Unlock Cloud Savings, A Rehost Migration Playbook (Part 3: Mobilize – Understand and Control Cloud Spend)

This blog post is the third in a four-part series to provide you with a step-by-step guide on how to optimize costs throughout an AWS Rehost migration, specifically:

1. Exploring your cost components and on-premises environment.
2. Building an accurate business case during the assess phase.
3. Understanding and controlling cloud spend during the mobilize phase.
4. Optimizing costs to realize the planned financial savings during the migrate phase.

Figure 1. Rehost Migration Cost Activity Overview by Phase

During the mobilize phase of your Rehost migration we need to understand the concept of the “migration double bubble,” and the tools and mechanisms available for reducing this “bubble,” so that we can control costs and eliminate unnecessary spend during migration.

1. Define the “migration double bubble”

As you transition workloads to AWS in your Rehost migration, it is common to experience a temporary spike in your cloud spend – often referred to as the “migration double bubble.” The “bubble” is formed when your total costs exceed your cost baseline during your organization’s large-scale migration, and return to the baseline once cost optimization measures are implemented.
Figure 2 is a graph of migration of IT spend throughout the plan, migrate, and optimize phases and depicts the migration double bubble.

Figure 2: The Migration Double Bubble

1.1. Bubble graph components

• For migration planning your organization will be in the AWS Assess and Mobilize phases. This involves building your business case, assessing your organization’s readiness for cloud transformation, and confirming stakeholders are aligned. These activities typically require AWS migration consulting services and upskilling your organization in cloud with training. These costs increase Actual Cost and create a positive divergence of the Actual Cost and Cost Baseline values.
•  For migrate your organization will be in the AWS Migrate and modernize phase. The Actual Cost will increase further due to migration tools, migration transfer costs, temporary duplicative on-premises and cloud environments, legacy infrastructure leasing penalties, and migration consulting services. The divergence between Actual Cost and the Cost Baseline peaks during the migration execution. However, as the core migration activities conclude, the resource head-count is reduced and the on-premises environments are decommissioned. The Actual Cost reduces and the divergence begins to decrease.
• For optimize your organization will still be in the AWS Migrate and modernize phase. As we begin optimize, the Actual Cost is approximately equal to the On-premises Cost Baseline. This is because you have migrated the workloads, but we still need to apply a majority of cost optimizations. Your remaining migration project team is now focused on optimizing the workloads. These cost optimizations decrease Actual Cost to create a negative divergence from the Cost Baseline value. These actions will achieve the Cost Savings value defined in your business case and cost saving objective.

2. Reduce the “bubble” to a “blip”

With an understanding of the “migration double bubble” we will explore mechanisms to be employed during the mobilize phase so this “bubble” is controlled and minimized during the migration.

2.1. Cost allocation model

Cost Model Icon

Your cloud cost allocation model provides a relationship between costs from AWS spend, how the costs are incurred, and who or what resources incurred the costs. A strategy is necessary so costs are accurately accounted for and charged back to the correct business units within your organization.
There are numerous well-documented cost allocation strategies, and we will discuss two: Account-based costing, and Tag-based costing in the context of your Rehost migration.

2.1.1. Account-based costing

An account is the default means by which AWS costs are allocated. Thus, using different accounts for different business units and groups enables tracking costs by business function without additional overhead. Additionally, an account acts as an identity and access management isolation boundary, providing segmentation between workloads with different access, security, and compliance requirements.
Figure 3 is an example of account-based costing by business unit.

Figure 3: Account-based Costing Example

In Figure 3 we have three accounts, one for each department: Sales, Human Resources, and Information Technology. The servers owned by each department have been migrated from on-premises to Amazon EC2 instances. The financial analyst of each department can analyze spend within their respective account using AWS Cost Explorer.

2.1.2. Tag-based costing

Tags are key value pairs that act as a metadata for organizing AWS resources. Custom tags can be used to create business relevant tags to organize the resources by various dimensions. For the scope of this blog we discuss tagging as a tool for tracking cost as part of your larger cost allocation strategy in your Rehost migration. However, ensure your tagging strategy and taxonomy is comprehensive enough to address organization of resources for technical, business, or security needs.
Financial tracking is performed in AWS by using cost allocation tags. A tag-based strategy will likely entail a mix of AWS-generated and User-defined cost allocation tags to accurately track your organization’s cloud spend. Furthermore, every cost accruing resource in AWS can be tagged, making tag-based costing a powerful mechanism in your cost allocation strategy.
A common approach is to tag resources based on an internal cost center value. Figure 4 is an example of this tag-based costing using a User-defined cost allocation tag.

