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Achieving Profitability on AWS
 

Achieving Profitability on AWS

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Getting from scale to profitability, the question is: How to run lean and continue to grow revenue? How to get to profitability? This webinar, the last installment of a four-part webinar series for ...

Getting from scale to profitability, the question is: How to run lean and continue to grow revenue? How to get to profitability? This webinar, the last installment of a four-part webinar series for start-ups, will focus on how to run lean.

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    Achieving Profitability on AWS Achieving Profitability on AWS Presentation Transcript

    • Startups on AWS:Getting to ProfitabilityPieter KempsBusiness Development, Startups & Venture CapitalAmazon Web Services@p_kemps
    • TimeUsagePage ViewsRevenueEtc.The Infamous Hockey Stick
    • TimeUsagePage ViewsRevenueEtc.The Infamous Hockey StickCosts
    • TimeUsagePage ViewsRevenueEtc.The Infamous Hockey StickCosts
    • You want only 3 things
    • Revenue to go UpUnit Costs to go DownMargin to go Up
    • TimeUsagePage ViewsRevenueEtc.The Infamous Hockey StickCosts
    • How does AWS help here?
    • Economies of ScalePricing ModelsCost Aware Architecting
    • Some AWS concepts…Pay as you goPay less per unit when you use morePay even less when you reserve• Reserved pricingPay even less when you architect for cost optimization• Smart architecting and leveraging AWS managed servicesPay even less as AWS grows• AWS economies of scale result in continuous price reductions
    • What does this look like inthe real world?
    • An exampleEnterprise software provider in APACFocused on SaaS for storage, security, collaboration, etc.Backed by leading VC’s in the regionStrong growth – winning customers globallyFocused on profitability & reducing unit costsWorked closely with the AWS team to optimize its architecture
    • MarginGrowth-10%price dropin S3-20%RI purchase-22%MigrationCassandrato Dynamo-18%Price drop inS3 of 25%54%reduction inunit costs“Based on a True Story”
    • Getting to ProfitabilitybyRunning Lean on AWS
    • RECAP
    • 01 02 03 04Idea MVP ProfitabilityScale
    • Build Apps, Not Infrastructure to do more with less01 02Idea MVP
    • Your application & Your businessInnovation, not undifferentiated heavy liftingSpending developer time in the right place(Deep insight alert: Developer Time = Money)AutomationBeanstalk – Developer sandboxes with production ready infrastructureOpsWorks – Control with Chef customizationCloudFormation – Comprehensive control of all aspects of infrastructure= Focus
    • Build Apps, Not Infrastructure to do more with lessDevelop Lean, Test Heavy to develop a killer MVP01 02Idea MVP
    • Build Apps, Not Infrastructure to do more with lessDevelop Lean, Test Heavy to develop a killer MVPFail Forward, Fail Faster by lowering the cost of innovation01 02Idea MVP
    • Getting to MVP for $250TimeScaleTotal Spend to MVP$250$235$15$0• 3 months dev/test/release• Serving Beta customers• Ready for full productionand scaleLow Cost of Iteration Means more Innovation
    • 01 02Idea MVPwww.slideshare.net/AmazonWebServices/getting-to-mvp-on-aws
    • 02 03MVP Scale
    • Scale up Demandleverage Amazon in your Go to Market strategy with the AWS PartnerNetwork (APN), Marketplace, and Amazon AppStore for Mobile Apps02 03MVP Scale
    • Scale up Demandleverage Amazon in your Go to Market strategy with the AWS PartnerNetwork (APN), Marketplace, and Amazon AppStore for Mobile AppsScale your Reachreach customers globally in minutes leveraging AWS’ global infrastructure,incl. regions, availability zones, and Content Delivery Network02 03MVP Scale
    • Go global in minutes to reach a global audienceFast & Easy customer acquisition leveraging AWS regions & CDNApplication
