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Convince Your CFO that #PerfMatters
@ColinBendell
©2015 AKAMAI | FASTER FORWARDTM
©2015 AKAMAI | FASTER FORWARDTM
• Convincing the Business (General)
• Save you $100k in 10 minutes
• COGS & CapEx Fin. Mod...
©2015 AKAMAI | FASTER FORWARDTM
Nobody likes waiting…
©2015 AKAMAI | FASTER FORWARDTM
Source: Equation Research on behalf of Compuware
©2015 AKAMAI | FASTER FORWARDTM
Source: Equation Research on behalf of Compuware
©2015 AKAMAI | FASTER FORWARDTM
Source: Akamai
©2015 AKAMAI | FASTER FORWARDTM
But does Perf. Investment
Business Sense?
©2015 AKAMAI | FASTER FORWARDTM
©2015 AKAMAI | FASTER FORWARDTM
• Use existing business metrics:
• Revenue
• Conversion Rate
• Don't forget in-direct metr...
©2015 AKAMAI | FASTER FORWARDTM
Create Pride: Show your users' experience
©2015 AKAMAI | FASTER FORWARDTM
Compare Yourself with Your Competition
Andy Davies
http://andydavies.me/
©2015 AKAMAI | FASTER FORWARDTM
©2015 AKAMAI | FASTER FORWARDTM
©2015 AKAMAI | FASTER FORWARDTM
Other Business'
Success Stories
©2015 AKAMAI | FASTER FORWARDTM
Performance Impacts Business Results
Source: Walmart, Torbit, Aberdeen Group
©2015 AKAMAI | FASTER FORWARDTM
Speed Matters: Conversion Rate vs. Load Time
Conversion  Rate  (%)
0-­1 1-­2 2-­3 3-­4 4-­...
©2015 AKAMAI | FASTER FORWARDTM
Performance Impacts Engagement
Josh Fraser
@joshfraser
©2015 AKAMAI | FASTER FORWARDTM
2 Seconds Faster Boosted Conversions By 66%
http://www.conversionconference.com/blog/case-...
©2015 AKAMAI | FASTER FORWARDTM
©2015 AKAMAI | FASTER FORWARDTM
©2015 AKAMAI | FASTER FORWARDTM
Spreadsheets:
the Language of the CFO
©2015 AKAMAI | FASTER FORWARDTM
©2015 AKAMAI | FASTER FORWARDTM
10 minute
MBA
©2015 AKAMAI | FASTER FORWARDTM
Money buys beer
©2015 AKAMAI | FASTER FORWARDTM
How do I get [more] Money?
©2015 AKAMAI | FASTER FORWARDTM
Long Answer: GDP
+ ++
GDP = C + I + G + (X-M)
©2015 AKAMAI | FASTER FORWARDTM
Short Answer:
Your Company Earnes
More Money
©2015 AKAMAI | FASTER FORWARDTM
Stock Price is What Others Think is the Company
Value
Company_Value =  Stock_Price *  Shar...
©2015 AKAMAI | FASTER FORWARDTM
Discount Cash Flow // Common Valuation Technique1
𝐶𝑜𝑚𝑝𝑎𝑛𝑦_𝑉𝑎𝑙𝑢𝑒 =
𝐶𝑎𝑠ℎ_𝐹𝑙𝑜𝑤2
1 + 𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑_...
©2015 AKAMAI | FASTER FORWARDTM
Discount Cash Flow //a common valuation technique
𝐶𝑜𝑚𝑝𝑎𝑛𝑦_𝑉𝑎𝑙𝑢𝑒 =
𝐶𝑎𝑠ℎ_𝐹𝑙𝑜𝑤2
1 + 𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑_...
©2015 AKAMAI | FASTER FORWARDTM
Profit & Loss Statement (or Income Statement)
How  Much  Beer  You  Sold
Cost  to  Make  B...
©2015 AKAMAI | FASTER FORWARDTM
Three Big Leavers to Increase Profits
How  Much  Beer  You  Sold
Cost  to  Make  Beer
Savi...
