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Demystifying Cloud Economics - How to Build an Investment Case for Scale Migration to the Cloud - Business

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While Cloud is fast becoming the new normal for organisations of all sizes, many IT executives & budget owners struggle to articulate the business value of moving to the Cloud in terms that resonate with the Board and broader C suite. In this session, we will talk through the impact cloud computing is having on the overall IT cost base, not just the infrastructure layer. We will also cover what the typical non-cost benefits are, and how they can be measured and communicated. Finally we will provide a framework that can be used to calculate the transformation costs associated with moving to Cloud.

Speaker: Conor McNamara, Head of Cloud Economics and Enterprise Strategy, Asia Pacific, Amazon Web Services

Published in: Technology
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Demystifying Cloud Economics - How to Build an Investment Case for Scale Migration to the Cloud - Business

  1. 1. ©  2016,  Amazon  Web  Services,  Inc.  or  its  Affiliates.  All  rights  reserved. Conor  McNamara,  Head  of  Business  Development,  APAC Amazon  Web  Services Ben  Cabanas  – CTO,  Transportation,  GE Demystifying  Cloud  Economics How  to  Build  an  Investment  Case  for  Scale  Migration  to  the  Cloud Business
  2. 2. Patterns  for  Enterprise  Adoption “transform  the  way  organisations produce  &   consume  technology” Remediate   Technology  Debt Develop  an  Innovation   Factory Platform
  3. 3. But  how  do  I  quantify  this?
  4. 4. The  migration  approach  is  dependent  on  the  specific   drivers  and  constraints  of  the  organisation   Lift  and  Shift Right-­sized  on  AWS AWS-­Optimized Old  world   enterprise  in   the  cloud Exploring   the  new   normal Next-­gen   operating   model Benefits   of   change Degree  of  Change
  5. 5. Why  the  economics of  cloud are  different
  6. 6. What  are  the  key  benefits  categories? • Unit  Price  of  Infrastructure • Ability  to  match  supply  &  demand • Reinvention  is  continuous  – a  true  efficiency  dividend • A  pathway  to  optionality • An  elastic  Cost  Base • Transparency  drives  a  lean  mindset Operational  Costs
  7. 7. What  are  the  key  benefits  categories? Workforce  Productivity • Automation  drives  maintenance  efficiencies • Reduced  cost  of  planned  and  unplanned  outages • Increased  Developer  Productivity
  8. 8. What  are  the  key  benefits  categories? Cost  Avoidance • Elimination  of  hardware  refresh  programs • Elimination  of  maintenance  programs
  9. 9. What  are  the  key  benefits  categories? Operational  Resilience • Reduced  Risk  Profile/Reduced  cost  of  Risk   Mitigation • Revenue  &  margin  improvements  due  to   reduced  outages
  10. 10. What  are  the  key  benefits  categories? Business  Agility • Reduced  Time  to  Market • Increased  operational  agility  (new  market   penetration,  divestiture,  acquisition) • Reduced  cost  &  increased  Pace  of   Experimentation
  11. 11. What  are  the  key  benefits  categories? Operational  Costs Workforce  Productivity Cost  Avoidance Operational  Resilience Business  Agility
  12. 12. AWS  TCO  support  to  date
  13. 13. AWS  TCO  Calculator  (https://awstcocalculator.com)
  14. 14. What’s  missing?
  15. 15. Economic Criteria Category Infrastructure Comparison   Capacity  Planning  benefits Financial Benefits  of  Innovation Cost  Avoidance Workforce Productivity Application  centric  TCO Cost  to  Achieve (Migration,  Platform,  Training) Legacy Constraints
  16. 16. Why  do  a  Mass  Migration?
