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The Total Cost of (Non) Ownership In The Cloud

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Kingsley Wood's APAC Webinar about the Total Cost of (Non) Ownership In the Cloud. Part of the 2012 APAC Webianr series.

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The Total Cost of (Non) Ownership In The Cloud

  1. 1. The Total Cost of (Non)Ownership In The Cloud Kingsley Wood kwood@amazon.com Business Development
  2. 2. What Analysts are Saying about AWSInfrastructure-as-a-Service Leader in 2011 Gartner IaaS Leader in 2011 Forrester Market Share Leader Magic Quadrant Hadoop Wave
  3. 3. Powering the Most Popular Internet Businesses
  4. 4. Trusted by Enterprises
  5. 5. ASEAN CUSTOMERS
  6. 6. AWS Global InfrastructureGovCloud US West US West US East South EU Asia Asia (US ITAR (Northern (Oregon) (Northern America (Ireland) Pacific Pacific Region) California) Virginia) (Sao Paulo) (Singapore) (Tokyo) AWS Regions AWS Edge Locations
  7. 7. The AWS Cloud Components For Enterprises Tools to access services Cross Service features High-level building blocks Low-level building blocks
  8. 8. Pay as you go
  9. 9. When Comparing TCO…
  10. 10. When calculating TCO… #1 Start by understanding your use cases, and the applications that support them
  11. 11. Analyze, Understand and Classify IT assets List all your IT assets Dash board Identify upward and downward dependencies Web CRM Auth Start classifying your IT assets into different categories: • Applications with Top LDAP Service Secret, Secret, or Public data setsDB • Applications with low, medium and Search high compliance requirements OLAP Engine • Applications that are internal- only, partner-only or customer- facing • Applications with low, medium and ERP Report logs high coupling • Applications with strict, relaxed licensing
  12. 12. Stack Rank your IT Assets, looking for: Under-utilized IT assets Applications that have an immediate business need to scale Applications that are running out of capacity Applications that are easy to move today First successes will build support within your organization and create awareness and excitement, so choose carefully!
  13. 13. Application Usage Patterns Steady State Spiky Predictable Uncertain Unpredictable Example: Example: Example:Corporate Data Logging Marketing Web Apps Promotions Website
  14. 14. Pick the low-hanging fruit so you can learn Dash board Web CRM CRM Auth Servic LDAP e DB DB Search OLAP Engine ERP Report logs
  15. 15. When calculating TCO… #1 Start by understanding your use cases, and the applications that support them #2 Take all the fixed costs into consideration(Don’t forget all the hidden costs!)
  16. 16. Take all the costs in to considerationFixed Cost Factors One-time Upfront Monthly AWS Co-lo On-Site AWS Co-lo On-SiteServer Hardware 0 $$$ $$ $$ 0 0Network Hardware 0 $$ $$ 0 0 0Hardware Maintenance 0 $$ $$ 0 0 0Software OS 0 $$ $$ $ 0 0Power and Cooling and Data 0 0 $$ 0 0 $Center EfficiencyData Center/co-lo Space 0 $$ $$ 0 0 0Personnel (Administration) 0 $$ $$ $ $$ $$$Storage and Redundancy 0 $$ $$ $ 0 0Bandwidth $ $$ $ $$ $ $Resource Management 0 0 0 $$ $ 0SoftwareTotal
  17. 17. Hardware Administration Costs Database Administration Costs
  18. 18. When calculating TCO… #1 Start by understanding your use cases, and the applications that support them #2 Take all the fixed costs into consideration(Don’t forget all the hidden costs!) #3 Use Updated Pricing (compute, storage and net) Price cuts, Tiered Pricing and Volume Discounts
  19. 19. Massive economies of scale andefficiency improvements allow us to continually lower prices
  20. 20. AutomationDeployment
  21. 21. 20 price cuts in last 5 years“It makes me look so good in front of my CFO. When he [CFO]sees the savings in our AWS monthly bill, he thinks that it is mewho is working hard on driving the costs down and increasingefficiency of the company’s infrastructure. I get all the credit forall the hard work you guys are putting in.” CIO of F500 company Massive economies of scale and efficiency improvements allow us to continually lower prices.