©2015 AKAMAI | FASTER FORWARDTM
More Money. More Beer.
©2015 AKAMAI | FASTER FORWARDTM
We are at a Performance Conference…
… how does performance impact your P&L?
©2015 AKAMAI | FASTER FORWARDTM
Velocity SC 2015: Financial Impact
How LinkedIn used RUM to drive optimizations and make t...
©2015 AKAMAI | FASTER FORWARDTM
Mapping performance to the Income Statement
Revenue    COGS    CapEx
Reduce bytes ✔ ✔ ✔
Re...
©2015 AKAMAI | FASTER FORWARDTM
Financial Modeling
Performance
©2015 AKAMAI | FASTER FORWARDTM
What is Financial Modeling?
• Excel! Yay!
• Technique to build confidence in decision maki...
©2015 AKAMAI | FASTER FORWARDTM
ProTip 1: Avoid the wormhole of
Finance Precision. Use Directionality
©2015 AKAMAI | FASTER FORWARDTM
ProTip 2: Use conservative shortcuts
©2015 AKAMAI | FASTER FORWARDTM
Model 1:
CapEx / OpEx CashFlow
©2015 AKAMAI | FASTER FORWARDTM
Build-More or Optimize
©2015 AKAMAI | FASTER FORWARDTM
CashFlow Opportunities: Requests, Bytes, TTLB
Server Time
Handshake
©2015 AKAMAI | FASTER FORWARDTM
Pros & Cons of CashFlow Modeling
Use this model:
• When you are optimizing backend process...
©2015 AKAMAI | FASTER FORWARDTM
Cash_Flow =   Capital_Exenses
+  Operational_Expenses
©2015 AKAMAI | FASTER FORWARDTM
Typical Year-over-Year Spend
©2015 AKAMAI | FASTER FORWARDTM
Questions
• Will your improvements slow the rate of new hardware purchased?
• Will it redu...
©2015 AKAMAI | FASTER FORWARDTM
Avoid including "Funny Numbers"
Don't include:
• Productivity gains
• Revenue from selling...
©2015 AKAMAI | FASTER FORWARDTM
This company tried computing the
true cost of the enterprise agreement.
©2015 AKAMAI | FASTER FORWARDTM
Two Models
• CoLo / OnPrem
• This years Capital Expense contributes to next years' Operati...
©2015 AKAMAI | FASTER FORWARDTM
Operating_Exepnse =  Number  of  Servers  *  Usage
OR
Capital_Expense
=  Number_of_New_Ser...
©2015 AKAMAI | FASTER FORWARDTM
Calculating Capital Expenses (CapEx)
CapEx =  Number_of_Servers *  Average_Cost
• Use "Ful...
©2015 AKAMAI | FASTER FORWARDTM
A Note about Virtual Machines
• Virtual Servers also require Capital
• Don't forget to inc...
©2015 AKAMAI | FASTER FORWARDTM
Plugging in the Numbers
https://goo.gl/6OHj9a
©2015 AKAMAI | FASTER FORWARDTM
Calculating Operating Expenses (OpEx)
Best Practice:
• Include all servers, regardless of ...
©2015 AKAMAI | FASTER FORWARDTM
OpEx
OpEx =  Number_of_Servers *  KVA_per_Server *  KVA_Price
• Pick one hardware profile ...
©2015 AKAMAI | FASTER FORWARDTM
Colo's charge by electricity
OpEx =  Number_of_Servers *  KVA_per_Server *  KVA_Price
• Mo...
©2015 AKAMAI | FASTER FORWARDTM
©2015 AKAMAI | FASTER FORWARDTM
Plugging in the Numbers
https://goo.gl/6OHj9a
©2015 AKAMAI | FASTER FORWARDTM
Example
• 140 “pizza box” type servers ($5k, 0.5KVA)
• 400 Page View/s peak
• 30% YoY grow...
