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Value, TCO & Cost Optimisation

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Value, TCO & Cost Optimisation

  1. 1. © 2015, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Allan Knudsen, AWS Henrik Forsberg, MTG May 2016 Value, TCO & Cost Optimization on AWS
  2. 2. We will be focusing on: Framing the value of AWS AWS & Lower Costs Optimize to drive Value
  3. 3. How to frame the value of moving to AWS? Start with your goals “We need to focus on moving our core business forward — not building and maintaining infrastructure…” “Reducing our overall cost is a high priority.” “We are looking to improve performance and expand globally in a flexible way.” Macro goals to move
  4. 4. Analysts have shown AWS Creates Value Source: IDC, Quantifying the Business Value of Amazon Web Services (May, 2015)
  5. 5. How do customers lower their TCO with AWS? 1 Source: IDC Whitepaper, “The Business Value of Amazon Web Services Accelerates Over Time.” December 2013 “Average of 400 servers replaced per customer” Replace up-front capital expense with lower “pay for what you use” variable cost model 3 Periodic Price Reductions Economies of scale allow AWS to continually lower costs 2 Pricing model choice to support variable & stable workloads On-Demand Reserved Spot Dedicated
  6. 6. AWS PRICING PHILOSOPHY More AWS Usage More Infrastructure More Customers Lower Infrastructure Costs Economies of Scale Reduced Prices Ecosystem Global Footprint New Features New Services Infrastructure Innovation 51PRICE REDUCTIONS We pass the savings along to our customers in the form of low prices and continuous reductions
  7. 7. Let’s Look Into Costs
  8. 8. Comparing TCO is not easy ≠
  9. 9. 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 optimization Utilization fundamentally higher in AWS cloud • Aggregating non-correlated workloads, scale, spot market Amazon specific hardware designs • OEM acquisition of custom servers and net gear • Direct purchasing of disk, memory, and CPU • AWS controlled hypervisor and net protocol layers Diagram is not to scale *For AWS, OPEX costs includes Reserved Instances one-time low, up-front payment, if Reserved Instances are used. Cost savings from moving to a public cloud provider
  10. 10. TCO The Way Clients Typically See it 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. Hardware – Server, (+Maintenance) Software - OS, Virtualization Licenses (+Maintenance) Hardware – Storage Disks Network Hardware – LAN Switches, Load Balancer Bandwidth costs Server Admin Virtualization Admin 1 2 3 4 Server Costs Storage Costs Network Costs IT Labor Costs
  11. 11. TCO The Way It Is = Acquisition + Operational Costs 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. Hardware – Server, Rack Chassis PDUs, ToR Switches (+Maintenance) Hardware – Storage Disks, SAN/FC Switches Network Hardware – LAN Switches, Load Balancer Bandwidth costs Server Admin Virtualization Admin 1 2 3 4 Server Costs Storage Costs Network Costs IT Labor Costs Software - OS, Virtualization Licenses (+Maintenance) Storage Admin costs Network Admin Costs Facilities Cost Space Power Cooling Facilities Cost Space Power Cooling Facilities Cost Space Power Cooling
  12. 12. Tools for cost analysis • TCO Calculator • Total Cost of Ownership comparison tool • Simple Monthly Calculator • Calculate your monthly AWS costs
  13. 13. Traditional Capacity Planning Limitations of traditional data centers: Inflexible physical assets Costs are never in sync Migration and expansion costs are high Cost of unexpected inefficiencies
  14. 14. Benefits of elastic and Pay-Per-Use Infrastructure Unable to serve customers Infrastructure Cost $ time Large Capital Expenditure Opportunity Cost Predicted Demand Traditional Hardware Actual Demand Automated Virtualization
  15. 15. Even after initial deployment, AWS continues to drive down costs
  16. 16. The Value of Using AWS Accelerates Over Time 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. $1 Investment in AWS $8.40 in benefits At 60 Months of using AWS ~8X $3.50 in benefits $1 Investment in AWS At 36 Months of using AWS ~3X
  17. 17. Upgrades are your responsibility Upgrades happen automatically On-premises infrastructure VPC support With AWS, Service Upgrades occur automatically
