Explore the financial considerations of owning and operating a traditional data center or managed hosting provider versus utilizing cloud infrastructure. This session will consider many cost factors which can be overlooked when comparing models, such as training, support contracts and software licensing. The presentation will additionally also cover as to how the TCO in an on-premise data center can become significantly higher when considering factors like scalability, flexibility & security when compared to a cloud platform. Learn how to further reduce your current costs on AWS and improve your spend predictability.

1. Kingsley Wood
Business Development Manager
Understanding the Total Cost of (Non) Ownership in the Cloud

2. Infrastructure-as-a-Service
Market Share Leader
Leader in 2011 Gartner
IaaS Magic Quadrant
Leader in 2011 Forrester
Hadoop Wave
What Analysts are Saying about AWS

3. Gartner Magic Quadrant for
Cloud Infrastructure as a Service
3

4. innovation

5. Powering the Most Popular Internet Businesses

6. Free steak
campaign
Facebook
page
Mars
exploration ops
Consumer
social app
Ticket pricing
optimization
SAP &
Sharepoint
Securities Trading
Data Archiving
Gene
sequencing
Marketing
web site
Interactive TV
apps
Financial
markets
analytics
R&D data
analysis
Consumer
social app
Big data
analytics
Web site &
media sharing
Disaster
recovery
Media
streaming
Web and
mobile apps
Streaming
webcasts
Facebook
app
Consumer
social app
Every Imaginable Use Case

7. Thriving Partner Ecosystem
Consulting Partners Technology Partners

9. Elastic On Demand
Pay as you go
Focus on
YOUR
business

10. 0
10
20
30
40
50
60
0 12 24 36
DatainTB
Months
Actual Storage
Incremental Adoption Savings

11. 0
10
20
30
40
50
60
0 12 24 36
DatainTB
Months
Actual Storage Provisioned
Incremental Adoption Savings

12. 0
10
20
30
40
50
60
0 12 24 36
DatainTB
Months
Actual Storage Provisioned
Incremental Adoption Savings

13. Traditional IT
capacity
Elastic capacity
Capacity
Time
Your IT needs

14. On and Off Fast Growth
Variable peaks Predictable peaks
Elastic capacity

15. Elastic capacity
On and Off Fast Growth
Predictable peaksVariable peaks
WASTE
CUSTOMER DISSATISFACTION

16. When you turn off your cloud resources, you
actually stop paying

17. Elastic cloud capacity
Traditional
IT capacity
Your IT needs
Time
Capacity
Elastic capacity

18. Elastic capacity
Fast GrowthOn and Off
Predictable peaksVariable peaks

22. Hardware, Software, Database, Network :
Procurement, Installation, Maintenance and
Administration Costs

23. Fixed Cost Factors One-time Upfront Monthly
AWS Co-lo On-Site AWS Co-lo On-Site
Server Hardware 0 $$$ $$ $$ 0 0
Network Hardware 0 $$ $$ 0 0 0
Hardware Maintenance 0 $$ $$ 0 0 0
Software OS 0 $$ $$ $ 0 0
Power and Cooling and Data
Center Efficiency
0 0 $$ 0 0 $
Data Center/co-lo Space 0 $$ $$ 0 0 0
Personnel (Administration) 0 $$ $$ $ $$ $$$
Storage and Redundancy 0 $$ $$ $ 0 0
Bandwidth $ $$ $ $$ $ $
Resource Management
Software
0 0 0 $$ $ 0
Total
Take all the costs in to consideration

24. Amazon Web Services provides
services and infrastructure to build
reliable, fault-tolerant, and highly
available systems in the cloud.
These qualities have been designed
into our services both by handling
such aspects without any special
action by you and by providing
features that must be used
explicitly and correctly.

25. “Just moving a system into the
cloud doesn’t make it fault-
tolerant or highly available. “
aws.amazon.com/architecture

