Win-Win: Tallying the Benefits of a Cloud Application Migration

GigaOm last week updated a benchmark report we had published in August titled, “Costs and Benefits of.NET Application Migration to the Cloud,” authored by GigaOm Analyst Ned Bellavance. That report detailed some of the dynamics and decision making behind a cloud application migration effort, and helped lay out the costs and value that IT organizations can expect from the investment.
On the benefits side of the equation, Bellavance in the report singled out a trio of benefits:

Increased productivity: Reduced admin overhead, improved operational efficiency, and speedier application and feature delivery are all cited here, as the unique scaling and service aspects of the cloud transform operational requirements.
Enhanced features: Deployment slots that provide discreet app versioning and resourcing, integration with GitHub, BitBucket, and Azure Repos to enable continuous deployment (CD), and distributed backup, recovery, and replication services are described.
Access to innovation: The ability to seamlessly test and leverage new platform and application features is a core value of cloud approaches.

The cost of achieving these benefits, of course, is the question. To answer it, Bellavance designed a series of benchmark tests to be run across three, largely equivalent, on-premises and cloud-based PaaS infrastructures:

On-Premises: Windows VMs running on VMware
Cloud: Microsoft Azure using Azure App Service and Azure SQL Database
Cloud: AWS using Elastic Beanstalk, EC2, and Amazon RDS

His findings? With the effective performance of the three options roughly on par, it became clear that the total cost of ownership (TCO) of an on-premises infrastructure was significantly higher than either of the cloud options. Bellavance found that the three-year cost of an on-premises application infrastructure was $69,300. The cost of hosts hardware ($20,000), Windows SQL licenses ($10,800), and VMware licenses and SnS ($10,500 apiece) were among the larger costs for an on-premises build out.
By contrast, Amazon AWS cost $44,237 over three years, with RDS Instance ($22,921) and EC2 Instances ($15,542) accounting for the majority of the cost. Microsoft Azure was less expensive still: $41,888 in total, with App Service ($20,288) and Azure SQL ($18,000) accounting for almost all the cost.
But this cost breakout bypasses an important advantage for Microsoft shops migrating applications from on-premises to the cloud. Specifically, Azure Hybrid Benefit (AHB) licensing reduces the cost of an Azure migration by enabling customers to apply their existing, on-premises Windows Server and SQL Server licenses to Azure virtual machines and Azure SQL Database instances. The impact can be large. Bellavance in his research found that AHB shaved more than $10,000 off the three-year budget, dropping the total cost from $41,888 to $31,088.
Migration Advice
The numbers certainly add up, and for Microsoft shops with existing on-premises licenses, the savings over moving to AWS can be significant. Of course, it takes a well-thought-out and sensible migration plan to ensure that those savings can be achieved at all. Bellavance in his report offers guidance for IT organizations considering a migration effort. He urges a four-stage approach:

Assessment: Categorize existing applications by revenue generation and cost to maintain. While there may be hundreds or thousands of applications to treat, consider working on applications according to a specific group — for example by department, application, or data type.
Prioritization: Identify applications that make good migration candidates, according to criteria such as existing cost of maintenance, risk of migration, and opportunity created — for example to unlock new functionality.
Evaluation: You can map application dependencies across data sources, services, and infrastructure to help identify group migration candidates.
Validation: Perform test migrations to validate functionality and performance, and to build experience around target environments, for example, in terms of what operational management dashboards are available.

A cloud app migration effort can pay big dividends, both in terms of cost savings and operational gains. Check out Bellavance’s in-depth benchmark report, “Costs and Benefits of.NET Application Migration to the Cloud,” for a detailed exploration of the opportunity.