  18. 18. Managed services eliminate many operational tasks Do-it-yourself MySQL replication Potentially ~100+ manual steps Set up primary and standby instances Set up identical volumes Create synchronous replication Create and manage DNS entries Detect instance failure conditions Detect network failure conditions Detect storage failure conditions Decide when to fail over…. Re-establish primary secondary connections. Amazon RDS Multi-AZ HA with a mouse click
  19. 19. Extending from TCO to Cost Optimization
  20. 20. The Four Pillars of Cost Optimization Right Sizing Reserved Instances Increase Elasticity Measure, Monitor, & Improve
  21. 21. Right Sizing Right Sizing • Selecting the cheapest instance available while meeting performance requirements • Looks at CPU, RAM, storage, and network utilization to identify potential instances that can be downsized • Leverage CloudWatch Metrics and set up custom RAM metric Rule of thumb: Right size, then reserve.
  22. 22. 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
  23. 23. Increase Elasticity Turn off non-production instances • Look for dev/test, non-prod instances that are running always-on and turn off Autoscale Production • Use Autoscaling to scale up and down based on demand and usage (e.g. spikes) Rule of thumb: Shoot for 20-30% of EC2 instances running on demand to be able to handle elasticity needs.
  24. 24. Using Right Sizing and Elasticity to Lower Cost More smaller instances vs. less larger instances 29 m4.large @ $0.126/hr. $2,630.88 / mo* 59 t2.medium @ $0.052/hr. $2,203.20 / mo* *Assumes Linux instances in US-East at 720 hours per month
  25. 25. AWS Trusted Advisor: Automated Cost Optimization and Advice 2,600,000+ recommendations $350M+ in cost reductions To: AWS Customer From: Amazon Web Services Subject: Potential Cost Savings Dear Customer, We have identified $49,000 of potential savings in your current To: AWS Customer From: Amazon Web Services Subject: Potential Cost Savings Dear Customer, To: AWS Customer From: Amazon Web Services Subject: Potential Cost Savings Dear Customer, We have identified $49,000 of potential savings in your current AWS deployment. -Amazon Web Services “AWS rang me up and said they were cutting my costs by $30,000 a month. In all my years in IT I have never had a supplier ring me up and say that. It never happens. Now we can invest that cash into new product development and turn it into revenue.” - News UK IT Director, Chris Birch
  26. 26. The Value of Innovation
  27. 27. Innovate by increasing the ability to “Fail Fast” 20 new projects 10 2 IT Project funnel Increase the # of new projects in the funnel Increase the speed by which projects move through the funnel Decrease the downside impacts of project “failures” (shut ‘em down quick) Keep costs low for the successes
  28. 28. Web links for more information AWS Economics Center: • aws.amazon.com/economics • Includes link to TCO Calculator • Link to the IDC report Case Studies & References: • aws.amazon.com/solutions/case-studies
  29. 29. Henrik Forsberg Head of MTGIQ – Group Data, BI & Analytics 2016-05-04 Breaking Down the Economics and TCO of Migrating to AWS
  30. 30. • Launched TV3 in 1987 as the first commercial TV channel in Scandinavia and the first privately owned channel • Satellite broadcasting covering Scandinavia, Eastern Europe and Russia • Free-TV channels in 11 countries and Pay-TV platforms and packages in 8 countries • More than 25 productions companies • + 100 TV channels • Net sales 16.218 MSEK (2016) • EBIT 1.268 MSEK (2016) MTG
  31. 31. CHANGE!
  32. 32. HOW WE DEAL WITH IT
  33. 33. DEEPER UNDERSTANDING OF CUSTOMERS & CONTENT • Align data across business areas • Accelerate data driven decision making • Support the change of business behavior • Build for various types of insights from the very beginning • Feeding data back to consumer products
  34. 34. HOWTOGETSTARTED? 1. Applications 2. Hardware 3. Installation & configuration 4. Development 5. Operations & maintenance Resources? Costs & structure? Organization? Time & Deliveries? Priorities? Long-term ambition? Data volumes? Flexibility?
  35. 35. CURRENTSETTING EMR RedshiftS3 EC2 EC2 S3 ”Data In” ”Data Out” EC2 SQS
  36. 36. • 80% of annual budget on new development • 10% of annual budget spent on hardware, infrastructure, config. • No capital investments • Affordable to make adjustments • No performance issues HIGHLIGHTS
  37. 37. Thank you!henrik.forsberg@mtg.com www.mtg.com/jobs
  38. 38. Henrik & Allan

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