Cloud rationalization: the best of cloud adoption framework

Angelika Agapow
Angelika Agapow
Content Marketing Specialist
September 12
10 min
Table of Contents

Cloud migration is often seen as a magic solution for businesses, offering cost savings, quick implementation, and scalability. However, simply transferring everything to the cloud is not enough. A well-planned strategy is important to ensure a successful transition with desired outcomes.

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What is cloud rationalization?

Cloud rationalization is a great part of digital transformation and plays a key role in the migration and modernization of assets in the cloud.

By evaluating assets, businesses can determine the most effective approach for each asset. Cloud adoption plans turn aspirations into actionable steps, often stemming from a business case that includes financial, technical, and outcome-related considerations.

Cloud rationalization is closely aligned with the overarching cloud adoption strategy, ensuring that assets are migrated or modernized in the most beneficial way possible.


How to: 5 steps of cloud rationalization

Discovering and rationalizing your digital estate in the cloud can be broken down into five key steps: discovery, tracking, analysis, dependency mapping, and reporting. With a range of options available, it’s important to choose the right tooling for your needs.

By completing this analysis, you’ll gain a clear understanding of your targets, challenges, resources, and costs, allowing you to make informed rationalization decisions.

Before diving into the analysis, it’s significant to establish your motives and expected business outcomes. These factors will guide your digital transformation program and cloud adoption plan. Your chosen strategy, particularly within the realm of cloud adoption, is a vital component of this process.


Step 1: Discovering

Your organization’s success hinges on effectively managing your digital estate. But where do you start?

Begin by taking stock of your virtual machines (VMs), servers, applications, and data. How you measure your digital estate depends on your desired business outcomes.

Are you looking to optimize costs, streamline operational processes, or enhance agility? Focus on VMs, servers, and workloads. Do you want to prioritize customer-centric transformations?

Pay attention to applications, APIs, and transactional data. Or are you focused on launching new products or services? Start by building a solid foundation of data.

Don’t forget about operational stability. To prioritize business continuity, disaster recovery, and workload reliability, factor in your operational stability goals.

To successfully navigate this complex process, it’s important to have a clear cloud strategy in place. By understanding your most important transformation goals, digital estate planning becomes a piece of cheese.

Remember, an inventory is an ongoing process. Regular validation by stakeholders and power users ensures its accuracy and usefulness. Once complete, your inventory provides an insightful overview of your current digital estate and all the assets your organization owns. Whether it’s a CMDB database (Configuration Management database), IT spreadsheets, or architecture diagrams, we’ll help you present your inventory in a way that suits your preferences.


Step 2: Tracking

When it comes to making rationalization decisions based on your inventory, the first step is to narrow down your options. By eliminating certain choices early on, you can make an initial decision about the future state of your asset more easily. Not only does this streamline the process, but it also means you won’t overwhelm your business with too many questions at this early stage.

Factors such as application makeup, compatibility, and end-of-support play a role in this selection process. For instance, if you have a monolithic application that is no longer supported by the vendor, options like “rebuild” or “rearchitect” may not be viable.

Similarly, if you have a workload running on a legacy operating system with no security updates or support available, choosing the “rehost” option wouldn’t be suitable.

If you have a business-critical application that has recently undergone extensive customization to support specific business models and processes, you won’t use the “replace” option.

Ideally, you want to narrow down your rationalization options to just two choices that require further investigation and analysis. For example, if it’s between rehosting and replacing, the only question your business needs to answer initially is whether to replace the asset.


Step 3: Analysing

In this step, you need to thoroughly analyze both the quantitative and qualitative factors to make a well-informed rationalization decision. Along with these factors, we also consider the forecast of workload or application, cost optimization, and available license offers. This analysis will result in determining the remaining rationalization options and assessing their potential outcomes.

To make the right choice, you need to understand how it aligns with the motivations behind cloud adoption and whether it will achieve the desired business outcomes. It’s also important to distinguish between the qualitative and quantitative factors and understand their implications.

You also have to consider the expected costs involved, including the initial investment required and the projected total cost of ownership over a specific period. This analysis requires both a quantitative examination through metrics and data, as well as qualitative research involving discussions with business and application owners to understand usage patterns and expectations.

Cloud application development consulting services

Utilizing monitoring tools, such as Azure Migrate, can greatly assist in this analysis process and provide recommendations for possible optimizations based on the rationalization options. To calculate the necessary investments, you can make use of Azure Pricing Calculator.

Learn why Fortune 500 companies bet on Azure 


Step 4: Dependency mapping

To ensure smooth progress, the next step involves addressing dependencies and resolving any potential issues. These dependencies can be found in different areas, including:

  1. Multi-tier applications: A solution may consist of a front-tier (web), middle-tier (processing), and back-end (database). The migration or implementation method and sequence will depend on rationalization options.
  2. System integrations: Applications or workloads that integrate with each other to enable business processes.
  3. Other dependencies: This includes factors like connectivity.


Identifying these dependencies relies on thorough analysis, inventories, and discussions with business and application owners.

Mitigation strategies may involve a series of migration and modernization actions, a collaborative migration and/or modernization approach, or a two-stage process where rehosting is done first followed by modernization.


