AWS Summit London 2014 | Optimising TCO for the AWS Cloud (100)


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This introductory level business focused session will help you to understand how to calculate, track and optimise the costs of using AWS to deliver your applications and run other IT workloads.

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AWS Summit London 2014 | Optimising TCO for the AWS Cloud (100)

  1. 1. © 2014, Inc. and its affiliates. All rights reserved. May not be copied, modified, or distributed in whole or in part without the express consent of, Inc. Optimizing Total Cost of Ownership for AWS David de Santiago, Amazon Web Services
  2. 2. Agenda •  Cost Philosophy •  Considerations for TCO analysis comparison •  Cost Optimization Techniques
  3. 3. Lower costs with AWS 1 “Average of 400 servers replaced per customer” Replace up-front capital expense with low variable cost 2 42 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 Tiered Pricing Volume Discounts Custom Pricing On-Demand Reserved Spot Dedicated Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web Services Accelerates Over Time.” December 2013
  4. 4. Lower costs than on-premises On-Premises Traditional Data Center On-Premises Virtualized Data Center CAPEX OPEX OPEX AWS CAPEX OPEX* Cost savings from running internal IT more efficiently AWS Scale •  Multiple new data centers built each year •  Volume purchasing, highly automated, supply chain optimization Utilization fundamentally higher in AWS cloud •  Aggregating non-correlated workloads, scale, spot market Amazon specific hardware designs •  OEM acquisition of custom servers & net gear •  Direct purchasing of disk, memory, & CPU •  AWS controlled hypervisor & net protocol layers Diagram is not to scale *For AWS, OPEX costs includes Reserved Instances one-time low, upfront payment, if Reserved Instances are used. Cost savings from moving to a public cloud provider
  5. 5. AWS Pricing Philosophy More AWS Usage More Infrastructure Economies of Scale Lower Infrastructure Costs Reduced Prices More Customers Ecosystem Global Footprint New Features New Services Infrastructure Innovation We pass the savings along to our customers in the form of low prices and continuous reductions 42
  6. 6. We’ve announced price reductions 42* times since our inception in 2006. Recent price drops included… Amazon EBS standard volume prices are lowered up to 50% for both storage and I/O requests. January 21, 2014 50% Amazon is reducing prices for Amazon ElasticCache cache nodes by an average of 34%. March 26, 2014 34% Amazon S3: We are reducing prices for Standard and Reduced Redundancy Storage, by an average of 51%. March 26, 2014 51% *as of April 2, 2014
  7. 7. By running on AWS, Dole can launch a new SharePoint website in minutes Amazon Virtual Private Cloud met security needs Host business intelligence and mobile applications globally $350,000 savings in operating expenses
  8. 8. Analysts have shown AWS reduces costs In early 2012, AWS commissioned IDC to interview 11 organizations that deployed applications on AWS. Since this study was conducted in early 2012, AWS has introduced price reductions nearly 20 times across Amazon EC2 and Amazon S3. IDC estimated what the impact of AWS's fee restructuring would be on the organizations that participated in the 2012 study and determined that the overall fees would drop by 21% lowering the five year TCO from $909,000 to $846,000. Source: IDC Business Value of AWS Accelerates over time IT PRODUCTIVITY INCREASE: 52% 5 YEAR TCO SAVINGS: 72%
  9. 9. New Markets Procurement Security: Entire infrastructure Productivity: Down-Time Agility: Innovation Cost Visibility-Traceability Cost Benefit Analysis Go Global in minutes New Capacity in Minutes Time-To-Market Employee productivity Cost of Failure Cost Allocation to Teams – Products - LOB
  10. 10. AWS TCO benefits increase over time… $3.50 in benefits $1 Investment in AWS $1 Investment in AWS $8.40 in benefits At 36 Months of using AWS… At 60 Months of using AWS… ~3X ~8X Source: IDC Business Value of AWS Accelerates over time According to IDC, this relationship between length of time using AWS and return is due to customers leveraging the more optimized environment to generate more applications along a learning curve.