    • Scale up Demandleverage Amazon in your Go to Market strategy with the AWS PartnerNetwork (APN), Marketplace, and Amazon AppStore for Mobile AppsScale your Reachreach customers globally in minutes leveraging AWS’ global infrastructure,incl. regions, availability zones, and Content Delivery NetworkScale your Architectureuse a range of AWS services to build scalable architectures that serve yourfirst 10 million users02 03MVP Scale
    • Dev / Test Environment
    • Alpha Release
    • Beta Release / MVP
    • Production 1.0Architecture
    • Production 1.2Architecture
    • Production 1.3Architecture
    • Production 1.4Architecture
    • Production 1.4 ArchitectureBest Practice Scalable ArchitectureWell-designed, 2 Tier architectureHighly Available due to Multiple Availability ZoneLoad Balancing & Auto-Scaling for full scalabilityStatic content stored in durable, consistent wayImproved end-user experience through CDNOptimal Database set up with ElastiCache or DynamoDBBig Data analytics built in for continuous optimizationCapable of serving 10M+ users
    • 02 03MVP Scalewww.slideshare.net/AmazonWebServices/getting-to-scale-on-aws
    • 03 04ProfitabilityScaleEconomies of ScaleAWS Pricing ModelsCost Aware ArchitectingA look at TCOThis Webinar
    • 03 04ProfitabilityScaleEconomies of ScaleAWS Pricing ModelsCost Aware ArchitectingA look at TCOThis Webinar
    • Economies of Scale truly matter…
    • Every Day…AWS adds the equivalent server capacityto power Amazon when it was a global,$5.2B enterprise in 20032003$5.2B retail business7,800 employeesA whole lot of servers…
    • Economies of ScaleLower variable expense than companies can achieve themselvesReducedPricesMoreCustomersMore AWSUsageMoreInfrastructureEconomies ofScaleLower Cost
    • 03 04ProfitabilityScaleEconomies of ScaleAWS Pricing ModelsCost Aware ArchitectingA look at TCOThis Webinar
    • On-DemandPay for computecapacity by the hourwith no long-termcommitmentsFor spiky workloads,or to define needsCost Optimization using different purchase modelsReservedMake a low, one-timepayment and receive asignificant discount onthe hourly chargeFor committedutilizationSpotBid for unused capacity,charged at a Spot Pricewhich fluctuates basedon supply and demandFor time-insensitive ortransient workloadsFree TierGet Started on AWSwith free usage & nocommitmentFor POCs andgetting started
    • aws.amazon.com/free
    • aws.amazon.com/free
    • aws.amazon.com/free
    • On Demand PricingPay less when you use more
    • 01020304050600 12 24 36DatainTBMonthsActual StorageSavings on Storage
    • 01020304050600 12 24 36DatainTBMonthsActual Storage ProvisionedSavings on Storage
    • 01020304050600 12 24 36DatainTBMonthsActual Storage ProvisionedSavings on StorageUnderutilized= WASTEAWS =NO WASTE
    • Reserved Instance PricingMake a low, one-time payment and receive asignificant discount on the hourly chargeFor committed utilization•Light Utilization RI•Medium Utilization RI•High Utilization RI•1-year•3-year2 Terms3 Versions
    • Reserved Instance PricingUtilization RI option Savings over On-Demand<10% On-Demand10% - 40% Light Utilization RI Up to 56%40% - 75% Medium Utilization RI Up to 66%>75% Heavy Utilization RI Up to 71%
    • $-$2,000$4,000$6,000$8,000$10,000$12,000$14,0000% 20% 40% 60% 80% 100%CostUtilizationHeavy UtilizationMedium UtilizationLight UtilizationOn-DemandReserved Instance Pricing
    • S3 Storage Volume
    • EC2 Instance Hours
    • February 201348.7 million users globallyRaised $200M (Total = $338M)$2.5B valuation
    • Web ApplicationServersSharded DatabaseCache ServersInternalWeb ServicesFile Storage
    • Python Web Application Servers150 High-CPU EC2 InstancesWeb ApplicationServersSharded DatabaseCache ServersInternalWeb ServicesFile Storage
    • Python Internal Web Services35 High-CPU EC2 InstancesWeb ApplicationServersSharded DatabaseCache ServersInternalWeb ServicesFile Storage
    • Memcache and Redis Caches90 High-Memory EC2 InstancesWeb ApplicationServersSharded DatabaseCache ServersInternalWeb ServicesFile Storage
