© 2016, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Guy Kfir
Sr. Account Manager
Amazon Web Services
May 24, 2016
Cost Optimization at Scale
David Costa
CTO
Fredhopper

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.

In the beginning . . .
…there was TCO

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

So how do we do it?
≠

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

Resources to get you started
AWS TCO Calculator
https://awstcocalculator.com
Case studies and research
http://aws.amazon.com/economics/

So you’re feeling pretty good.

Cost optimization is…
going from…
to…
pay for what you use
pay for what you need

Where do you start?

The four pillars of cost optimization
Right-sizing Reserved
Instances
Increase
elasticity
Measure,
monitor, and
improve

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.)

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

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.

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.

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

Putting it all together: case study

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

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

Solving the growth challenge

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

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

Step 2: Reserve

The impact of reservations
30% reduction
In unit cost

Putting it together
85% reduction
in unit cost!

Sounds pretty easy, right?
Not really.
In reality, it is very complex.

David Costa
CTO
dcosta@fredhopper.com
@davidcosta
Netherlands
May 24, 2016
NBC Congrescentrum

What is Fredhopper?

The solution of choice for eCommerce Search,
Navigation and Merchandizing in the Enterprise

Fredhopper Cloud Services Product
Fredhopper
Cloud
Services
Query API
Data
API
Business
Configuration
API
PIM
Analyti
cs
CRM
REST endpoints
query.published.live1.fas.eu1.fredhopperservices.com/fredhopper/query/
bm.prepublished.live1. … .com/fredhopper/config/campaigns/fashion/en_US/list?label_id=<ID>

Search Box

Instant Search Suggestions

Flyout Navigation

Facet Navigation

Banner
Campaigns

Promotions

Search Box
Instant Search Suggestions
Facet Navigation
Flyout Navigation
Banner
Campaigns
Promotions
… much more

Our vision is to be the “most flexible and agile” SaaS-
solution for managing digital merchandising strategies
& brand experiences on a global scale.

How are customers using Fredhopper?

Adoption and scalability drivers
42
Create, manage and
deliver
engaging cross-channel
product experiences on
a
global scale.
Select, rank and serve
the most relevant
content to the right
person at the
right time
Provide online the level
of personalized,
dynamic, rich experience
of traditional
high-end stores
from International
to Global
from Static Shelf
to Digital Isle
from Transaction
to Experience

Large fleet of computing
infrastructure deployed globaly in
production

Global
Tokyo
Sydney
Singapore
Frankfurt
Dublin
California
6 Regions

Including RI
amortization and
depending on the RIs
coverage
$ 200-250k
monthly
Ready to be deployed
in 6 of the AWS
regions around the
globe
4/6 Regions
production
Computing resources
steadily growing over
the past 7 years
% Constant
growth

We use RIs to obtain a significant
Cost reduction
4

It provides a framework to build a
cost structure
4

EC2 Instances deployed
in production across 4
AWS regions
EC2 Instances deployed
in Development
212
5
195
0
175

2
080,10%
Reserved Instances
8
5
19,90%
On Demand Instances
1
0
>90%
Instances Utilization
2015
RIs coverage scheme for production

Summing it up
50
Around 2000 instances in production, (>5000 vCPUs)
On demand monthly around $ 300k
With 80% RIs we have a $ 150k EC2 cost per month
Savings of 150k per month and around $1.7M per year on EC2 costs

Operational Transparency and
Visibility

Realtime dynamic dashboard of OD vs RI utilization
Rules
RI coverage according to scheme
Usage above RI coverage
RI coverage above usage
Usage outside RI coverage

Conclusion

Takeaways from Fredhopper
Cost structures beside cost savings provides a
culture of utilization and cost awareness
It does work! We saved $1.7M last year in EC2
costs
The team is rewarded by those cost reductions: part
of the savings funds innovation and green fields.

Thank you!

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

Cost optimization governance
(Remember the fourth pillar?)

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.

AWS options

Reserved Instances and right-sizing options

• Vast selection of software solutions optimized for
AWS
• Flexible Pricing: Hourly, Monthly and Annually
• No cost trials
• 1-Click deployment
• Easy provisioning
• One invoice that includes AWS usage and AWS
Marketplace Software
AWS Marketplace

Putting it all together

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

Cycle of cost optimization
✔
✔
✔
✔✘
✘
✘
✘
$
$
$
$
$

Thank You!