©2015 AKAMAI | FASTER FORWARDTM
Before
©2015 AKAMAI | FASTER FORWARDTM
After:
©2015 AKAMAI | FASTER FORWARDTM
Ignore the size of the OpEx budget
Focus on user performance budget
©2015 AKAMAI | FASTER FORWARDTM
PageView and Interaction Cost
• A Page View requests that return Content-­‐Type:  text/htm...
©2015 AKAMAI | FASTER FORWARDTM
Page View is a proxy for 'user interaction'
©2015 AKAMAI | FASTER FORWARDTM
Interaction Cost
Interaction_Cost =  (OpEx +  CapEx)  /  Page_View_per_Second
• Max page v...
©2015 AKAMAI | FASTER FORWARDTM
Before (with $/PVs)
©2015 AKAMAI | FASTER FORWARDTM
After (with $/PVs)
©2015 AKAMAI | FASTER FORWARDTM
What about IaaS / PaaS?
• Model still applies with a few tweaks; ignore Capital costs
• Ea...
©2015 AKAMAI | FASTER FORWARDTM
Please, tell me more
about your made-up
financial model
©2015 AKAMAI | FASTER FORWARDTM
User Performance Improvement (RUM Data)
©2015 AKAMAI | FASTER FORWARDTM
Origin Bandwidth Reduced to Below 100mbps
©2015 AKAMAI | FASTER FORWARDTM
Reduce Server Utilization
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,0...
©2015 AKAMAI | FASTER FORWARDTM
Cashflow Summary
• Backend performance can impact end-user performance
• Performance can h...
©2015 AKAMAI | FASTER FORWARDTM
Revenue
Probabilistic Modeling
©2015 AKAMAI | FASTER FORWARDTM
Revenue Modeling
• Your Operations teams can control CapEx and OpEx spending
What about Re...
©2015 AKAMAI | FASTER FORWARDTM
Revenue Modeling is Hard
©2015 AKAMAI | FASTER FORWARDTM
Applying Monte-Carlo Simulation
• Apply probability based input on an equation
• Run many ...
©2015 AKAMAI | FASTER FORWARDTM
Plugging in the Numbers
https://goo.gl/6OHj9a
©2015 AKAMAI | FASTER FORWARDTM
Notes about Revenue Modeling
• Use Revenue Modeling to show directionality
• Avoid absolut...
©2015 AKAMAI | FASTER FORWARDTM
So yea, you're going to have to come in to
work over the weekend now…
©2015 AKAMAI | FASTER FORWARDTM
Summary
• Performance correlates to engagement
• Make performance part of your culture
• U...
©2015 AKAMAI | FASTER FORWARDTM
Performance can make happy users
and makes business sense!
Thank-You!
@ColinBendell
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2015 Velocity SC: Convince your CFO that #perfmatters

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You probably feel at times that it is more probable that a black hole will wander into your datacenter than for you to get funding to improve the performance of your application. This workshop will show you the tricks to financially model the impact of performance. Use these tools to convince the business that improving performance not only drives revenue, it also reduces operational costs.

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2015 Velocity SC: Convince your CFO that #perfmatters

  1. 1. Convince Your CFO that #PerfMatters @ColinBendell
  2. 2. ©2015 AKAMAI | FASTER FORWARDTM
  3. 3. ©2015 AKAMAI | FASTER FORWARDTM • Convincing the Business (General) • Save you $100k in 10 minutes • COGS & CapEx Fin. Modeling • Revenue Modeling
  4. 4. ©2015 AKAMAI | FASTER FORWARDTM Nobody likes waiting…
  5. 5. ©2015 AKAMAI | FASTER FORWARDTM Source: Equation Research on behalf of Compuware
  6. 6. ©2015 AKAMAI | FASTER FORWARDTM Source: Equation Research on behalf of Compuware
  7. 7. ©2015 AKAMAI | FASTER FORWARDTM Source: Akamai
  8. 8. ©2015 AKAMAI | FASTER FORWARDTM But does Perf. Investment Business Sense?