  22. 22. Pay less when you use more
  23. 23. Incremental Adoption Savings 60 50 40 Data in TB 30 20 10 0 0 12 24 36 Months Actual Storage
  24. 24. Incremental Adoption Savings 60 50 40 Data in TB 30 20 10 0 0 12 24 36 Months Actual Storage Provisioned
  25. 25. Incremental Adoption Savings 60 50 40 Data in TB 30 20 10 0 0 12 24 36 Months Actual Storage Provisioned
  26. 26. Did you know?Free Usage Tier Free Services Data Transfer New Customers AWS Elastic Beanstalk No Charge for AWS CloudFormation Amazon EC2 AWS IAM Inbound Data Transfer Amazon RDS Auto Scaling Amazon ELB Consolidated Billing Data Transfer between Amazon S3 Instances within an Amazon EBS Availability ZoneFor All CustomersAmazon SQS/SNSAmazon DynamoDB Amazon SES Amazon SWF And more…
  27. 27. When calculating TCO… #1 Start by understanding your use cases, and the applications that support them #2 Take all the fixed costs into consideration(Don’t forget all the hidden costs!) #3 Use Updated Pricing (compute, storage and net) Price cuts, Tiered Pricing and Volume Discounts#4 Leverage Reserved Pricing vs. On-Demand Pricing(Amortize Monthly over 1-3 years)
  28. 28. Multiple pricing models allow you to optimize costs for both variable and stable workloadsOn-Demand, Reserved (Light, Medium and Heavy for 1-Year, 3-Year) and Spot
  29. 29. Save more when you reserve On-demand Reserved Instances Instances• Pay as you go • One time low upfront fee + Pay as you go• Starts from • $23 for 1 year $0.02/Hour term and $0.01/Hour 1 and 3 year terms Heavy Medium Light Utilization RI Utilization RI Utilization RI
  30. 30. $14,000 $12,000 m2.xlarge running Linux in US-East Region $10,000 over 3 year period $8,000Cost Heavy Utilization $6,000 Medium Utilization Light Utilization $4,000 On-Demand $2,000 $- 0% 20% 40% 60% 80% 100% Utilization Utilization Sweet Spot Feature Savings over On-Demand <10% On-Demand No Upfront Commitment 10% - 40% Light Utilization RI Ideal for Disaster Recovery Up to 56% (3-Year) 40% - 75% Medium Utilization RI Standard Reserved Capacity Up to 66% (3-Year) >75% Heavy Utilization RI Lowest Total Cost Up to 71% (3-Year) Ideal for Baseline Servers
  31. 31. Steady State Usage Pattern 8Traffic in Instances 6 Traffic pattern 4 Reserved Physical 2 0 0 6 12 18 24 30 36 Months
  32. 32. TCO of Steady State Web Application TCO Web Application - Steady State Usage Pattern On-Premises AWS Option 1 AWS Option 2 AWS Option 3 Option All Reserved Mix of On-Demand All On-Demand Amortized monthly costs over 3 years (3-Year Heavy) and ReservedOption 1: All Reserved Compute/Server CostsRecommended Option (Most Cost-effective) Server Hardware $306.36 $0.00 $0.00 $0.00 Network Hardware $62.04 $0.00 $0.00 $0.00Option 2: Hardware Maintenance Mix of On-Demand and Reserved$47.10 $0.00 $0.00 $0.00 Power and Cooling $172.02 $0.00 $0.00 $0.00 Data Center Space $144.48 $0.00 $0.00 $0.00Option 3:Personnel All On-Demand $1,200.00 $0.00 $0.00 $0.00Commitment-free and Risk-free Option AWS Instances $0.00 $618.33 $1,079.42 $2,138.40 Total - Per Month $1,932.00 $618.33 $1,079.42 $2,138.40 Total - 3 Years $69,552.00 $22,260.00 $38,859.20 $76,982.40 Savings over On-Premises Option 68.0% 44.1% -10.7%
  33. 33. Spiky Predictable Usage Pattern 12 10Traffic in Instances 8 6 Traffic Pattern Reserved 4 On-Demand Physical 2 0 0 6 12 18 24 30 36 Months
  34. 34. When you turn off your cloudresources, you actually stop paying for
  35. 35. TCO of Spiky Predictable Web Application TCO Web Application - Spiky Usage Pattern On-Premises AWS Option 1 AWS Option 2 AWS Option 3 Amortized monthly costs over 3 years Option All Reserved Mix of On-Demand All On-Demand and Reserved Compute/Server CostsOption 1: All Reserved Server Hardware $510.60 $0.00 $0.00 $0.00 Network Hardware $103.40 $0.00 $0.00 $0.00Option 2: Hardware Maintenance Mix of On-Demand and Reserved $78.50 $0.00 $0.00 $0.00Recommended Option (Most Cost-effective) Power and Cooling $286.70 $0.00 $0.00 $0.00 Data Center Space $240.80 $0.00 $0.00 $0.00Option 3: Personnel All On-Demand $2,000.00 $0.00 $0.00 $0.00Commitment-free and Risk-free Option $0.00 AWS Instances $992.16 $881.42 $1,940.40 Total - Per Month $3,220.00 $992.16 $881.42 $1,940.40 Total - 3 Years $115,920.00 $35,717.60 $31,731.20 $69,854.40 Savings over On-Premises Option 69.2% 72.6% 39.7%
  36. 36. Uncertain Unpredictable Usage Pattern 20 16Traffic in Instances 12 Actual Traffic 8 Expected Traffic Reserved On-Demand 4 Physical 0 0 6 12 18 24 30 36 Months
  37. 37. Light and Medium Utilization Reserved Instances Low upfront one-time fees When you turn off, you save on hourly usage
