Intended for customers who have (or will have) thousands of instances on AWS, this session is about reducing the complexity of managing costs for these large fleets so they run efficiently. Attendees will learn about common roadblocks that prevent large customers from cost optimizing, tools they can use to efficiently remove those roadblocks, and techniques to monitor their rate of cost optimization. The session will include a case study that will talk in detail about the millions of dollars saved using these techniques. Customers will learn about a range of templates they can use to quickly implement these techniques, and also partners who can help them implement these templates.

1. © 2016, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Keith Jarrett
AWS Business Development Manager
Cloud Economics
April 19, 2016
Building and Realizing the
Economic Case for the AWS Cloud
Eric Shoemaker
Vice President Global Sales
CloudHealth Technologies

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. on AWS.
Used for:
1) Comparing the costs of running an entire infrastructure environment or
specific workload on-premises or in a co-location facility vs. 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
The diagram doesn’t include every cost item. For example, software costs can include database,
management, and middle-tier software costs. Facilities cost can include costs associated with upgrades,
maintenance, building security, taxes, and so on. 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 and 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, and
improve

13. Right-sizing
Right-sizing
• Selecting the cheapest instance available
while meeting performance requirements
• Looking at CPU, RAM, storage, and network
utilization to identify potential instances that
can be downsized
• Leveraging Amazon CloudWatch metrics and
setting up custom RAM metrics
Rule of thumb: Right size, then reserve.
(But if you’re in a pinch, reserve first.)

14. Reserved Instances
Commitment level
1 year
3 year
AWS services offering RIs
Amazon EC2
Amazon RDS
Amazon DynamoDB
Amazon Redshift
Amazon ElastiCache
* Dependent on specific AWS service, size/type, and region

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

16. Increase elasticity
Turn off nonproduction instances
• Look for dev/test, nonproduction instances that
are running always-on and turn them off.
Autoscale production
• Use Auto Scaling to scale up and down based
on demand and usage (for example, spikes).
Rule of thumb: Shoot for 20–30% of Amazon EC2
instances running on demand to be able to
handle elasticity needs.

17. Using right-sizing and elasticity to lower cost
More smaller instances vs. fewer larger instances
29 m4.large @ $0.12 /hr
$2,505.60 / mo*
59 t2.medium @ $0.052/hr
$2,208.96 / mo*
*Assumes Linux instances in US-East at 720 hours per month

18. Putting it all together: case study

19. Challenge:
Minimizing unit costs
under period of massive
growth.
A consistent measure of
CPU processing power
Elastic compute unit
(ECU)

20. The growth challenge
August 2014
August 2015
584 ECU
1,192 ECU
2x
YoY Compute Growth
33%
decrease in monthly
EC2 costs!

21. Solving the growth challenge

22. Step 1: Right-size and update instances
m1 on demand
$0.07 per ECU
c4 on demand
$0.02 per ECU

23. The impact of right-sizing
70% reduction
in unit cost

24. Step 2: Reserve

25. The impact of reservations
30% reduction
In unit cost

26. Putting it together
85% reduction
in unit cost!

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

28. Cost optimization governance
(Remember the fourth pillar?)

29. Uncovering the cost optimization opportunities
1. Auto-tag resources.
2. Identify always-on nonprod.
3. Identify instances to down-size.
4. Recommend RIs to purchase.
5. Dashboard our status.
6. Report on savings.

30. AWS options

31. Reserved Instances and right-sizing options

32. Example: reasonable optimization dashboard

33. Creating a culture of cost transparency
Targets and metrics Cloud Competency
Center
AWS Enterprise
Support

34. © 2016, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Eric Shoemaker, Vice President Global Sales
April 19, 2016
CloudHealth® Technologies
Cloud Service Management
Building and Realizing an Economic Case for the Cloud

35. Managing the cloud for improved efficiency
 Visibility from integrated reporting
 Optimization thru integrated recommendations
 Governance with active policy management

36. Optimize with performance right-sizing

37. CloudHealth platform in action
Right-sizing

38. Simplify and improve reservation management
 Improve total cost of ownership
 Analyze, model, modify, and purchase reservations with a single
click

39. CloudHealth platform in action
Reservation management

40. Improve governance through active policy management
 Apply rules based on multiple
data sources.
 Receive recommendations on
how to return back to ideal/
preferred state.
 Choose actions to take.

41. CloudHealth platform in action
Policies and governance

42. Automate with business driven governance
 Approval-based automation
with workflow approval for
“soft controls.”
 Non-approval-based
automation. Automate actions
by using on-premises Token
Vending Machine (TVM).
 Notify users of violation.
 Automatic changes to
infrastructure.
 Changes to infrastructure after
internal approval.

43. CloudHealth platform in action
Ongoing optimization with automation

44. Simplifying cloud migration
Data center assessment and cost modeling

45. Putting it all together

46. Where to start
Set up a Cloud
Competency Center
Bring in the right
tools
Use metrics to
reinforce behavior
Use partners to
accelerate!

47. Cycle of cost optimization
✔
✔
✔
✔✘
✘
✘
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$
$
$
$
$

48. Thank You!