27. Putting it all together

28. Building Block Flexibility

29. 256
128
64
32
16
8
4
2
1
1 2 4 8 16 32 64 128 256
High I/O 4XL 60.5 GB
35 EC2 Compute Units
16 virtual cores
2*1024 GB SSD-based local instance storage
EC2 Compute Units
Memory(GB)
Small 1.7 GB,
1 EC2 Compute Unit
1 virtual core
Micro 613 MB
Up to 2 ECUs (for
short bursts)
Large 7.5 GB
4 EC2 Compute Units
2 virtual cores
$0.32/0.46
Hi-Mem XL 17.1 GB
6.5 EC2 Compute Units
2 virtual cores
Hi-Mem 2XL 34.2 GB
13 EC2 Compute Units
4 virtual cores
Hi-Mem 4XL 68.4 GB
26 EC2 Compute Units
8 virtual cores
High-CPU Med 1.7 GB
5 EC2 Compute Units
2 virtual cores
High-CPU XL 7 GB
20 EC2 Compute Units
8 virtual cores
Medium 3.7 GB,
2 EC2 Compute Units
1 virtual core
M3 XL 15 GB
13 EC2 Compute Units
4 virtual cores
EBS storage only
M3 2XL 30 GB
26 EC2 Compute Units
8 virtual cores
EBS storage only
Extra Large 15 GB
8 EC2 Compute Units
4 virtual cores
10 GB
Inter-Instance
Network
Cluster GPU 4XL 22 GB
33.5 EC2 Compute Units,
2 x NVIDIA Tesla “Fermi”
M2050 GPUs
Cluster Compute 4XL 23 GB
33.5 EC2 Compute Units
Cluster Compute 8XL 60.5 GB
88 EC2 Compute Units
High Storage 8XL 117 GB
35 EC2 Compute Units,
24 * 2 TB ephemeral drives
10 GB Ethernet
Hi-Mem Cluster Compute 8XL 244 GB
88 EC2 Compute Units
16 virtual cores
240 GB SSD

30. Go Global in Minutes

31. Global
Infrastructure
Components
Regions
An independent collection of AWS resources in a defined
geography
A solid foundation for meeting location-dependent privacy
and compliance requirements
Availability Zones (AZ)
Designed as independent failure zones
Physically separated within a typical metropolitan region
Edge Locations
To deliver content to end users with lower latency
A global network of edge locations supports global DNS
infrastructure (Route53) and Cloud Front CDN

32. On a global footprint
9 Regions
US-WEST (Oregon) EU-WEST (Ireland)
ASIA PAC
(Tokyo)
ASIA PAC
(Singapore)
US-WEST (N. California)
SOUTH AMERICA (Sao
Paulo)
US-EAST (Virginia)
GOV CLOUD
ASIA PAC
(Sydney)

33. 25 Availability Zones
On a global footprint

34. US West Region (Oregon)
Availability
Zone A
Availability
Zone B
Singapore
Availability
Zone A
Availability
Zone B
EU West Region
Availability
Zone A
Availability
Zone C
Availability
Zone B
Each Region has multiple Availability Zones. Availability Zones are
distinct locations that are engineered to be insulated from failures in
other Availability Zones and provide inexpensive, low latency network
connectivity to other Availability Zones in the same Region.

35. 40 Edge Locations
Dallas(2)
St.Louis
Miami
JacksonvilleLos Angeles (2)
Palo Alto
Seattle
Ashburn(2)
Newark
New York (2)
Dublin
London(2)
Amsterdam
Stockholm
Frankfurt(2)
Paris(2)
Singapore(2)
Hong Kong
Tokyo
Sao Paulo
South Bend
San Jose
Osaka
Milan
Sydney
On a global footprint
Seoul

36. AWS Platform

37. Steady State
Example:
Corporate Data Logging
Application Usage Patterns
Spiky Predictable
Example:
Marketing
Promotions Website
Uncertain Unpredictable
Example:
Web Apps

38. Multiple pricing models allow you to
optimize costs for both variable and
stable workloads
On-Demand, Reserved (Light, Medium and Heavy for 1-Year, 3-Year) and Spot

39. Save more when you reserve
On-demand
Instances
• Pay as you go
• Starts from
$0.02/Hour
Reserved
Instances
• One time low
upfront fee +
Pay as you go
• $23 for 1 year
term and
$0.012/Hour
Heavy
Utilization RI
Medium
Utilization RI
Light
Utilization RI
1 and 3
year terms

40. 0
2
4
6
8
0 6 12 18 24 30 36
TrafficinInstances
Months
Steady State Usage Pattern
Traffic pattern
Reserved
Physical

41. TCO of Steady State Web Application
TCO Web Application - Steady State Usage Pattern
Amortized monthly costs over 3 years
On-Premises
Option
AWS Option 1
All Reserved
(3-Year Heavy)
AWS Option 2
Mix of On-Demand
and Reserved
AWS Option 3
All On-Demand
Compute/Server Costs
Server Hardware $306.36 $0.00 $0.00 $0.00
Network Hardware $62.04 $0.00 $0.00 $0.00
Hardware Maintenance $47.10 $0.00 $0.00 $0.00
Power and Cooling $172.02 $0.00 $0.00 $0.00
Data Center Space $144.48 $0.00 $0.00 $0.00
Personnel $1,200.00 $0.00 $0.00 $0.00
AWS Instances $0.00 $618.33 $1,079.42 $2,138.40
Total - Per Month $1,932.00 $618.33 $1,079.42 $2,138.40
Total - 3 Years $69,552.00 $22,260.00 $38,859.20 $76,982.40
Savings over On-Premises Option 68.0% 44.1% -10.7%
Option 1: All Reserved
Recommended Option (Most Cost-effective)
Option 2: Mix of On-Demand and Reserved
Option 3: All On-Demand
Commitment-free and Risk-free Option