    • MySQL Database Servers70 Master/Slave Pairs on EC2Web ApplicationServersSharded DatabaseCache ServersInternalWeb ServicesFile Storage
    • Amazon S3 File Storage8 Billion Objects • 410 TerabytesWeb ApplicationServersSharded DatabaseCache ServersInternalWeb ServicesFile Storage
    • Auxiliary Services60 EC2 InstancesDevelopmentLoggingOperational ToolsAsynchronousTask WorkersSearchData AnalysisElastic MapReduceData Analysis
    • • Most traffic happens in the afternoons and evenings, so they reduce the number ofinstances at night by 40%.• At peak traffic $52 an hour is spent on EC2 and at night, during off peak, the spend is aslittle as $15 an hour. Saving per hour = 71%
    • Save more money by using Spot InstancesUp to 85% savings over On Demand pricingSpot market for under-utilized capacityRequested Bid Price andPay as you goSpot Price < On-Demand Price
    • Use Case Types of ApplicationsBatch 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 biologyVideo and ImageProcessing/RenderingTransform videos into specific formatsTesting Provide testing of software, web sites, etcWeb/Data Crawling Analyzing data and processing itFinancial Hedgefund analytics, energy trading, etcHPC Utilize HPC servers to do embarrassingly parallel jobsCheap Compute Backend servers for Facebook gamesUse Cases for Spot Pricing
    • Optimizing Video Transcoding Workloadsfor a FREEMIUM modelFree OfferingOptimize for reducing costAcceptable Delay LimitsImplementation– Leverage spot pricing– Maximum Bid Price– < On-demand Rate– Use on-demand Instances, if delayGet strongly reduced price for yourworkloadPremium OfferingOptimized for Faster responseNo DelaysImplementation– Invest in Reserved Instances– Use on-demand for ElasticityGet Instant Capacity for higher price
    • 03 04ProfitabilityScaleEconomies of ScaleAWS Pricing ModelsCost Aware ArchitectingA look at TCOThis Webinar
    • “Give me 4 fault tolerant algorithms and I can pickthe best one almost with my eyes closed.If you then ask me which one is best for thebusiness, in terms of dollar costs, I would beclueless...”Werner Vogels, CTO, Amazon
    • Cost optimization through ‘Cost Aware Architecting’…by leveraging:Reduce Cost of…Compute1. S3 & CloudFront for Caching & Offloading2. Load Balancing from the startStorage 4. Storing derivative objects in S3 ‘Reduced Redundancy’Data Base 5. Read Replicas and/or ElastiCacheTest & Dev 6. A/B Testing for rapid proto-typing3. Auto-Scaling done Right
    • 1. S3 & CloudFront for Caching & Offloading• Reduce your compute demand and costs• Improve end-user experience• Increase reliability and durabilityCost Aware Architecting to Reduce costs of EC2
    • 1. S3 & CloudFront for Caching & OffloadingCost Aware Architecting to Reduce costs of EC2
    • 1. S3 & CloudFront for Caching & OffloadingCost Aware Architecting to Reduce costs of EC2
    • 1. S3 & CloudFront for Caching & OffloadingCost Aware Architecting to Reduce costs of EC2
    • 1. S3 & CloudFront for Caching & OffloadingCost Aware Architecting to Reduce costs of EC2
    • 2. Load Balancing from the start• Ready for massive scale, high reliability• Uninterrupted growth and evolution• Stateless and redundant arrayCost Aware Architecting to Reduce costs of EC2
    • 2. Load Balancing from the start• Ready for massive scale, high reliability• Uninterrupted growth and evolution• Stateless and redundant arrayCost Aware Architecting to Reduce costs of EC2
    • 2. Load Balancing from the start• Ready for massive scale, high reliability• Uninterrupted growth and evolution• Stateless and redundant arrayCost Aware Architecting to Reduce costs of EC2
    • Buuuk for Singapore Press Holding (SPH)
    • 3. Auto-Scaling done Right with Real Time reaction response• Elastic Load Balancing and (event-driven) Auto Scaling• Notification of pending news flash (with audible alarm)• On-demand ramp up of capacity (6 mins.)• Subscriber alert push delivered• Mass response traffic handled (followed by ramp down)Cost Aware Architecting to Reduce costs of EC2