  38. 38. TCO of uncertain unpredictable web application when it fails TCO Web Application - Unpredictable Usage Pattern (Failure case) On-Premises AWS Option 1 AWS Option 2 AWS Option 3 Amortized monthly costs over 3 years Option All Reserved Mix of On-Demand All On-Demand and Reserved Compute/Server CostsOption 1: All Reserved Server Hardware $816.96 $0.00 $0.00 $0.00 Network Hardware $165.44 $0.00 $0.00 $0.00Option 2: Hardware Maintenance Mix of On-Demand and Reserved $125.60 $0.00 $0.00 $0.00 Power and Cooling $458.72 $0.00 $0.00 $0.00Option 3: Data Center or Co-located Space All On-Demand $385.28 $0.00 $0.00 $0.00Commitment-free and Risk-free Option$3,200.00 Personnel $0.00 $0.00 $0.00Recommended Option (Most Cost-effective) AWS Instances $0.00 $1,552.89 $1,275.46 $1,009.80 Total - Per Month $5,152.00 $1,552.89 $1,275.46 $1,009.80 Total - 3 Years $185,472.00 $55,904.00 $45,916.48 $36,352.80 Savings over On-Premises Option 69.9% 75.2% 80.4%
  39. 39. « Want to increase innovation? Lower the cost of failure » Joi Ito
  40. 40. Cost of lost business or disappointed customers Uncertain Unpredictable Usage Pattern (Success Case) 40 36 32 Traffic in Instances 28 24 20 Actual Traffic Expected Traffic 16 Reserved 12 On-Demand 8 Physical 4 0 0 6 12 18 24 30 36 Months
  41. 41. Save more money by using Spot Instances On-demand Reserved Spot Instances Instances Instances• Pay as you go • One time low upfront • Requested Bid Price fee + Pay as you go and Pay as you go • $23 (1 year) • Varying…$0.005/Hour• Starts from $0.01/Hour at 9am today $0.02/Hour 1 and 3 year terms Heavy Medium Light Utilization RI Utilization RI Utilization RI
  42. 42. Save more money by using Spot InstancesReserved Hourly Price > Spot Price < On-Demand Price
  43. 43. Spot Use casesUse Case Types of ApplicationsBatch Processing Generic background processing (scale out computing)Hadoop Hadoop/MapReduce processing type jobs (e.g. Search, Big Data, etc.)Scientific Computing Scientific trials/simulations/analysis in chemistry, physics, and biologyVideo and Image Transform videos into specific formatsProcessing/RenderingTesting Provide testing of software, web sites, etcWeb/Data Crawling Analyzing data and processing itFinancial Hedgefund analytics, energy trading, etcHPC Utilize HPC servers to do embarrassingly parallel jobsCheap Compute Backend servers for Facebook games
  44. 44. Typical Spot Bidding Strategies Bid Distribution 20% 18%Percentage of the Distribution 16% 14% 12% 10% 8% 6% 4% 2% 0% Bid Price as Percentage of the On-Demand Price
  45. 45. Optimizing Video Transcoding Workloads Free Offering Premium Offering • Optimize for reducing cost  Optimized for Faster response times • Acceptable Delay Limits  No DelaysImplementation Implementation • Set Persistent Requests  Invest in RIs • Use on-demand Instances, if  Use on-demand for Elasticity delay Maximum Bid Price Maximum Bid Price < On-demand Rate >= On-demand Rate Get your set reduced price for Get Instant Capacity for higher price your workload
  46. 46. When calculating TCO… #1 Start by understanding your use cases, and the applications that support them#2 Take all the fixed costs into consideration (Don’t forget all the hidden costs!) #3 Use Updated Pricing (compute, storage and net) Price cuts, Tiered Pricing and Volume Discounts#4 Leverage Reserved Pricing vs. On-Demand Pricing(Amortize Monthly over 1-3 years) #5 Intangible Cost Savings – Take a closer look at what you get as part of AWS
  47. 47. AWS delivers a premium security spec at non-premium pricesCertifications Physical Security HW, SW, Network SOC 1 Type 2 Datacenters in Systematic change (formerly SAS-70) nondescript facilities management ISO 27001 Physical access Phased updates strictly controlled deployment PCI DSS for EC2, S3, EBS, VPC, Must pass two-factor Safe storage RDS, ELB, IAM authentication at decommission least twice for floor FISMA Moderate Automated access Compliant Controls monitoring and self- Physical access audit HIPAA & ITAR logged and audited Compliant Advanced network Architecture protection
  48. 48. Reduced Time to Market = More Revenue
  49. 49. Continuous optimization in your architecture results in recurring savingsas early as your next month’s bill
  50. 50. When Comparing TCO…
  51. 51. AWS Pricing PhilosophyPay as you go• No minimum commitments or long-term contracts required• Capex -> Opex• Turn off when you don’t need itPay less per unit when you use more• Tiered Pricing and Volume DiscountsPay even less when you reserve• Reserved pricingPay even less as AWS grows• Efficiencies, optimizations and economies of scale result in passing the savings back to you in the form of lower pricing
  52. 52. http://aws.amazon.com/tco-calculator/
  53. 53. TCO Comparison Calculator for Web Applications
  54. 54. How customers are saving money with AWSAWS Economics Center IDC Report: Theaws.amazon.com/economics Business Value ofTCO Whitepapers AWS AcceleratesCalculator Tools Over Timeaws.amazon.com/tco-calculatorCase Studies
  55. 55. Thank you!

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