Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

B4 - The TCO of cloud applications


Published on

Weighing the financial considerations of owning and operating a data center facility versus employing a cloud infrastructure requires detailed and careful analysis. In practice, it is not as simple as just measuring potential hardware expense alongside utility pricing for compute and storage resources. The Total Cost of Ownership (TCO) is often the financial metric used to estimate and compare direct and indirect costs of a product or a service. Given the large differences between the two models, it is challenging to perform accurate apples-to-apples cost comparisons between on-premises data centers and cloud infrastructure that is offered as a service. In this session, we explain the economic benefits of deploying applications in AWS over deploying equivalent applications hosted in an on-premises environment.

Published in: Technology, Business
  • Be the first to comment

B4 - The TCO of cloud applications

  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 Jean-Pierre LeGoaller Principal Solutions Architect Amazon Web Services
  2. 2. Agenda •  Total Cost of Ownership •  Cost Optimization on AWS
  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. 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%
  7. 7. 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.
  8. 8. Comparing TCO is not easy (But We’re Going to Try) ≠
  9. 9. 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.
  10. 10. 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 × × × ××× ×
  11. 11. TCO Example : 100 VMs On-Premises vs. AWS # of VMs Avg. vCPU Avg. vRAM Optimize by? Usage 25 1 2 RAM 5% 35 4 14 RAM 80% 30 8 32 RAM 60% 5 8 68 RAM 40% 5 16 128 Disk I/O 8% # of Instances Instance vCPU RAM Instance Type 25 m1.small 1 1.7 On Demand 35 m3.xlarge 4 15 3 Yr. Heavy RI 30 m3.2xlarge 8 30 3 Yr. Med. RI 5 m2.4xlarge 8 68.4 3 Yr. Light RI 5 i2.4xlarge 16 122 3 Yr. Light RI Avg. vCPU Avg. vRAM Optimize by? 1 2 CPU 4 14 CPU 8 32 CPU 8 68 CPU 16 128 Disk I/O Instance vCPU RAM m1.small 1 1.7 c3.xlarge 4 7 c3.2xlarge 8 15 c3.2xlarge 8 15 i2.4xlarge 16 122
  12. 12. 1, 1.7, 0.044 1, 3.75, 0.07 2, 3.75, 0.105 2, 7.5, 0.14 2, 15, 0.41 4, 7, 0.21 4, 15, 0.28 4, 30.5, 0.82 8, 15, 0.42 8, 30, 0.56 8, 61, 1.64 4, 30.5, 0.853 8, 61, 1.705 16, 122, 1.4 16, 30, 0.84 32, 60, 1.68 32, 244, 3.5 16, 122, 3.41 16, 117, 4.6 0 50 100 150 200 250 300 0 5 10 15 20 25 30 On Demand Prices shown (N.Virginia region), only latest generation instances (M3,C3) shown where applicable, GPU and Micro instances not shown above Memory-Optimized Instances (R3) Compute-Optimized Instances (C3) General Purpose Instances (M3) Storage-Optimized Instances (I2) vCPU RAM TCO Example : Choosing EC2 instances
  13. 13. TCO Example : 100 VMs On-Premises vs. AWS
  14. 14. NEW: AWS TCO Calculator
  15. 15. •  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.
  16. 16. 7/2011 - ~50GB/day 4/2013 - ~5TB/day 10/2013 - ~20TB/day 03/2014 - ~40TB/day Customer Spotlight:
  17. 17. AdRoll S3 Usage by the numbers •  1.5+ PB of compressed data stored •  5-10TB of compressed new data each day •  ~5B monthly requests No engineers spend time on storage
  18. 18. AdRoll EC2 Infrastructure •  ~500 c3.4xlarge in 4 regions •  Close to 100% uptime since launch •  <100ms max latency •  500K+ requests/second globally on DynamoDB •  Operated by 2 engineers AdRoll estimate that they would need about 20 engineers to design and maintain a similar infrastructure on-site.
  19. 19. AdRoll TCO AdRoll estimate that they would need about 20 engineers to design and maintain a similar infrastructure on-site. Their entire AWS cost is less than the cost of such a team
  20. 20. 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 Focus on your business
  21. 21. Cost Optimization on AWS
  22. 22. 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
  23. 23. 2. Use Auto Scaling Describes what Auto Scaling will create when adding Instances Only one active launch configuration at a time Launch Configuration as-create-launch-config --image-id ami-54cf5c3d --instance-type m1.small --key mykey --group webservers --launch-config 101-launch-config Auto Scaling managed grouping of EC2 instances Automatically scale the number of instances by policy – Min, Max, Desired Auto Scaling Group as-create-auto-scaling-group 101-as-group --availability-zones us-east-1a us-east-1b --launch-configuration 101-launch-config --load-balancers myELB --max-size 5 --min-size 1 Parameters for performing an Auto Scaling action Scale Up/Down and by how much Auto Scaling Policy as-put-scaling-policy 101ScaleUpPolicy --auto-scaling-group 101-as-group --adjustment=1 --type ChangeInCapacity --cooldown 300
  24. 24. 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
  25. 25. 3. Turn off un-used instances •  Dev./test instances •  Simple instance start/stop •  Tear down/build up altogether •  Instances are disposable
  26. 26. 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 Light Utilization RI 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
  27. 27. 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
  28. 28. 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
  29. 29. 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
  30. 30. 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 67% savings •  Great for archiving, long-term backups and old data
  31. 31. 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
  32. 32. 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)
  33. 33. 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)
  34. 34. 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
  35. 35. 10. Leverage AWS tools AWS Trusted Advisor AWS EC2 Usage Reports
  36. 36. Recap Choose the right Instance type Use Auto Scaling Turn off un-used Instances Use Reserved Instances Use Spot Instances Leverage Storage Classes Offload your architecture Use Application Services Use Consolidated Billing Leverage AWS Tools – Trusted Advisor, EC2 Usage Reports Others…
  37. 37. Summary TCO •  Make reasonable assumptions and leverage industry benchmarks •  Know the on-premises hidden costs •  Use our new TCO Calculator 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
  38. 38. © 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 Thanks! Jean-Pierre LeGoaller Principal Solutions Architect Amazon Web Services