Quantifying_the_impact_of_AWS_on_your_business

© 2019, Amazon Web Services, Inc. or its affiliates. All rights reserved.
H O N G K O N G
18.10.19

H O N G K O N G
18.10.19
Quantifying the impact of AWS on
your business
Chris So
Manager, Enterprise Business

Session agenda
1
Cloud Value
Framework
2
Areas of business value
Cost savings
Staff productivity
Operational resilience
Business agility
3
Process &
best practices

Achieving business value: Cloud Value Framework
Cost savings (TCO)
Example
50%+ reduction in TCO (GE)
What is it?
Infrastructure cost savings/
avoidance from moving to
the cloud
Cost impact
Staff productivity
Example
More than 500 hours per year
of server configuration time
saved (Sage)
What is it?
Efficiency improvement
by function on a task-by-
task basis
Example
Critical workloads run in
multiple AZs and Regions
for robust DR (Expedia)
What is it?
Benefit of improving SLAs and
reducing unplanned outage
Business agility
Example
Launch of new products
75% faster (Unilever)
What is it?
Deploying new features/
applications faster and
reducing errors
Value impact

Sample output
Staff productivityCost savings Operational resilience Business agility
Total $1,936,668 $1,012,500 $1,432,343 $4,349,921
Server
Storage
Network
$1,093,514
$688,514
$154,640
Savings
Infrastructure
Facilities
Network
$405,000
$270,000
$337,500
Impr. Value
30%
80%
20%
eCommerce1
After Value
99.00%
Before
99.50% $1,432,343 Time to deploy
Total defects
Customer NPS
Employee NPS
$656,232
$640,360
$1,302,274
$1,751,055
Impr. Value
22.0%
35.0%
50.0%
33.3%
KPIUptime
TOTAL ANNUAL BENEFIT $8,731,432
Typical focus Most compelling cloud benefits

Cost savings: Economics of the cloud
Traditional hardware
Actual demand
AWS
Predicted demand
Key:
Infrastructure
cost $
Time
Large
capital
expenditure
Opportunity
cost
Lost
opportunity

Business cases estimate cost savings of 26–49%
Footprint rightsizing based
on actual compute needs
Economies of scale allow AWS
to continually lower price
Flexible pricing models and
instance options
26–49%
n = 125 TCO-focused case engagements
Projected cost savings from moving to AWS

Cost savings: Example
1 non-virtualized physical server, 16 cores, and 64 GB RAM at 50% utilization
1 c4.4xl (3-year TCO)
Server HW
Maintenance
Rack
Facilities
Labor
Software
TOTAL (3-year)
$8.0K
$3.6K
$2.0K
$10.8K
$4.0K
$0K
$28.4K
On premises
Amazon EC2 3-yr. RI
Labor
Support
TOTAL (3-year)
$8K
$1K
$1K
$10K
AWS

Cost savings: Modeling on premises
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling
Storage software costs
(+ maintenance)
Hardware: Storage disks,
SAN/FC switches2 Storage Costs
Recurring ISP/bandwidth costs
Network hardware: LAN
switches, load balancer3 Network Costs
Facilities Cost
Space Power Cooling
1 Server Costs Software: OS, virtualization
licenses (+ maintenance)
Hardware: Server, rack
chassis PDUs, ToR switches
(+ maintenance)
Diagram doesn’t include every cost item. For example, software costs can include database, management, and
middle-tier software costs. Facilities costs can include costs associated with upgrades, maintenance, building
security, taxes, and other items.
Illustrative

Cost savings: AWS benchmarking insights
Source: AWS Cloud Economics Benchmarking, n = 500 AWS
customers. August 2018
This reduction grows with AWS maturity and exclusivityAWS reduces costs…
Reduction in overall
IT infra spend
19.0%
IT infra spend
22.4%
IT infra spend
25.2%
IT infra spend
29.1%

Task
Typical
reduction
Description
Server budgeting and planning 90% There is no capital server budget or plan in the AWS Cloud
Server purchasing process 75%
Instance purchasing requires minimal effort in comparison
to server purchasing
Long-term capacity planning 75%
Capacity planning is simply a matter of initiating new instances
based on thresholds, and much of this can be automated
Project budgeting and planning 75% Project budgeting and planning effort should be significantly reduced
Prepare detailed implementation plans 75%
Implementation plans will be reduced since instance initiation
is very straightforward
Arrange repair for hardware on occasion
of hardware failure
100% Not necessary with AWS
Installing/upgrading/removing software 50% Simplify and automate OS patching/updating
Staff productivity: Example
Server administrator
Illustrative