  11. 11. Flipboard Example: Handling objection AWS gets expensive as you grow big…
  12. 12. Comparing TCO is not easy (But We’re here to help) ≠
  13. 13. Typical cost drivers for on-premises deployments, including overhead costs Network Costs Storage Costs Server Costs Hardware – Server, Rack Chassis PDUs, ToR Switches (+Maintenance) Software - OS, Virtualization Licenses (+Maintenance) Overhead Cost Space Power Cooling Hardware – Storage Disks, SAN/FC Switches Overhead Cost Storage Admin costs Network Hardware – LAN Switches, Load Balancer Bandwidth costs Network Admin costs Overhead Cost IT Labor Costs Server Admin Virtualization Admin 1 2 3 4 Space Power Cooling Space Power Cooling illustrative 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.
  14. 14. AWS services pricing includes overhead costs Hardware Vendor Offering ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Server Network Hardware Software OS + VMs DC/Co-lo Floor Space Powering Cooling Software Defined Networking Data Center Personnel Storage Redundancy Resource Mgmt. /SW Automation × × × ××× ×
  15. 15. In Your TCO Analysis Power/Cooling (compute, storage, shared network) Data Center Administration (procurement, design, build, operate, network, security personnel) Rent/Real Estate (co-lo charges, building deprecation, taxes) Software Licensing/Maintenance (OS, Virtualization, DCIM, Automation..) RAW vs. USABLE storage capacity (Usable = ~50% Raw) Storage Redundancy (RAID penalty, OS penalty) Storage Backup costs (Tape, backup software) Bandwidth, Network Gear & Redundancy (Routers, VPN, WAN..) DON’T FORGET THINK BENEFITS Additional investment into new initiatives Reduced Procurement Time, Resource sitting on shelf Cost of lost customers Lower down time, increased productivity
  16. 16. •  From over 40 data centers down to 6 •  Planning to migrate 3000 apps by Jan 2015 •  Saving $100M over 3 Years VS 1. Evaluate infrastructure costs & architecture 2. Make business case 3. Enable decision to move to the cloud Customer Spotlight: Dow Jones Intl.
  17. 17. Cost Optimization on AWS
  18. 18. 1. Choose the right instance types Start Choose an instance that best meets your basic requirements Start with memory & then choose closest virtual cores Look for peak IOPS storage requirements Tune Change instance size up or down based upon monitoring Use CloudWatch & Trusted Advisor to assess Roll-Out Run multiple instances in multiple Availability Zones
  19. 19. TCO Example : Choosing EC2 instances On Demand Prices shown (N.Virginia region), only latest generation instances (M3,C3) shown where applicable, GPU and Micro instances not shown above
  20. 20. 2. Use Auto Scaling Auto-scaling Automatic re-sizing of compute clusters based upon demand Actual EC2 Right Amount Satisfy peaks and flat periods No wasted capacity
  21. 21. Utilization and Auto Scaling: Granularity more small instances vs. less large instances 29 m1.large @ $0.240/hr. = $6.96 59 m1.small @ $0.06/hr. = $3.54
  22. 22. 3. Turn off un-used instances •  Dev./test instances •  Simple instance start/stop •  Tear down/build up altogether •  Instances are disposable
  23. 23. 0 2 4 6 8 10 12 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 On Demand Medium Utilization RI Heavy utilization RI /Spot Instances 4. Use Reserved Instances Reserved Instances enable you to maximize savings by paying a low, one-time fee for a capacity reservation of 1-3 years in exchange for a significant discount on the hourly rate. Amazon EC2 up to 65% savings Amazon RDS up to 76% savings Amazon DynamoDB up to 76% savings Amazon Redshift up to 73% savings Amazon ElastiCache up to 70% savings AWS services offering reservations