  17. 17. If  I  were  you,   I  wouldn’t  start  from here…
  18. 18. Ø Utility  pricing  model  across  entire  technology  stack Ø Reduced  maintenance  costs  &  ability  to  refocus  your  staff Ø Access  to  innovation  platform Ø Provide  direct  cost  control  to  the  lines  of  business Ø Remove  the  depreciation  “hole”  &  eliminate capital  commitments Ø Use  it  as  a  platform  for  future  cost  savings Ø Eliminate  hosting  technology  debt. Ok,  on  a  serious  note…
  19. 19. Am  I  ready for  a  mass migration?
  20. 20. The  Adoption  Journey  &  the  role  of  Mass  Migration Year  1 Year  2 Year  3 Year  4 • Early  Discovery • Learning • POCs • TCO/ROI  Analysis • Security  &  Risk  Preparation • Cloud  Strategy • Foundational  Architecture • New   Application   Patterns  (MSA,  CI/CD) • Dev/Test • Production   Application   Migration • Operational  Integration • Billing  Optimization Value • Portfolio  Mass   Migration • DC   Shutdown • Horizontal  Solutions   (VDI,  Back-­ up/Archive,  Broad   storage) • Advanced   Operational  Patterns   (CI/CD) • Optimization • Infrastructure  fully  automated • App/Dev  owns  full  solution  stack  with   tools  and  service  catalogs Time Year  5
  21. 21. The  Adoption  Journey  &  the  role  of  Mass  Migration Year  1 Year  2 Year  3 Year  4 • Early  Discovery • Learning • POCs • TCO/ROI  Analysis • Security  &  Risk  Preparation • Cloud  Strategy • Foundational  Architecture • New   Application   Patterns  (MSA,  CI/CD) • Dev/Test • Production   Application   Migration • Operational  Integration • Billing  Optimization Value • Portfolio  Mass   Migration • DC   Shutdown • Horizontal  Solutions   (VDI,  Back-­ up/Archive,  Broad   storage) • Advanced   Operational  Patterns   (CI/CD) • Optimization • Infrastructure  fully  automated • App/Dev  owns  full  solution  stack  with   tools  and  service  catalogs Time Year  5
  22. 22. Challenges  of  a  mass  migration   investment  case
  23. 23. Ø Lack  of  sufficient  data re.  legacy  estate  to  plan  or  build  a  business  case Ø Sunk  costs  associated  with  legacy  contracts  and/or  existing  DCs/Co-­Los  inhibit   short  term  saving  potential   Ø Uncertainty as  to  level  of  investment  required  to  migrate  and  build  future  state   platform Ø Lack  of  clarity  as  to  future  state  benefits  profile  (cost  savings++)   Ø Short  term  cost  spike  due  to  running  old  and  new  world  in  parallel Ø Cash  constraints  and  shareholder  pressure  often  means  there  are  capital   constraints
  24. 24. Good  News  -­ we  can  help!
  25. 25. • Data  Discovery  Support  (Tooling  +  Competency) • Full  Benefits  Assessment  via  AWS  Value  Engineering • Migration  Methodology  +  Transformation  Cost  Estimates • Tailored  AWS  &  Partner  Investment  Programs
  26. 26. Cost  to  Achieve  – Application  Transformation  Patterns Migration  Pattern  Name  &  Label Pattern  Description Retain Ø Clientwill  keep  host  /  application  in  their  source  environment Retire* Ø Application and  host  decommission  on  source Re-­Hosting* Ø Like  for  Like  application  migration to  target  cloud Ø Minimal  effort  to  make  the  application  work  on  the  target  cloud  infrastructure   (Minimal  appl layout  change) Re-­Platform* Ø Up-­Version  of  the  OS  and/or Database  onto  the  target  cloud Ø Storage  migration  will  be  needed  (without  conversion) Ø Application  reinstallation  on  the  target Ø Database  to  AWS  RDS Re-­Factoring* Ø OS  and/or  Database  porting Ø Middleware and  application  change  to  cloudify an  application Ø Data  conversion;;  Database  transition  to  MySQl,  Aurora,  etc. Ø UAT  required Re-­Architect** Ø Application  architecture  changes  may  also  require Up-­Version  or  Porting   Ø Middleware,  data  modernisation;;  application  consolidation  /  stacking Ø UAT  required;;  HPC  Grid,  No  ITIL R1 R2 R3 R4 R5 R6