  9. 9. ©2015 AKAMAI | FASTER FORWARDTM
  10. 10. ©2015 AKAMAI | FASTER FORWARDTM • Use existing business metrics: • Revenue • Conversion Rate • Don't forget in-direct metrics: • Engagement • Successful Logins Lara Hogan http://larahogan.me Run A/B Tests; Compare results
  11. 11. ©2015 AKAMAI | FASTER FORWARDTM Create Pride: Show your users' experience
  12. 12. ©2015 AKAMAI | FASTER FORWARDTM Compare Yourself with Your Competition Andy Davies http://andydavies.me/
  13. 13. ©2015 AKAMAI | FASTER FORWARDTM
  14. 14. ©2015 AKAMAI | FASTER FORWARDTM
  15. 15. ©2015 AKAMAI | FASTER FORWARDTM Other Business' Success Stories
  16. 16. ©2015 AKAMAI | FASTER FORWARDTM Performance Impacts Business Results Source: Walmart, Torbit, Aberdeen Group
  17. 17. ©2015 AKAMAI | FASTER FORWARDTM Speed Matters: Conversion Rate vs. Load Time Conversion  Rate  (%) 0-­1 1-­2 2-­3 3-­4 4-­5 5-­6 6-­7 7-­8 8-­9 9-­10 10-­11 11+ Population Conversion  Rate  (%) Page  Load  Time  (Sec)
  18. 18. ©2015 AKAMAI | FASTER FORWARDTM Performance Impacts Engagement Josh Fraser @joshfraser
  19. 19. ©2015 AKAMAI | FASTER FORWARDTM 2 Seconds Faster Boosted Conversions By 66% http://www.conversionconference.com/blog/case-study-how-making-pages-2-seconds-faster-boosted-conversions-by-66/ Tammy Everts @tameverts
  20. 20. ©2015 AKAMAI | FASTER FORWARDTM
  21. 21. ©2015 AKAMAI | FASTER FORWARDTM
  22. 22. ©2015 AKAMAI | FASTER FORWARDTM Spreadsheets: the Language of the CFO
  23. 23. ©2015 AKAMAI | FASTER FORWARDTM
  24. 24. ©2015 AKAMAI | FASTER FORWARDTM 10 minute MBA
  25. 25. ©2015 AKAMAI | FASTER FORWARDTM Money buys beer
  26. 26. ©2015 AKAMAI | FASTER FORWARDTM How do I get [more] Money?
  27. 27. ©2015 AKAMAI | FASTER FORWARDTM Long Answer: GDP + ++ GDP = C + I + G + (X-M)
  28. 28. ©2015 AKAMAI | FASTER FORWARDTM Short Answer: Your Company Earnes More Money
  29. 29. ©2015 AKAMAI | FASTER FORWARDTM Stock Price is What Others Think is the Company Value Company_Value =  Stock_Price *  Shares
  30. 30. ©2015 AKAMAI | FASTER FORWARDTM Discount Cash Flow // Common Valuation Technique1 𝐶𝑜𝑚𝑝𝑎𝑛𝑦_𝑉𝑎𝑙𝑢𝑒 = 𝐶𝑎𝑠ℎ_𝐹𝑙𝑜𝑤2 1 + 𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑_𝐴𝑣𝑒𝑟𝑎𝑔𝑒_𝐶𝑜𝑠𝑡_𝐶𝑎𝑝𝑖𝑡𝑎𝑙 2 + 𝐶𝐹= 1 + 𝑊𝐴𝐶𝐶 = + ⋯ + 𝐶𝐹? 1 + 𝑊𝐴𝐶𝐶 ? + 1This  is  one  of  many  techniques.  It  is  has  *many*  flaws.