Staff productivity: Example
Task Typical reduction
Server budgeting and planning 90%
Server purchasing process 75%
Long-term capacity planning 75%
Project budgeting and planning 75%
Prepare detailed implementation plans 75%
Arrange repair for hardware on occasion
of hardware failure 100%
Installing, upgrading, and removing software 50%
x
75% reduction w/AWS
18.8% efficiency gain
25% of time
Server administrator

Staff productivity: AWS benchmarking insights
Source: n = 500 AWS customers. AWS Cloud Economics
Benchmarking, August 2018.
Cloud improves efficiency… This value accelerates with AWS maturity
2x
Increase in # of VMs
managed per admin
1.8x
Increase in # of TBs
managed per admin
VMs managed on prem vs. in cloud TBs managed per administrator
On premises In cloud On premises In cloud
3.2x
Increase in # of TBs managed
per admin over time
3.3x
Increase in # of VMs managed
per admin over time
TBs managed over timeVMs managed over time
1–2 years on AWS 3+ years on AWS 1–2 years on AWS 3+ years on AWS

Staff productivity: Case studies
“[Our staff] spends 60% of work on things
like data proliferation, lack of standards,
security hardening… AWS is addressing
these needs.”
50% reduction in administrative
overhead, including server management
and backup operations.
$3M staffing cost savings; reduced
operational costs by 83%.
“Before AWS, we had an entire team
working on setting up hardware and
deploying and configuring it. Now, they
can spend their time focusing on more
important corporate initiatives.”
50% reduction in infra management time.
“I haven’t had a support callout in six
months. Previously we’d have to work late
at least 1-2x/week. It’s allowed us to
refocus people’s efforts onto more
strategic tasks.”
50% improvement in IT efficiency.
“Tasks around hardware troubleshooting
and tuning have been eliminated while
capacity planning and procurement have
been reduced by 90%.”

Operational resilience: Downtime & security costs
Annual Fortune
1000 application
downtime costs
(IDC)
$1.25B
to $2.5B
Average cost per
lost or stolen
record (Ponemon
Institute)
$141
Cost/hr. of
a critical
application
failure (IDC)
$500K to
$1M
Average cost of a
data breach
(Ponemon
Institute)
$3.6M
Average cost/hr.
of downtime
(Ponemon
Institute)
$474K

Operational resilience: Quantifying cost
Cost category % of total Definition
Third parties 1.3%
The cost of contractors, consultants, auditors, and other specialists engaged to help resolve
unplanned outages
Equipment 1.2% The cost of new equipment purchases and repairs, including refurbishments
Ex-post activities 1.1% All after-the-fact incidental costs associated with business disruption and recovery
Recovery 2.9%
Activities and associated costs that relate to bringing the organization’s networks and core systems
back to a state of readiness
Detection 3.6%
Activities associated with the initial discovery and subsequent investigation of the partial or
complete outage incident
IT productivity 8.4% The lost time and related expenses associated with IT personnel downtime
End-user productivity 18.7% The lost time and related expenses associated with end-user downtime
Lost revenue 28.2%
The total revenue loss from customers and potential customers because of their inability to access
core systems during the outage period
Business disruption 34.6%
Additional economic loss of the outage, including reputation damages, customer churn, and lost
business opportunities
Total 100.0%

Operational resilience: Example
FTE cost = $1,500/minute
1. Business user productivity
# of users = 1,500
Ave. FTE cost = $125K/yr.
FTE cost = $750/minute
2. Other categories
~50% of cost
0.1% improvement = 525.6 minutes
x $2,250/minute
~$1.2M
Calculate cost per minute of unplanned downtime
Illustrative

AWS customers reduce monthly incidents
Source: n = 500 AWS customers. AWS Benchmarking,
August 2018.
43.4%
Reduction in total
monthly incidents
# of total monthly incidents
Before AWS After AWS
High infrastructure availability and durability;
multi-AZ failover
Automatic configuration and resource management;
centrally managed users and credentials
Built-in DDoS protection and security perimeter;
30+ compliance certifications and accreditations