  27. 27. So  What  Can  We  Learn  From   GE’s  Story  To  Date?
  28. 28. ….Organisations All  Over  the  World  are  Using  AWS   to  Retire  Their  Legacy  Technology  Debt Kaplan  Closes  8  Data  Centers. By  Migrating  Data  Centers,  Wilmar Saves  50%  in  CAPEX.   Delaware  North  Moves  Data  Center  to  Save  $3.5M   Over  Five  Years. Hess  Uses  AWS  to  Streamline  Data  Center  Migration   in  6  Months. News  UK  Shortens  Time  to  Market  by  6  Months  by   Migrating  60%  of  its  Data  Centers.
  29. 29. ….and  Learnings  are  Leading  to  an   Accelerated  Migration  Pace In just three months, Condé Nast was able to migrate over 500 servers, one petabyte of storage, various mission critical applications (such as HR, Legal, and Sales), and over 100 database servers into the AWS Cloud.
  30. 30. ….The  move  to  AWS  provides  a  platform  to  transform   your  IT  cost  base 100% 30% Today DC  in  AWS Right-­sizing AWS   Optimized   Apps Move  to   Aurora Move  to   Open   Source Corporate   Apps  aaS   on  AWS Migration  to   Workspaces True  AWS   Optimized Focus  of  initial  migration For  illustrative  purposes  only
  31. 31. What  are  the  characteristics  of  a  potential  customer?   Existing  production  AWS  workloads,  trained  teams,  and  Enterprise  Support. A  focused  objective  that  includes  200+  applications  and  a  clear  timeline. Strong  Executive  sponsorship,  a  clear  value  proposition,  and  commercial  terms  in   place. Willing  and  able  to  invest  resources  and  make  financial  commitment. Clear  security  and  compliance  plans  that  support  this  change  in  their  business.
  32. 32. Plan   Go-­No-­ Go Project   Launch Project   Launch So  what  could  an  engagement  look  like?   Migration   Planning   Workshop Joint  Assessment  &   Planning Migration   Program   commences 1-­2  Days 4  Weeks* Decision   Meeting Scope  dependent* Customer  team+
  33. 33. Closing  Thoughts Cloud  in  the  Enterprise  is  no  longer  an  experiment   For  us  this  is  no  longer  an  experiment,  this  is  no  longer  a  test.  ...  It's  inevitable.   GE  CIO,  Jim  Fowler,  October  2015 Global  patterns  for  success  are  emerging  -­ and  should  be  leveraged  by   fast  followers Cloud  is  not  a  commodity  – consuming  the  platform  natively  will  deliver   sustainable  customer  outcomes Zero  infrastructure,  everything  as  a  service  – Infrastructure  is  no  longer   a  critical  component  of  your  value  chain
  34. 34. AWS  Training  &  Certification Intro  Videos  &  Labs   Free  videos  and  labs  to   help  you  learn  to  work   with  30+  AWS  services   – in  minutes! Training  Classes In-­person  and  online   courses  to  build   technical  skills  – taught  by  accredited   AWS  instructors Online  Labs   Practice  working  with   AWS  services  in  live   environment  – Learn  how  related   services  work   together AWS  Certification Validate  technical   skills  and  expertise  – identify  qualified  IT   talent  or  show  you   are  AWS  cloud  ready Learn  more:  aws.amazon.com/training
  35. 35. Your  Training  Next  Steps: ü Visit  the  AWS  Training  &  Certification  pod  to  discuss  your   training  plan  &  AWS  Summit  training  offer ü Register  &  attend  AWS  instructor  led  training ü Get  Certified AWS  Certified?  Visit  the  AWS  Summit  Certification  Lounge  to  pick  up  your  swag Learn  more:  aws.amazon.com/training
  36. 36. Thank  You!

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