  31. 31. ©2015 AKAMAI | FASTER FORWARDTM Discount Cash Flow //a common valuation technique 𝐶𝑜𝑚𝑝𝑎𝑛𝑦_𝑉𝑎𝑙𝑢𝑒 = 𝐶𝑎𝑠ℎ_𝐹𝑙𝑜𝑤2 1 + 𝑊𝑒𝑖𝑔ℎ𝑡𝑒𝑑_𝐴𝑣𝑒𝑟𝑎𝑔𝑒_𝐶𝑜𝑠𝑡_𝐶𝑎𝑝𝑖𝑡𝑎𝑙 2 + 𝐶𝐹= 1 + 𝑊𝐴𝐶𝐶 = + ⋯ + 𝐶𝐹? 1 + 𝑊𝐴𝐶𝐶 ? +
  32. 32. ©2015 AKAMAI | FASTER FORWARDTM Profit & Loss Statement (or Income Statement) How  Much  Beer  You  Sold Cost  to  Make  Beer Management Savings  for  more  distilleries Your  Money
  33. 33. ©2015 AKAMAI | FASTER FORWARDTM Three Big Leavers to Increase Profits How  Much  Beer  You  Sold Cost  to  Make  Beer Savings  for  more  distilleries Your  Money
  34. 34. ©2015 AKAMAI | FASTER FORWARDTM More Money. More Beer.
  35. 35. ©2015 AKAMAI | FASTER FORWARDTM We are at a Performance Conference… … how does performance impact your P&L?
  36. 36. ©2015 AKAMAI | FASTER FORWARDTM Velocity SC 2015: Financial Impact How LinkedIn used RUM to drive optimizations and make the site faster Thursday @ 13:45pm - Ritesh Maheshwari (LinkedIn) What are third-party components doing to your site? Thursday 14:40 - Andy Davies & Simon Hearne (NCC Group) Reaching everyone Friday 11:50 - Tim Kadlec (Akamai) How Go is making us faster Friday @14:40 - Wilfried Schobeiri (MediaMath PHP 7 Friday @16:10 - Rasmus Lerdorf (Etsy) Speeding up the PlayStation 4 user interface - web performance optimization outside the browser Friday 17:05 - JP CASTRO (Sony) Yesterday's perf best-practices are today's HTTP/2 anti-patterns Friday 17:05 - Ilya Grigorik (Google) Revenue    COGS    CapEx ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔
  37. 37. ©2015 AKAMAI | FASTER FORWARDTM Mapping performance to the Income Statement Revenue    COGS    CapEx Reduce bytes ✔ ✔ ✔ Reduce requests ✔ ✔ ✔ Expedite rendering ✔ Reduce time-to-last-byte ✔ ✔ ✔
  38. 38. ©2015 AKAMAI | FASTER FORWARDTM Financial Modeling Performance
  39. 39. ©2015 AKAMAI | FASTER FORWARDTM What is Financial Modeling? • Excel! Yay! • Technique to build confidence in decision making • Consistent comparison for project planning outcomes • Good: consistent IRR comparison • Bad: ignores Goodwill (Brand) and Job satisfaction (Culture) • Two schools of thought: • Precision: Consider every detail • Directionality: Consider the big inputs
  40. 40. ©2015 AKAMAI | FASTER FORWARDTM ProTip 1: Avoid the wormhole of Finance Precision. Use Directionality
  41. 41. ©2015 AKAMAI | FASTER FORWARDTM ProTip 2: Use conservative shortcuts
  42. 42. ©2015 AKAMAI | FASTER FORWARDTM Model 1: CapEx / OpEx CashFlow
  43. 43. ©2015 AKAMAI | FASTER FORWARDTM Build-More or Optimize
  44. 44. ©2015 AKAMAI | FASTER FORWARDTM CashFlow Opportunities: Requests, Bytes, TTLB Server Time Handshake
  45. 45. ©2015 AKAMAI | FASTER FORWARDTM Pros & Cons of CashFlow Modeling Use this model: • When you are optimizing backend processes • Adding caching layers (back-end, cdn, client) • Optimizing user workflows • Optimizing page layout Don't use this model: • Optimizing client compute (eg: javascript) • Optimizing client rendering (eg: adding webp)
  46. 46. ©2015 AKAMAI | FASTER FORWARDTM Cash_Flow =   Capital_Exenses +  Operational_Expenses
  47. 47. ©2015 AKAMAI | FASTER FORWARDTM Typical Year-over-Year Spend
  48. 48. ©2015 AKAMAI | FASTER FORWARDTM Questions • Will your improvements slow the rate of new hardware purchased? • Will it reduce the operating costs? • Will you be able to turn down servers? • What are the projected costs with and without improved performance?