Step 5: Reporting

In order to effectively make informed decisions regarding cloud rationalization, you should compile and present reliable reports to the decision-making body. When considering multiple scenarios for an application or workload, these options should be compared side by side. By documenting the advantages, disadvantages, expected outcomes, and differences of each option, a decision can be reached.


The 5 Rs of cloud rationalization

Cloud rationalization is the systematic evaluation of assets to determine their optimal migration or modernization in the cloud.

The five Rs of rationalization provide a useful framework for envisioning the future state of any workload being considered for the cloud.

At the beginning of your cloud migration journey, it’s significant to review the fundamentals and ensure you have a solid plan in place.

Slow and steady wins the race: A gradual approach to cloud migration



A rehost effort, also referred to as a lift and shift migration, refers to the process of moving an existing asset to a chosen cloud provider while making minimal changes to the overall architecture. There are several common drivers for this type of migration, including the desire to reduce capital expenses, free up datacenter space, and achieve a quick return on investment in the cloud.

When conducting a rehost effort, it is important to consider quantitative analysis factors such as the size of the virtual machine (CPU, memory, and storage), dependencies (such as network traffic), and asset compatibility.

Qualitative analysis factors should also be taken into account. These include tolerance for change, business priorities, and critical business events.



Reduce operational costs and unlock new business opportunities with Platform as a Service (PaaS). Refactoring your application to fit a PaaS-based model in general can lead to faster updates, code portability, greater cloud efficiency, and more effective managed operations. When considering PaaS options, it is important to conduct both quantitative and qualitative analysis.

Quantitative factors to consider include application asset size, dependencies, user traffic, development platforms such as languages, and database specifications.

Qualitative factors to consider continued business investments, bursting options or timelines, and business process dependencies.

By leveraging PaaS, you can optimize your application’s performance, streamline resource utilization, and drive cost savings.



Don’t let aging applications hold you back from harnessing the power of cloud providers. If your applications are not compatible with cloud providers, it could be due to the architectural decisions made during their development. In these cases, a rearchitecture may be necessary before transformation can occur.

However, even if your applications are cloud-compatible, there’s still an opportunity to minimize cost and maximize operational efficiencies by rearchitecting them into cloud-native solutions. This can be especially beneficial for improving application scale or agility, and adopting new cloud capabilities. It also allows for a seamless integration of various technology stacks.

Quantitative analysis factors such as application asset size (like CPU, memory, and storage), dependencies (like network traffic), user traffic (including metrics like page views, time on page, and load times), development platforms (including languages, data platforms, and middle tier services), and database details (CPU, memory, storage, and version) are essential in determining the feasibility of rearchitecting.

Additionally, qualitative analysis factors like business growth potential, operational costs, and the potential for feedback loops and investments in DevOps should also be considered.



When the gap between an application’s current state and desired state becomes too large, it may no longer be worth investing in. This is especially true for applications that no longer align with the business processes. To address this, it is recommended to create a new code base that follows a cloud-native approach.

Some common reasons for making this change include speeding up innovation, faster application development, and reducing operational costs.

When conducting an analysis, quantitative factors to consider include the size of application assets, dependencies, and user traffic. Other factors to consider are the development platforms that are used and the database.

Qualitative factors to consider include declining end-user satisfaction, limitations of the current application in supporting business processes, and the potential for cost, experience, or revenue gains.



Efficient and effective solutions are important for success in any industry. When implementing these solutions, it is important to use the best technology and approach available at the time. One option that can provide all the necessary functionality is software as a service (SaaS) applications. By utilizing SaaS, future replacements can be scheduled, streamlining the transformation process.

There are several common drivers for implementing solutions: standardizing around industry best practices, accelerating the adoption of business process-driven approaches, and reallocating development investments into applications that create a competitive edge.

To analyze the effectiveness of these solutions, both quantitative and qualitative factors must be considered. Quantitative analysis involves assessing general operating cost reductions, as well as evaluating factors such as VM size, dependencies, assets to be retired, and database specifications.

On the other hand, qualitative analysis involves conducting a cost-benefit analysis of the current architecture compared to a SaaS solution, reviewing business process maps, evaluating data schemas, and considering custom or automated processes.

By carefully reviewing and considering these factors, businesses can ensure they are making the most informed decisions when implementing solutions.


What should you consider before cloud rationalization?

Start your cloud migration planning with an open discussion between IT and the business.

Read about 6 cloud migration strategies you should know


Legal considerations are on the top

You must comply with any legal, state, or international regulations, so find a certified provider who can ensure your data remains compliant.


Availability is a major factor

While the idea of 99.999% availability may be appealing, consider the cost and risk of downtime. Are you comfortable with the fact that control of availability, especially for critical applications will be left to someone else?


Tech part makes the job

Consider technical factors such as infrastructure constraints, legacy operating systems, unique hardware requirements, and application complexity. Does the app have latency sensitivity or hardcoded IP addresses?


Don’t overlook project constraints

Assess migration costs, the need for team retraining, and ongoing costs. Remember to consider intangibles like labor, quality of service, performance, and flexibility. The total cost of operations must be taken into account.



You can determine if your app is suitable for a public or private cloud, or if it should remain in a legacy environment. From there, you can create an effective migration plan. Remember, there is no one-size-fits-all solution – your cloud operating model may involve a combination of public cloud, private cloud, and traditional IT environments.

Angelika Agapow
Angelika Agapow
Content Marketing Specialist
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