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Journey Through the AWS Cloud: Cost Optimisation


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This webinar discussed strategies to help save money in the AWS Cloud. From turning systems off at night, to implementing bidding strategies on the spot market, there are many ways in which you can manage and your reduce costs with AWS.

This webinar dived into the differences between instance types; explain how you can reduce costs with Reserved Instances, the spot market and by architecting to reduce costs. It also discussed how to combine on-demand pricing with spot pricing to perform cost effective big data analysis, and introduce customer examples to illustrate how AWS customers gain the most from AWS whilst at the same time managing their spend.

Published in: Technology

Journey Through the AWS Cloud: Cost Optimisation

  1. 1. Journey through the Cloud: Cost Optimisation Ian Massingham – Technical Evangelist @IanMmmm
  2. 2. Common use cases & stepping stones into the AWS cloud Learning from customer journeys Best practices to bootstrap your projects Journey through the cloud
  3. 3. Replace up-front capital expense with low variable cost Economies of scale allow AWS to continually lower costs Pricing model choice to support variable & stable workloads Save more money as you grow bigger Cost Optimisation
  4. 4. AWS Pricing Philosophy Considerations for TCO comparison AWS TCO Calculator Cost Optimisation Techniques Agenda
  5. 5. AWS Pricing Philosophy
  6. 6. 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 45
  7. 7. Lower costs with AWS 1 “Average of 400 servers replaced per customer” Replace up-front capital expense with low variable cost 2 45 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
  8. 8. 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 optimisation 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 cloud provider
  9. 9. 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%
  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. Considerations for TCO Comparison
  13. 13. Comparing TCO is not easy ≠
  14. 14. 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.
  15. 15. 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 × × × ××× ×
  16. 16. 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
  17. 17. AWS TCO Calculator
  18. 18.
  19. 19. •  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. Find out more here:
  20. 20. Cost Optimisation Techniques
  21. 21. 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
  22. 22. 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
  23. 23. 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
  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 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. 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
  28. 28. 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 C ase StudyBuilding a Top500 HPC Cluster on AWS
  29. 29. 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
  30. 30. 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
  31. 31. 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)
  32. 32. 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)
  33. 33. 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
  34. 34. 10. Leverage AWS tools AWS Trusted Advisor AWS EC2 Usage Reports
  35. 35. Cost Optimisation Techniques 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…
  36. 36. Resources AWS Economics Center: TCO Calculator: Flipboard Grows its Reader Base while Reducing IT Expenditure News Corp Discusses Plans for Migrating Data Centers to AWS:
  37. 37. Summary TCO •  Make reasonable assumptions and leverage industry benchmarks •  Know the on-premises hidden costs •  Use our new TCO Calculator Cost Optimisation •  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. AWS Training & Certification Certification Demonstrate your skills, knowledge, and expertise with the AWS platform Self-Paced Labs self-paced-labs Try products, gain new skills, and get hands-on practice working with AWS technologies Training Skill up and gain confidence to design, develop, deploy and manage your applications on AWS
  39. 39. Ian Massingham – Technical Evangelist @IanMmmm @AWS_UKI for local AWS events & news @AWScloud for Global AWS News and Announcements ©, Inc. and its affiliates. All rights reserved.
  40. 40. We typically see customers start by trying our services Get started now at :
  41. 41. Design your application for the AWS Cloud More details on the AWS Architecture Center at :