Saugatuck Technology Releases First-ever Cloud Workload Cost Analysis Report

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Realistic modeling enables IT workload comparison and assessment for on-premises vs. Cloud

Saugatuck research has shown again and again that moving some workloads to Cloud is simply not the most cost-effective use of Cloud, or the most cost–efficient means of managing IT resources.

While Total Cost of Ownership (TCO) models are relevant and useful in organizing and managing an enterprise Cloud presence, too many TCO models overlook or underestimate Cloud’s true, core costs at the enterprise workload level. Widespread “workload ignorance” thus leads to under-estimating enterprise Cloud costs, over-spending on Cloud services, increasing the actual costs of using and managing IT resources, and reducing the effectiveness of IT resources and departments.

The latest strategic research report from Saugatuck Technology, Understanding Cloud Infrastructure Costs: Navigating for Savings, presents a carefully detailed model and approach for IT leaders and managers to use in assessing the suitability and costs of various workloads for Cloud. The report uses Saugatuck’s real-world, enterprise IT research and analysis to examine and explain how the costs of Cloud IT resource use differ by workload, and to ascertain the impact of that on Cloud TCO, by comparing combinations of workload type, size, IT operating efficiencies, and Cloud provider.

Depending on the mix of these variables, the report shows that companies running smaller-sized workloads can regularly save 6 percent to 70 percent using “Public” Cloud, companies running medium-sized workloads can save 10 percent to 35 percent using a “hybrid” Cloud, and companies running larger-sized workloads can save 5 percent to 20 percent using a “Private” or dedicated Cloud – relative to the costs of running the same workloads in-house. At the same time, companies that already have highly optimized IT environments should not assume that a move to Cloud will deliver significant infrastructure savings.

“One of the challenges in effective Cloud IT management is identifying and understanding the model’s core components,” says the study’s lead author, Saugatuck VP Charlie Burns. “An important area of consideration when evaluating the TCO of any Cloud IT infrastructure is how it compares to the efficiency and optimization of relevant, traditional IT infrastructure. While significant savings are achievable, we caution companies to deeply understand their workloads – as the savings very much depend on the pre-existing level of resource utilization and levels of optimization,” concludes Burns.

“IT leaders and managers tend to look at Cloud as a source of lower-cost IT resources, especially computing-related resources. They too often consider Cloud to have a lower TCO than most traditional systems, regardless of the workload being moved to and executed via Cloud,” adds Saugatuck SVP and Head of Research, Bruce Guptill – who contributed to the report. “Saugatuck research has shown again and again that moving some workloads to Cloud is simply not the most cost-effective use of Cloud, or the most cost–efficient means of managing IT resources.”

The 15-page research report, Understanding Cloud Infrastructure Costs: Navigating for Savings, is available immediately via Saugatuck’s website. Ongoing subscribers to Saugatuck’s Continuous Research Services (CRS) can download the report after signing in to their accounts at Non-subscribers can purchase the report at

About Saugatuck Technology
Saugatuck Technology, Inc. provides subscription research and management consulting services focused on the key market trends and disruptive technologies driving change in enterprise IT, including Cloud Business Solutions and Infrastructure, Social Computing, Mobility and Advanced Analytics, key contributors to the emerging Boundary-free Enterprise™. Founded in 1999, Saugatuck is headquartered in Westport, CT, with offices in Santa Clara, CA and in Wiesbaden, Germany. For more information, please visit or call +1.203.454.3900.

To request a briefing with our analysts, contact: chris(dot)macgregor(at)saugatucktechnology(dot)com.

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Chris MacGregor
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