    • 3. Auto-Scaling done Right with Real Time reaction responseCost Aware Architecting to Reduce costs of EC2Straits TimesBuuuk
    • 3. Auto-Scaling done Right with Real Time reaction responseCost Aware Architecting to Reduce costs of EC2
    • 3. Auto-Scaling done Right with Real Time reaction responseCost Aware Architecting to Reduce costs of EC2
    • 3. Auto-Scaling done Right with Real Time reaction responseCost Aware Architecting to Reduce costs of EC2
    • 4. Storing derivative objects in S3 ‘Reduced Redundancy’• Original vs. derived assets : 33% savings• Single reference and consistency• Control, accurate logs and trackingCost Aware Architecting to Reduce costs of S3Reduced Redundancy Storage‘RRS’
    • 5. Read Replicas and/or ElastiCache (‘Database Smarts’)• Scale out and share work• Optimal performance, minimize load• Enhance reliability, ensure data safety• Cost reductionCost Aware Architecting to Reduce costs of DB
    • 6. A/B Testing for rapid proto-typing & innovation• Inexpensive idea validation• Seamless switch over and versioning• Rapid dev / test agilityCost Aware Architecting to Reduce costs of Test/Dev
    • Analytics: A/B test of different characters
    • Pricing A/B test Magic Wands
    • 03 04ProfitabilityScaleEconomies of ScaleAWS Pricing ModelsCost Aware ArchitectingA look at TCOThis Webinar
    • When calculating TCO…#1 Start by understanding your use cases & usage patterns
    • On and Off Fast GrowthVariable peaks Predictable peaksUsage Patterns
    • Traditional HW / HostingOn and Off Fast GrowthPredictable peaksVariable peaksWASTECUSTOMER DISSATISFACTION
    • AWS = Elastic CapacityFast GrowthOn and OffPredictable peaksVariable peaks
    • When calculating TCO…#1 Start by understanding your use cases & usage patterns#2 Apples to Apples – Take all the fixed costs into consideration
    • When calculating TCO…#1 Start by understanding your use cases & usage patterns#2 Apples to Apples – Take all the fixed costs into consideration#3 Leverage ‘Cost Aware Architecting’ to reduce resources
    • 0102030405060HostingTraditional Hosting vs AWS# of(virtual)serversOffloadto S3Cachingwith CFAuto-ScalingEtc.Hosting
    • When calculating TCO…#1 Start by understanding your use cases & usage patterns#2 Apples to Apples – Take all the fixed costs into consideration#3 Leverage ‘Cost Aware Architecting’ to reduce resources#4 Include pricing models (RI, Spot) and economies of scale
    • MarginGrowth-10%price dropin S3-20%RI purchase-22%MigrationCassandrato Dynamo-18%Price drop inS3 of 25%54%reduction inunit costs“Based on a True Story”
    • When calculating TCO…#1 Start by understanding your use cases & usage patterns#2 Apples to Apples – Take all the fixed costs into consideration#3 Leverage ‘Cost Aware Architecting’ to reduce resources#4 Include pricing models (RI, Spot) and economies of scale#5 Take a look at what’s included: Intangible Cost Savings !
    • New CustomersAmazon EC2Amazon RDSAmazon ELBAmazon S3Amazon EBSFor All CustomersAmazon SQS/SNSAmazon DynamoDBAmazon SESAmazon SWFAnd more…AWS Elastic BeanstalkAWS CloudFormationAWS IAMAuto ScalingConsolidated BillingNo Charge forInbound Data TransferData Transfer betweenInstances within anAvailability ZoneFree Usage TierDid you know?Free Services Data Transfer
    • These Asian startups … are getting the same… as these companies:DURABILITYSECURITYSCALABILITYRELIABILITYAFFORDABILITY
    • These Asian startups benefit from AWS… just like these companies:E-COMMERCECONSUMER APPSGAMINGENTERPRISE / SaaSMEDIA
    • 03 04ProfitabilityScaleWhat’s Next?This Webinar
    • Visit aws.amazon.com/startupsSign up for the AWS Summit:Mumbai June 25Delhi June 27Bangalore July 5Singapore July 17 (AWS Cloud Kata for Startups)Singapore July 18 (Summit)Sign up here: aws.amazon.com/aws-summit-2013/Fill up your feedback form
    • Questions?Pieter KempsBusiness Development, Startups & Venture CapitalAmazon Web Service@p_kemps