Figure 4: Tag-based Costing Example

In Figure 4 we have an organization with accounts for each environment, Development, Test, and Production. The servers have been migrated from on-premises to EC2 instances within the respective accounts based on environment, and each EC2 instance contains a key of CostCenter. There are three distinct cost centers, and therefore three possible values for the CostCenter key, 001, 002, and 003. Each cost center has EC2 instances in various accounts.
The organization has a separate account that manages and governs the other accounts via AWS Organizations. From this Management account the cost allocation tags enable resources to be sorted and filtered on the CostCenter tag and tag values in AWS Cost Explorer and detailed billing reports. The tags can also be managed and edited using AWS Tag Editor.

2.1.3. Defining your cost allocation model

Most cost allocation strategies are a blend of several cost models, tailored to the organization’s financial operational structure and accounting needs. Collaborate with your organization’s Financial Operations (FinOps) team to define a model for your organization during mobilize so financial guardrails and reporting is in place before the migrations begin.

2.2. Migration Hygiene

Migration Hygiene Icon

Two cost efficiencies are executed in the post-migration steps following each migration cutover. Cleaning up AWS MGN resources within your AWS environment and deleting on-premises environments minimize unnecessary spend and contribute to good hygiene.

2.2.1. Clean-up of MGN Resources

The AWS MGN User Guide provides prescriptive guidance of the service. The following “clean-up” items are to serve as reminders of cost-saving items for inclusion in your organization’s migration runbook.

• Terminate Migration Servers: AWS MGN creates replication servers during the migration process. Terminate these EC2 instances as part of post-migration
• Delete EBS Volumes and Snapshots: During replication, AWS MGN creates Amazon EBS snapshots of your source servers. After confirming the migration’s success and determining that rollback is no longer necessary, delete these EBS volumes and snapshots to optimize storage costs.

2.2.2. Deletion of On-Premises Servers

VM “deletion” is often independent of “decommissioning.” Deletion refers to removing the VM’s configuration and disk files from the virtualized datastore; Whereas decommission refers to removing the asset from the organization’s configuration management database (CMDB).

• Delete the on-premises virtual machines (VMs): After completing the migration cutover, plan to delete your on-premises virtual machines (VMs). Set a deletion policy that aligns with your post-migration rollback window, expressed in days. This ensures you maintain the ability to roll back if needed, while also cleaning up unnecessary resources.
• Delete on-premises backups: Deletion of an on-premises VM generally does not trigger deletion of any external backup files of the VM, especially if the backup store is a separate solution or repository. Thus, any virtualized backups will also need to be deleted post-cutover.

Caution: Only delete on-premises data after the migration rollback period has expired. This data is crucial for rollback during testing and validation.

2.3. Acceleration and Cost Saving Programs

Migration Accelerate Icon

AWS and AWS Partners offer numerous mechanisms for acceleration and cost savings for consideration during your mobilize phase. Several offerings applicable to Rehost migrations are as follows:

• AWS Migration Acceleration Program: The AWS Migration Acceleration Program (MAP) is a comprehensive, proven framework designed to help organizations migrate to AWS efficiently and effectively. It offers a structured approach to cloud migration, providing best practices, tools, and resources to streamline the process.
• AWS Savings Plans: AWS EC2 Instance Savings Plans provide the lowest prices, offering savings up to 72% in exchange for commitment to usage of individual instance families in a region.
• Purchase and Lease-back Programs: AWS Partners help customers optimize costs during cloud migration by managing existing data center investments. This includes using third-party providers in purchase/lease-back programs, where the provider assesses your current on-premises IT assets (servers, storage, networking) and offers to purchase them at fair market value, allowing you to lease them back for the migration. Afterward, the provider securely disposes of the hardware. These partners specialize in IT asset disposition (ITAD), helping reduce operational costs and speed up migration to AWS. To explore ITAD services, visit the AWS Marketplace.

3. Conclusion

In this blog post we continued our Rehost migration cost optimization journey during the mobilize phase by: 1. Defining the “migration double bubble” and exploring the tools and mechanisms available to 2. Reduce the “bubble” to a “blip.” Specifically, these include, 2.1 Cost allocation models, 2.2 Migration hygiene, and 2.3 Acceleration and cost saving programs.

Blog Series

Every two weeks the next blog post in the series will be released with direct links added as follows:

• Part 1: Assess – Explore Cost Components
• Part 2: Assess – Build a Business Case
• Part 3: Mobilize – Understand and Control Cloud Spend
• Part 4: Migrate – Realizing Planned Savings

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