Covers building the business for moving to AWS. Offers tips, tricks, and general guidance for optimizing costs while using AWS.

1. Building [And Realizing] The
Economic Case for AWS
Keith Jarrett
Business Development Manager
Cloud Economics

2. What to expect….
We will introduce our approach for
building the business case for
moving to the cloud and share tips
from some of our most innovative
customers who are able to
successfully architect for cost
optimization in order to realize the
economics of the AWS cloud.

3. In the Beginning . . .
There was TCO

4. What is TCO?
Definition: Comparative total cost of ownership analysis (acquisition
and operating costs) for running an infrastructure environment end-to-end
on-premises vs. AWS.
Used for:
1) Comparing the costs of running an entire infrastructure environment or
specific workload on premises or in a co-location facility versus on AWS
2) Budgeting and building the business case for moving to AWS

5. So how do we do it?
≠

6. TCO = Acquisition Costs + Operations Costs
Hardware – Server, Rack
Chassis PDUs, ToR
Switches (+Maintenance)
Software - OS,
Virtualization Licenses
(+Maintenance)
Facilities Cost
Hardware – Storage Disks,
SAN/FC Switches
Storage Admin costs
Network Hardware – LAN
Switches, Load Balancer
Bandwidth costs
Network Admin costs
Server Admin Virtualization Admin4
Diagram doesn’t include every cost item. E.g. software costs can include database, management, middle tier software costs.
Facilities cost can include costs associated with upgrades, maintenance, building security, taxes etc. IT labor costs can include
security admin and application admin costs.
Space Power Cooling
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling
Server Costs
Storage Costs
Network Costs
IT Labor Costs
1
2
3
illustrative

7. Resources to get you started
AWS TCO Calculator
https://awstcocalculator.com
Case Studies & Research
http://aws.amazon.com/economics/

8. So you’re feeling pretty good.

9. Until your CFO shows up with the bill.

10. Cost Optimization is…
Going from… To…
Pay for what you Use Pay for what you Need

11. Where do you start?

12. The Four Pillars of Cost Optimization
Right Sizing Reserved
Instances
Increase
Elasticity
Measure,
Monitor, &
Improve

13. Right Sizing
Right Sizing
• Selecting the cheapest instance available
while meeting performance requirements
• Looks at CPU, RAM, storage, and network
utilization to identify potential instances that
can be downsized
Rule of thumb: Right size, then reserve.
(But if you’re in a pinch, reserve first).

14. Reserved Instances
Step 1: RI Coverage
• Cover always on resources
Step 2: RI Utilization
• Leverage RI flexibility to increase utilization
Rule of thumb: Target 70-80% always on
coverage and 95% RI Utilization rate.

15. Increase Elasticity
Turn off non-production instances
• Look for dev/test, non-prod instances that are
running always-on and turn off
Autoscale Production
• Use Autoscaling to scale up and down based
on demand and usage (e.g. spikes)
Rule of thumb: Shoot for 20-30% of EC2
instances running on demand to be able to
handle elasticity needs.

16. Putting it all together: Case Study

17. Challenge:
Minimizing Unit Costs
under period of massive
growth.
A consistent measure of
CPU processing power
Elastic Compute Unit
(ECU)

18. The Growth Challenge
August 2014
August 2015
1,601 ECU
13,957 ECU
772%
YoY Compute Growth!
33%
DECREASE in
monthly EC2 costs!

19. Solving the Growth Challenge

20. Step 1: Right Size & Update Instances
m1 on demand
$0.07 per ECU
c4 on demand
$0.02 per ECU

21. The Impact of Right Sizing
70% Reduction
in Unit Cost

22. Step 2: Reserve

23. The Impact of Reservations
30% Reduction
in Unit Cost

24. Putting it together
85% Reduction
in Unit Cost!

25. Sounds pretty easy, right?
Not really.
In reality, it is very complex.
• Scale
• Behavioral Change
• Visibility
• Ownership

26. Cost Optimization Governance
(Remember the 4th Pillar?)

27. Uncovering the Cost Optimization Opportunities
1. Auto-tag resources
2. Identify ‘always on’ Non Prod
3. Identify instances to down-size
4. Recommend RIs to purchase
5. Dashboard our status
6. Report on savings

28. AWS Options

29. Reserved Instances and Right Sizing Options
(Build Your Own)

30. Example: Reasonably Optimization Dashboard

31. Laying the Groundwork for Success
Taking Action: Where to Start
• Tag instances to allocate costs by tag
and/or account
• Enable Detailed Billing Reports with
resource tags (DBR-rt)
• Set up CloudWatch metrics such as RAM
utilization for memory intensive workloads
• Set up metrics to measure elasticity, RI
coverage, RI utilization, and right-sizing.

32. Thank You!
Keith Jarrett
Business Development Manager
Cloud Economics

33. Appendix

34. And…A Dashboard Ripe with Opportunity

35. Right Sizing https://github.com/evancraw/AWSOptimizationTemplates

36. Analysts have shown AWS reduces cost over the long term
Source: IDC, Quantifying the Business Value of Amazon Web Services (May, 2015)

37. How do customers lower their TCO with AWS?
1
Replace up-front
capital expense with
low variable cost
2
51 Price
Reductions
Economies of scale
allow AWS to
continually lower costs
3
Pricing model choice
to support variable &
stable workloads
4
Save more money as
you grow bigger
On-Demand
Reserved
Spot
Tiered Pricing
Volume
Discounts