost visibility and predictability | Mobilize phase
There are several moving parts during large scale migrations and it’s important to not undermine the foundational steps that are required for a proper cost management environment. The AWS Migration Acceleration Program (MAP) offers funding for customers that are migrating to AWS and it requires them to tag their workloads accordingly. This is a good opportunity to also define a broader cost allocation strategy and monitor how teams are migrating their applications.
Work with the finance teams to transform the migration business case into a migration budget plan by leveraging AWS Budgets; we recommend to document assumptions and update them along the journey. Make sure these numbers are visible across your company by creating custom dashboards (eg., Cloud Intelligence KPI Dashboard), especially between team leaders and executive sponsors. As the first migration waves start, document the cost variations and experiment creating a driver-based forecast using the upcoming migration waves. Some customers find it helpful to classify the applications into multiple T-shirt sizes (eg., small, medium, and large) to facilitate the operationalization of the cloud cost forecasting process. We also recommend enabling the AWS Cost Anomaly Detection to avoid cost surprises and enhance control without slowing your migration.
3. Optimize earlier to maximize ROI and save time | Migrate & Modernize phase
Migrations are a great exercise to evaluate how well your company is utilizing its resources. During the application discovery and migration business case (Assess phase) your organization has gathered critical information about CPU and Memory utilization from several applications during a defined period of time—we recommend at least 2 weeks of data to capture peaks and valleys of performance.
Make sure your company is leveraging this data to rightsize resources in the cloud at the first time. For compute, we recommend exploring Graviton and Burstable instances to maximize savings and performance. For storage, check if the most recent storage class for EBS (GP3) is being utilized since it provides a better cost/performance and implement storage lifecycle policies at your S3 buckets.
In order to leverage the full capabilities of AWS, your organization will need to modernize its applications. Consider the AWS-managed database options like RDS, Aurora, Redshift, and DynamoDB and maximize your return. If it’s too complex or there are time constraints, lift and shift first, but have a clear path defined with the organization to modernize afterwards. Programs like the AWS Database Freedom can assist your company during that exercise by providing technical advice, migration support, and financial assistance.
Once workloads are migrated and performance testing is completed, communicate with the CFM leader to acquire Savings Plans or Reserved Instances and pay less for always-on workloads.
🔖 Watch our CFM Talks webinar: Savings Plans and Reserved Instances – What purchase strategy is right for you?
Whether you are just starting your migration and are looking for migration discovery tools, or are well underway on your migration and modernization process, AWS has a set of solutions to help transform and meet business objectives with cost transparency, control, forecasting, and optimization throughout your migration journey.