Operational resilience: Case studies
Migrated all workloads to AWS to reduce
downtime by 60%, with an annual savings
of £1.2M
Using AWS, Travelstart has seized
opportunities in emerging markets and
has cut operational costs by 43% and
downtime by 25%
“SAP applications have improved
from 90% to almost 100% since moving
to AWS”
Migrated to AWS in 6 weeks with
no downtime and improved availability
to 99.99%+
With its on-premises setup, the availability
of its system ran to 98%, but on its cloud
infrastructure, this has risen to 99.965%
Rebuilt patient engagement portal
on AWS and reduced downtime from
120 to <5 min/month

Business agility: Innovate faster while reducing
failure costs
Simplify requirement design by leveraging built-in operational solutions
(e.g., scaling, security) and hundreds of AWS and third-party services and
solutions to deliver cloud-native products
Increase the speed of build and test through continuous integration
and delivery pipelines, and lower the cost of spinning up experimentation
by shutting down environments/services quickly
Reduce maintenance cost and simplify operations with AWS providing
IT infrastructure services, and AWS/third-party managed services options
Traditional software delivery lifecycle
and average % of time spent at each step* Cloud benefits
Eliminate deployment “wait time” with automated application
development and smaller deployment batches
*Meta Group/Gartner research
22%
15%
23%
17%
12%
Requirements & analysis
Design
Build
Integration & test
Deploy
11%Maintain

Business agility: Track and measure KPIs
KPI
New applications launched per year Mean time to resolution (MTTR) in hours
Time to market for new applications Response time to defects (hours)
Time to provision new environments (days) Customer retention (%)
Deployment frequency (revs/year) Adoption of new features (%)
Time to deploy to production (weeks) “Value” per release ($ revenue potential)
Time to deploy to test (days) Employee retention (%)
Features per release Employee absenteeism (%)
Total # of incidents/defects Employee NPS/satisfaction
Percentage of total defects found in test Customer NPS/satisfaction

Business agility: Example
Customer-facing application for a subscriber-based company
1. Time to market (TTM)
2. Conversion rates
3. Customer LTV
4. Clicks per month
6 months  1 month
80%  90%
$1K
10K
10K clicks/month x 10% conversion rate uplift x $1K LTV x 5 months
= $5M TTM benefit

AWS helps customers accelerate time to market
Shortened finance and procurement cycles
Accelerated testing processes across development,
deployment, and production
Reduced developer time spent on environment
setup and non-coding tasks
Source: n = 500 AWS customers. AWS Cloud Economics
Benchmarking, August 2018.
18.8%
Accelerated time to market
Time to market for new
applications in months
Before AWS After AWS

Business agility: Case studies
“We are able to use AWS to reduce the
time required to deploy infrastructure
from weeks to days or hours.”
Increased product development
rate by 30%.
Deploys instances 90% faster.
Provisioning time reduced from
four weeks to two days.
“More than 80 percent of IT expenditure
at AFG was consumed by IT operational
costs… Today, 60% of our IT expenditure
is dedicated to innovation.”
“Our projects no longer last years; they
last months. Which means that we can
deliver new features to our customers
much faster than we had before.”

Live Nation: Realized value with AWS
18% initial TCO savings
40% reduction in TCO through
cost optimization after
first year
58% reduction in TCO to date
Cost savings (TCO)
50% reduction in traditional
IT tasks
10x improvement in # of new
projects
Improved automation and
backup processes with
managed services
Staff productivity
99.9% vs 99.999% availability
Improved security posture
Near-zero performance
complaints
10x increase in innovation
pipeline
Rapid experimentation
90%+ business user satisfaction
with cloud services
Business agility
Progress
Internal
migration
Focus
17
months
118 apps
in cloud & 58% TCO
savings

Analysis approach and timeline
Action items
Output
• Define
analysis scope
• Identify stakeholders
• Align on key
value drivers
and timeline
• Data request sheet
• Scope and
stakeholders
identified
First call
• Customer receives
quantitative Data
Request form
• Stakeholder
discovery sessions
• Customer provides
data back to AWS
• Data request sheet
and interviews
completed
Data gathering
• Final business case
presentation
• Business case
presentation
Executive
presentation
• Build first pass
financial model
• Clarification
of customer
information
and data
• Customer feedback
and comments
(refinement)
• Financial model
• Draft business case
Analysis
Refinement

Best practices
Present the overall value, not just TCO, + Staff Productivity, Operation
Resilience, Business Agility
Build the business case collaboratively with your stakeholders
in multiple iterations
Involve the right stakeholders (Finance, Procurement, IT,
Engineering, Business)
Assign value to hard areas to quantify, like business agility
Start the business case process early in the decision-making process

Thank you!

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