42. 0
2
4
6
8
10
12
0 6 12 18 24 30 36
TrafficinInstances
Months
Spiky Predictable Usage Pattern
Traffic Pattern
Reserved
Physical
On-Demand

43. When you turn off your cloud resources, you
actually stop paying

44. Setting Threshold

45. Configure Action

46. TCO Web Application - Spiky Usage Pattern
Amortized monthly costs over 3 years
On-Premises
Option
AWS Option 1
All Reserved
AWS Option 2
Mix of On-Demand
and Reserved
AWS Option 3
All On-Demand
Compute/Server Costs
Server Hardware $510.60 $0.00 $0.00 $0.00
Network Hardware $103.40 $0.00 $0.00 $0.00
Hardware Maintenance $78.50 $0.00 $0.00 $0.00
Power and Cooling $286.70 $0.00 $0.00 $0.00
Data Center Space $240.80 $0.00 $0.00 $0.00
Personnel $2,000.00 $0.00 $0.00 $0.00
AWS Instances $0.00 $992.16 $881.42 $1,940.40
Total - Per Month $3,220.00 $992.16 $881.42 $1,940.40
Total - 3 Years $115,920.00 $35,717.60 $31,731.20 $69,854.40
Savings over On-Premises Option 69.2% 72.6% 39.7%
TCO of Spiky Predictable Web Application
Option 1: All Reserved
Option 2: Mix of On-Demand and Reserved
Recommended Option (Most Cost-effective)
Option 3: All On-Demand
Commitment-free and Risk-free Option

47. 0
4
8
12
16
20
0 6 12 18 24 30 36
TrafficinInstances
Months
Uncertain Unpredictable Usage Pattern
Actual Traffic
Expected Traffic
Reserved
Physical
On-Demand

48. TCO Web Application - Unpredictable Usage Pattern (Failure case)
Amortized monthly costs over 3 years
On-Premises
Option
AWS Option 1
All Reserved
AWS Option 2
Mix of On-Demand
and Reserved
AWS Option 3
All On-Demand
Compute/Server Costs
Server Hardware $816.96 $0.00 $0.00 $0.00
Network Hardware $165.44 $0.00 $0.00 $0.00
Hardware Maintenance $125.60 $0.00 $0.00 $0.00
Power and Cooling $458.72 $0.00 $0.00 $0.00
Data Center or Co-located Space $385.28 $0.00 $0.00 $0.00
Personnel $3,200.00 $0.00 $0.00 $0.00
AWS Instances $0.00 $1,552.89 $1,275.46 $1,009.80
Total - Per Month $5,152.00 $1,552.89 $1,275.46 $1,009.80
Total - 3 Years $185,472.00 $55,904.00 $45,916.48 $36,352.80
Savings over On-Premises Option 69.9% 75.2% 80.4%
Option 1: All Reserved
Option 2: Mix of On-Demand and Reserved
Option 3: All On-Demand
Commitment-free and Risk-free Option
Recommended Option (Most Cost-effective)
TCO of uncertain unpredictable web application when it fails

49. 0
4
8
12
16
20
24
28
32
36
40
0 6 12 18 24 30 36
TrafficinInstances
Months
Uncertain Unpredictable Usage Pattern (Success Case)
Actual Traffic
Expected Traffic
Reserved
Physical
On-Demand
Cost of lost business or disappointed customers

50. On-demand
Instances
• Pay as you go
• Starts from
$0.02/Hour
Reserved
Instances
• One time low upfront
fee + Pay as you go
• $23 (1 year)
$0.012/Hour
Spot
Instances
• Requested Bid Price
and Pay as you go
• Varying…$0.005/Hour
at 9am today
Heavy
Utilization RI
Medium
Utilization RI
Light
Utilization RI
1 and 3
year terms
Save more money by using Spot Instances

51. Save more money by using Spot Instances

52. Spot Use cases
Use Case Types of Applications
Batch Processing Generic background processing (scale out
computing)
Hadoop Hadoop/MapReduce processing type jobs (e.g.
Search, Big Data, etc.)
Scientific Computing Scientific trials/simulations/analysis in chemistry,
physics, and biology
Video and Image
Processing/Rendering
Transform videos into specific formats
Testing Provide testing of software, web sites, etc
Web/Data Crawling Analyzing data and processing it
Financial Hedgefund analytics, energy trading, etc
HPC Utilize HPC servers to do embarrassingly parallel
jobs
Cheap Compute Backend servers for Facebook games

