In Part 1 of our IT Cost Optimisation series, we highlighted how decluttering your digital estate by eliminating redundant software can free up significant resources. Now, it's time to turn our attention to another powerful lever for efficiency and savings: right-sizing.
What Is Right-Sizing?
Right-sizing is more than just cutting back; it’s the strategic process of precisely matching your IT resources (incl. assets) with actual requirements. Think of it as finding the “Goldilocks zone” for your digital estate: not too much, not too little, but just right to meet your requirements without unnecessary expense.
This approach applies across all facets of IT—from technology components to the processes that support them. To provide a relatable picture for the former, here are some common scenarios:
- Over-Licensed Software: An organisation assigns top-tier, feature-rich licences to users who only require basic functionalities.
- Idle or Over-Provisioned Compute: A cloud virtual machine runs 24/7 with excessive CPU and RAM despite consistently low utilisation.
- Storage Optimisation: Historical archives or old project files reside on expensive, high-performance cloud storage, and obsolete data is retained indefinitely.
Why Right-Sizing Is Essential for True Cost Optimisation
These examples highlight why right-sizing is a cornerstone of effective cost optimisation. By aligning your IT resources with demand, you eliminate wasteful spending and unlock meaningful value.
- Balancing Value with Requirements: Right-sizing ensures your IT resources are continuously aligned with actual business and technical needs. This approach guarantees maximum value delivery without overspending or constraints (e.g. underperformance).
- Maximising Resource Utilisation: By eliminating idle or over-provisioned IT resources, you ensure your technology investments are fully utilised. This not only reduces waste but also frees up budget and internal resources for more strategic, value-adding initiatives.
- Enabling Agility and Scalability: A leaner, right-sized digital estate is more agile. It allows your organisation to scale up or down in response to evolving needs—without overcommitting to unnecessary capacity.
The Crucial First Step: Unlocking True Understanding
Before you can right-size effectively, you need comprehensive visibility into what you’re actually using versus what you truly need. Without this foundational understanding, any attempts at right-sizing become guesswork, risking varying issues such as degraded performance, insufficient capacity or missed savings.
This initial phase is about collecting and analysing data to paint a clear picture. Leveraging stakeholder input, usage analytics, logging, and metrics to answer questions such as:
- Who uses what, and how often?
- What are the actual requirements and demands?
- How critical is the data, and how frequently is it accessed?
- What are the historical trends and future forecasts?
Practical Steps for Continuous Right-Sizing
With a clear understanding established, you can begin the process of right-sizing your IT resources. Use these practical steps to build a process that is integrated, repeatable, and aligned with your objectives:
- Monitoring: Implement robust monitoring and data collection. Continuously gather essential data such as performance metrics and activity logs over an extended period to capture usage patterns, including peaks and troughs.
- Identification & Prioritisation: Use your collected data and cost analysis tools to systematically pinpoint IT resources that are underutilised or misaligned with business objectives. Prioritise opportunities by focusing on assets with the highest potential for savings and the lowest risk of operational impact.
- Communications: Explain the benefits of right-sizing to all stakeholders and ensure to continuously seek direct input on requirements and proposed changes. Address concerns transparently and involve them in the data analysis. Buy-in from business units is crucial for success and ensures everyone understands the “why” behind the changes.
- Implementation & Testing: Before making any changes, establish a clear baseline of current requirements to use as a measurement for monitoring. For all IT resources, always perform testing and implement changes in a staged deployment, where viable. Changes should always be monitored closely throughout and following implementation, with a plan in place to revert to previous resource states, in the event of material impact to operations.
- Continuous Iteration: Your digital estate is dynamic, and right-sizing should be too. Embed a continuous or recurring procedure (quarterly, semi-annually, or automated) to review IT resource utilisation and identify new opportunities, ensuring your IT resources remains perfectly aligned with evolving needs.
Right-Sizing the Common Scenarios: Taking Action
Let’s revisit the common scenarios from the beginning and outline the actionable steps you can take.
Over-Licensed Software Scenario
Your organisation assigns top-tier, feature-rich licences to users who only require basic functionalities.
- Action: Adopt a tiered licensing model and downgrade these users to a more basic licence that meets their essential needs at a significantly lower cost.
- Benefit: A direct and immediate reduction in recurring software subscription costs.
Idle or Over-Provisioned Compute Scenario
A cloud virtual machine runs 24/7 with excessive CPU and RAM despite consistently low utilisation.
- Action: Resize the VM to a smaller, more appropriate instance type. For non-production environments, implement scheduling to shut them down during off-hours.
- Benefit: Substantial savings on compute costs by aligning resource allocation with actual usage.
Storage Optimisation Scenario
Historical archives or old project files reside on expensive, high-performance cloud storage, and obsolete data is retained indefinitely.
- Action: Implement lifecycle policies to move “cold” data to lower-cost tiers and remove obsolete files.
- Benefit: A significant reduction in storage expenses and improved data governance.
Proactive Right-Sizing: Learning from the Past
Right-sizing isn’t only reactive; it can—and should—be embedded upstream in procurement and planning.
For example, if your standard procurement process provides high-spec laptops to all employees regardless of their role, costs can quickly balloon. A proactive approach involves implementing a tiered hardware procurement strategy that matches specifications to role-specific requirements, leveraging user input and past analytics to inform the next procurement cycle.
Additionally, various technologies can be used to offset local hardware requirements by outsourcing various components to hosted services (e.g., a SaaS application or a Cloud PC) or by adopting modular physical technologies—resulting in reduced capital expenditure and increased flexibility for changing conditions.
The Pitfalls: What to Watch Out For
While the benefits of right-sizing are clear, the practice is not without challenges:
- Operational Impact: The greatest risk to operations is under-sizing. Cutting IT resources too aggressively can lead to bottlenecks, instability, and a negative user experience, ultimately costing more in lost productivity or user dissatisfaction.
- Data Voids: Attempting to right-size without comprehensive usage data leads to guesswork and increases the risk of mistakes.
- Incompatible Resources: Physical hardware and long-lifecycle digital assets complicate right-sizing efforts. Unlike virtual IT resources, you can’t easily scale down a physical server once it’s purchased.
- Fear of Change & Resistance: IT teams may hesitate due to past performance issues or a preference for “safe” over-provisioning. Users may resist perceived resource reductions.
- Over-Optimisation: Spending more time optimising a small, low-cost IT resource than the potential savings justify. The “cost of optimisation” should be less than the “benefit of optimisation.”
A Right-Sized Foundation: Cloud Technologies
While right-sizing is relevant to traditional on-premises environments, modern cloud technologies greatly enhance its benefits. Thanks to their flexible, pay-per-usage nature, cloud platforms make right-sizing more achievable and impactful. This is a key reason why organisations should always consider cloud technologies (e.g. IaaS and SaaS) when embarking on new digital initiatives.
Conclusion
Right-sizing is a fundamental pillar of modern IT cost optimisation. By committing to understanding actual requirements, making informed adjustments, and continuously monitoring and adapting your environment, you unlock significant savings and cultivate an agile, cost-effective digital estate ready for future demands.
The full potential of right-sizing is unlocked when paired with automation. Imagine systems that not only detect idle or underused IT resources but can adjust them automatically—or intelligent platforms that scale infrastructure up or down in real time based on demand. In our next article, we’ll explore how automation takes IT cost optimisation to the next level.
By continuously right-sizing your digital estate, you keep performance, cost, and capacity in sync with actual needs. This proactive approach enables your organisation to run efficiently today, while staying adaptable and resilient for whatever the future may hold.