  49. 49. ©2015 AKAMAI | FASTER FORWARDTM Avoid including "Funny Numbers" Don't include: • Productivity gains • Revenue from selling old hardware • Contract [re]negotiation time • Software Licensing savings This will allow you to bypass a 7 week discussion with your procurement about the true cost of your enterprise agreement.
  50. 50. ©2015 AKAMAI | FASTER FORWARDTM This company tried computing the true cost of the enterprise agreement.
  51. 51. ©2015 AKAMAI | FASTER FORWARDTM Two Models • CoLo / OnPrem • This years Capital Expense contributes to next years' Operating Expense • You can theoretically extend the life of purchased capital • IaaS / PaaS • Everything is Operational Expenses
  52. 52. ©2015 AKAMAI | FASTER FORWARDTM Operating_Exepnse =  Number  of  Servers  *  Usage OR Capital_Expense =  Number_of_New_Servers *  Average_Server_Cost Operating_Exepnse =  Number_of_Servers *  Average_Server_KVA *  CoLo_Cost_per_KVA
  53. 53. ©2015 AKAMAI | FASTER FORWARDTM Calculating Capital Expenses (CapEx) CapEx =  Number_of_Servers *  Average_Cost • Use "Fully Loaded" cost (incl: cost to procure, security audits, colo service tickets, rack & stack fees, etc) • Use lowest-common-denominator to save inventorying your infrastructure • If in doubt: $5,000 $100,000
  54. 54. ©2015 AKAMAI | FASTER FORWARDTM A Note about Virtual Machines • Virtual Servers also require Capital • Don't forget to include (vMotion) buffer • Be consistent in calculation
  55. 55. ©2015 AKAMAI | FASTER FORWARDTM Plugging in the Numbers https://goo.gl/6OHj9a
  56. 56. ©2015 AKAMAI | FASTER FORWARDTM Calculating Operating Expenses (OpEx) Best Practice: • Include all servers, regardless of role • Assume that increase in user demand = increase in infrastructure use Data-Center OpEx • Most Co-Lo providers bill based on power usage • Assume Co-Lo pricing includes cooling, floor space, and internet • Each datacenter is a special snowflake: be conservative in your calculations
  57. 57. ©2015 AKAMAI | FASTER FORWARDTM OpEx OpEx =  Number_of_Servers *  KVA_per_Server *  KVA_Price • Pick one hardware profile that is representative • If in doubt, use the newest hardware’s power consumption • Use 80% of the manufacturers reported fully loaded power draw • Most hardware reports power as Watts and BTU. Assume a power- factor of 0.9 and use: • KVA  =  Watts  /  900 • When in doubt I use these approximation numbers: • 0.5KVA for an average pizza box server • 3.5KVA for a 6U high density compute chassis
  58. 58. ©2015 AKAMAI | FASTER FORWARDTM Colo's charge by electricity OpEx =  Number_of_Servers *  KVA_per_Server *  KVA_Price • Most CoLos bundle amenities and charge by electricity • Ranges from $0.70/KVA/mo to $0.20/KVA/mo • Running your own datacenter =~ colo space • If in doubt, a conservative, after tax value: $0.50/KVA/mo
  59. 59. ©2015 AKAMAI | FASTER FORWARDTM
  60. 60. ©2015 AKAMAI | FASTER FORWARDTM Plugging in the Numbers https://goo.gl/6OHj9a
  61. 61. ©2015 AKAMAI | FASTER FORWARDTM Example • 140 “pizza box” type servers ($5k, 0.5KVA) • 400 Page View/s peak • 30% YoY growth rate • Has a problem with personalization tracking
  62. 62. ©2015 AKAMAI | FASTER FORWARDTM Before
  63. 63. ©2015 AKAMAI | FASTER FORWARDTM After:
  64. 64. ©2015 AKAMAI | FASTER FORWARDTM Ignore the size of the OpEx budget Focus on user performance budget