  24. 24. Customer Spotlight: Pinterest AWS Set-up •  8 billion objects and 400 terabytes of data (May 2012), 10x growth from August 2011; EC2 instances have grown by 3x in the same time period •  150 EC2 instances ( web tier), 90 instances (in-memory caching), 70 master databases •  Reserved instances used for standard traffic; On-demand and spot instances used to handle daily elastic load. Most services targeted to run at about 50% on-demand and 50% spot Source: Pinterest AWS Case study, Pinterest Architecture update, 410TB of data, 10X Growth, 12 employees Source: Return on Agility, Werner Vogels “Imagine we were running our data center, and we had to go through a process of capacity planning and ordering and racking hardware. It wouldn't have been possible to scale fast enough,"– Ryan Park, Pinterest Operations Engineer Costs have gone from $54 per hour to $20 per hour Only 2 weeks of engineering effort was required to achieve this cost savings
  25. 25. 5. Use Spot Instances •  Pricing •  Up to 92% discount •  Elastic •  Capacity not otherwise available •  Tradeoff •  Potential for interruption Picking the right Bid Price - Tolerance for interruptions, % likelihood of termination
  26. 26. 1.21 PFLOPS 264 years of compute in < 18 hours 16,788 instances in 8 regions Customer Spotlight: Cycle Computing On-Premises Spot $68 Million $33K
  27. 27. 6. Leverage Storage Classes AWS Cloud Amazon Glacier Gateway Appliance/ AWS Storage Gateway Amazon S3 Block File On-premises Data Center Archive Backup Disaster Recovery Amazon EBS Amazon S3 Reduced Redundancy •  99.99% durability vs. 99.999999999% •  Up to 20% savings •  Great for everything that is easy to reproduce Amazon Glacier •  Same durability as S3 •  3 to 5 hours restore time •  Up to 89% savings •  Great for archiving, long-term backups and old data
  28. 28. 7. Offload your architecture The more you can offload, the less infrastructure you need to maintain, scale, and pay for •  Offload popular traffic to Amazon CloudFront and S3 •  Introduce Caching ResponseTime ServerLoad ResponseTime Server Load ResponseTime Server Load No CDN CDN for Static Content CDN for Static & Dynamic Content 90% of calls
  29. 29. 8. Use Application Services Elastic Load Balancing Amazon Relational Database Service (RDS) Amazon Simple Queue Service (SQS) Amazon Simple Email Service (SES) Amazon Elastic MapReduce Amazon ElastiCache Amazon Simple Notification Service (SNS)
  30. 30. Web Servers Availability Zone $0.025 per Elastic Load Balancer- hour (or partial hour) $0.008 per GB of data processed by an Elastic Load Balancer 100 GB Data processed, 1 ELB $18 (.025*24*30) + $.008*100 $18.80 Web Servers Availability Zone EC2 instance + software LB Elastic Load Balancer DNS DNS VS Leverage Application Services $0.060 per hour, m1.small Separate for Software Load Balancer $.060*24*30 = $43.2 (m1.small) + Software LB Cost On Demand Prices shown (N.Virginia region)
  31. 31. 9. Use Consolidated Billing •  Receive a single bill for all charges incurred across all linked accounts •  Share RI discounts •  Combine tiering benefits •  View & manage linked accounts •  Add additional accounts •  Projected spent (billing Alarms….. Build story) •  Attribute cost back to projects… (allocate costs to specific project and measure/assess productivity of teams… build story) •  Netflix tagging.
  32. 32. 10. Leverage AWS tools AWS Trusted Advisor AWS EC2 Usage Reports
  33. 33. Summary TCO •  Know the on-premises hidden costs •  Make reasonable assumptions and leverage industry benchmarks Cost Optimization •  Create cost-aware architectures and leverage best practices •  Re-evaluate and revisit your architecture often •  Leverage Application Services, CloudWatch •  Stay up to date – RI modifications, Trusted Advisor
  34. 34. AWS Partner Trail Win a Kindle Fire •  10 in total •  Get a code from our sponsors
  35. 35. Please rate this session using the AWS Summits App and help us build better events
  36. 36. #AWSSummit @AWScloud @AWS_UKI
  37. 37. © 2014, Inc. and its affiliates. All rights reserved. May not be copied, modified, or distributed in whole or in part without the express consent of, Inc. Optimizing Total Cost of Ownership for AWS David de Santiago, Amazon Web Services Thank you!