Cutting cloud costs with VM rightsizing

Putting in the extra work upfront to find the right virtual machine (VM) size for your environment can deliver significant savings in the long run.  

You’ve done your research and determined that your business is ready to move to the cloud. You plug your workloads into a cost calculator—and the estimate causes you to reconsider. Sound familiar?

Companies sometimes shy away from moving their data and resources to the cloud because of cost. In our “Cloud on a budget” blog post series, we break down a few tried-and-true strategies for cloud cost optimization. Let’s start with VM rightsizing. 

What is VM rightsizing?

VM rightsizing is the process of optimizing cloud resources to provide sufficient performance levels while keeping costs low. Simply stated, you’re reviewing deployed servers to look for opportunities to downsize and lower cloud costs while preserving the capacity you need to run your business smoothly. 

How much could you save? A real-world example

Rightsizing your VMs in the cloud can deliver significant savings. Consider the following scenario:

You have 20 VMs on-premise. Each has 32GB of RAM—you purposely overbuilt these. Your physical server has 1TB of RAM providing nearly unlimited RAM for your company size.

The chart below provides a sample of virtual machine pricing from a leading cloud computing provider. 

Cost without rightsizing

20 x $3,360 = $67,200/year

Cost with rightsizing

After a rightsizing exercise, you determine that you only need 8GB of RAM.

20 x $840 = $16,800/year  

Potential Savings

$67,200 – $16,800 = $50,400/year

A shift in thinking

When comparing cloud costs with the cost of an on-premise environment, it’s helpful to acknowledge the inherent difference in strategy.  

• On-premise. When a company makes a capital investment in server hardware, they typically buy more server density than they need so that they don’t have to worry about it again. Oversized servers support processing speeds that make everyone happy as they embrace nearly unlimited resources with few consequences.
• In the cloud. Moving an oversized server to the cloud as is would be unnecessarily expensive. While you save the expense of buying and maintaining physical servers, you do pay for the cloud resources you allocate. For this reason, cost precision becomes a top priority. Rightsizing enables you to set up a virtual server sized for the company’s actual needs.

How do you rightsize?

The most difficult task in rightsizing is striking a balance between cost savings and preserving performance and user experience. To get started:

1. Gather performance logs. You can use historical data or capture live performance. Either way, be sure to include performance during your most resource-intensive times. Depending on your business, this could be quarter-end, year-end, or some other event that increases resource demands.
2. Analyze resource trends. Include CPU, memory, and disk data. Beware of over-simplifying this analysis—average usage may not cover busier periods, while maximum usage may be bigger than you need due to outlier peaks. The right size will lie somewhere in between the average and the maximum.

Measure twice, cut once

Before dismissing the cloud as cost-prohibitive, remember that moving to the cloud also requires a shift in thinking when it comes to cost strategy. Putting in the extra work upfront to find the right VM size for your environment can deliver significant savings in the long run.

Looking for a cloud provider?

Need more guidance on rightsizing? The complex analysis and nuance required for rightsizing can be a daunting task on your own. Our Sphere Advantage Rightsize can help you determine the most accurate VM size for your environment. With SEI Sphere as your cloud partner, our cloud specialists will perform this analysis and find the balance of cost and performance for you. Contact us to learn more.