53. Typical Spot Bidding Strategies
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
PercentageoftheDistribution
Bid Price as Percentage of the On-Demand Price
Bid Distribution

54. Optimizing Video Transcoding Workloads
Free Offering
• Optimize for reducing cost
• Acceptable Delay Limits
Implementation
• Set Persistent Spot Requests
• Use on-demand Instances, if
delayed on Spot
Maximum Bid Price
< On-demand Rate
Get your set reduced price for
your workload
Premium Offering
• Optimized for Faster response times
• No Delays
Implementation
• Invest in RIs
• Use on-demand for Elasticity
Maximum Bid Price
>= On-demand Rate
Get Instant Capacity for higher price

55. • Security groups for EC2
and VPC
Network ACL
• Multi-Factor Authentication
• CloudHSM
• RDS Oracle transparent
encryption
Comprehensive Security Capabilities to
Support Virtually Any Workload
• VPC
• Direct connect
• Dedicated instances
• Identity & Access
Management
• S3 Encryption

56. Certifications & Accreditations for
Workloads that Matter
“Amazon Virtual
Private Cloud
offers an additional
level of security
and an ability to
integrate with
other aspects of
our infrastructure.”
Dr. Michael Miller
Head of HPC for R&D
Motion Picture Association of
America

57. The AWS Price Reduction Philosophy
Ecosystem
Global
Footprint
New Features
New Services
Infrastructure
Innovation
More AWS
Usage
More
Infrastructure
Economies
of Scale
Lower
Infrastructure
Costs
Reduced
Prices
More
Customers

58. Pay less when you use more

59. “It makes me look so good in front of my CFO. When
he [CFO] sees the savings in our AWS monthly bill, he
thinks that it is me who is working hard on driving the
costs down and increasing efficiency of the company’s
infrastructure. I get all the credit for all the hard work
you guys are putting in.”
CIO of F500 company

60. AWS Trusted Advisor
Cost optimizations
Security & Availability
checks
Performance
recommendations
329,000
recommendations
$22M
in annualized
savings
To: AWS Customer
From: Amazon Web Services
Subject: Potential Cost Savings
Dear Customer,
We have identified $49,000 of potential
savings in your current AWS deployment.
-Amazon Web Services
To: AWS Customer
From: Amazon Web Services
Subject: Potential Cost Savings
Dear Customer,
We have identified $49,000 of potential
savings in your current AWS deployment.
-Amazon Web Services
To: AWS Customer
From: Amazon Web Services
Subject: Potential Cost Savings
Dear Customer,
We have identified $49,000 of potential
savings in your current AWS deployment.
-Amazon Web Services
Obsessed with Helping Customers
Save Money

61. Ongoing Innovation
drives Continuous Optimization
in your architecture resulting in
recurring savings
as early as your next month’s bill

62. Enterprises are Adopting AWS to Achieve the
Benefits of the Cloud
✔ ✔ ✔ ✔ ✔
Replace
CapEx with
OpEx
Lower
Overall
Costs
No More
Guessing
Capacity
Agility /
Speed /
Innovation
Shift Focus to
Differentiation
Go
Global in
Minutes
✔

63. The Benefits Of The Cloud Are Only
Possible IN THE CLOUD
“Private
Cloud”
x x x xx x
✔ ✔ ✔ ✔ ✔
Replace
CapEx with
OpEx
Lower
Overall
Costs
No More
Guessing
Capacity
Agility /
Speed /
Innovation
Shift Focus to
Differentiation
Go
Global in
Minutes
✔

64. Forrester Foresights
Survey data , Q3 2012
Self-service
Portals
24%
Resource
Automation
27%
Resource
Tracking
29%
Cost
Chargeback
14%
Customers are Struggling to Deliver on
Promises of the “Private Cloud” Vendors
Have you
implemented these
cloud features?

65. • Pay as you go
– No minimum commitments or long-term contracts required
– Capex -> Opex
– Turn off when you don’t need it
• Pay less per unit when you use more
– Tiered Pricing and Volume Discounts
• Pay even less when you reserve
– Reserved pricing
• Pay even less as AWS grows
– Efficiencies, optimizations and economies of scale result in
passing the savings back to you in the form of lower pricing
AWS Pricing Philosophy

66. http://aws.amazon.com/tco-calculator/

67. How customers are
saving money with AWS
AWS Economics Center
aws.amazon.com/economics
TCO Whitepapers
Calculator Tools
aws.amazon.com/tco-calculator
Case Studies
IDC Report: The
Business Value of
AWS Accelerates
Over Time

70. Kingsley Wood
Business Development Manager
Thank You !