  65. 65. ©2015 AKAMAI | FASTER FORWARDTM PageView and Interaction Cost • A Page View requests that return Content-­‐Type:  text/html. • Page View is not perfect: use a metric that represents user activity • Conversions • Checkout-Rate • Logins
  66. 66. ©2015 AKAMAI | FASTER FORWARDTM Page View is a proxy for 'user interaction'
  67. 67. ©2015 AKAMAI | FASTER FORWARDTM Interaction Cost Interaction_Cost =  (OpEx +  CapEx)  /  Page_View_per_Second • Max page view per second tells us how much money is spent to maintain this peak traffic • You have built implicitly to meet peak traffic • As user demand grows, you will build more hardware in lock step • Interaction Cost to remain constant year over year
  68. 68. ©2015 AKAMAI | FASTER FORWARDTM Before (with $/PVs)
  69. 69. ©2015 AKAMAI | FASTER FORWARDTM After (with $/PVs)
  70. 70. ©2015 AKAMAI | FASTER FORWARDTM What about IaaS / PaaS? • Model still applies with a few tweaks; ignore Capital costs • Each IaaS / PaaS provider has different pricing levers • Focus on cost-per-interaction model
  71. 71. ©2015 AKAMAI | FASTER FORWARDTM Please, tell me more about your made-up financial model
  72. 72. ©2015 AKAMAI | FASTER FORWARDTM User Performance Improvement (RUM Data)
  73. 73. ©2015 AKAMAI | FASTER FORWARDTM Origin Bandwidth Reduced to Below 100mbps
  74. 74. ©2015 AKAMAI | FASTER FORWARDTM Reduce Server Utilization $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 CapEx… OpEx Assumptions:  5yr  Amortization;;  0.5KVA/server;;  $0.50/VA/mo $200,000 savings  over  5yrs
  75. 75. ©2015 AKAMAI | FASTER FORWARDTM Cashflow Summary • Backend performance can impact end-user performance • Performance can have financial impact • Use CapEx and OpEx modeling to show directionality of impact • Avoid the detailed nuances – use conservative generalizations • You can use the same model to project negative financial impact (eg: image responsive images)
  76. 76. ©2015 AKAMAI | FASTER FORWARDTM Revenue Probabilistic Modeling
  77. 77. ©2015 AKAMAI | FASTER FORWARDTM Revenue Modeling • Your Operations teams can control CapEx and OpEx spending What about Revenue? • How can performance improve total sales? • How performance increases user growth (CAGR) • How performance increases sales per user (ARPU)
  78. 78. ©2015 AKAMAI | FASTER FORWARDTM Revenue Modeling is Hard
  79. 79. ©2015 AKAMAI | FASTER FORWARDTM Applying Monte-Carlo Simulation • Apply probability based input on an equation • Run many times • Evaluate the results
  80. 80. ©2015 AKAMAI | FASTER FORWARDTM Plugging in the Numbers https://goo.gl/6OHj9a
  81. 81. ©2015 AKAMAI | FASTER FORWARDTM Notes about Revenue Modeling • Use Revenue Modeling to show directionality • Avoid absolute claims about performance • Consider regression analysis to understand what probability inputs • Know your user performance distribution first. (You are using Real-User-Monitoring, right?)
  82. 82. ©2015 AKAMAI | FASTER FORWARDTM So yea, you're going to have to come in to work over the weekend now…
  83. 83. ©2015 AKAMAI | FASTER FORWARDTM Summary • Performance correlates to engagement • Make performance part of your culture • Understand the user experience and leverage empathy • Project cash flow savings from performance • Applies to OnPrem and IaaS/PaaS • Project revenue impact from performance
  84. 84. ©2015 AKAMAI | FASTER FORWARDTM Performance can make happy users and makes business sense!
  85. 85. Thank-You! @ColinBendell

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