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Practical Cloud Economics

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Practical Cloud Economics

  1. 1. Practical Cloud Economics Ed Byrne, October 2012
  2. 2. About MeCloud and Enterprise IT EntrepreneurCEO, CloudVertical - “Reducing IT Waste”Previously GM, Hosting365 (now SunGard)@edbyrnewww.edbyrne.meblog.cloudvertical.com
  3. 3. AgendaWhat is Cloud EconomicsThe Myths of Cloud ComputingVariables and Cost ModelsResources
  4. 4. Principles of Cloud Economics IT as a Utility - Available and Scalable IT is Paid for using a Consumption based model Theoretically 100% capital efficient
  5. 5. IT Cost ModelCapacity is CapEx and Cyclically DrivenUsage follows predictable patternsCost increases with time and complexity
  6. 6. Cloud Cost Model (Theory) Capacity scales up and down in line with demand Usage follows predictable patterns (no change) Cost matches capacity - pay as you consume
  7. 7. IT Cloud Cost Model (Actual) Capacity is provisioned based on expected load Usage follows predictable patterns Cost goes up and to the right, with an **** moment
  8. 8. Cloud Economics RealityThe Cloud is not analogous to the Electricity model.The Cloud is not Pay as You Go. It’s Pay as You Provision.Utilisation is the problem -> the traditional capacity planningmodel has migrated to the Cloud. • Physical Hardware - 20% Utilisation Average • Virtualised Infrastructure - 30% Utilisation Average • Cloud Deployments - 30% Utilisation Average
  9. 9. IT / the Cloud isn’t inefficient You are
  10. 10. Traditional CultureIT has never been responsible for Cost meteringBudgets are aspirational targetsExisting tools focus on Uptime, Usage and Performance Monitoring
  11. 11. Efficient ComputingYou can’t manage what you don’t measureCreate Accountability, Visibility, ReportingMeter Cost, Capacity and UsageShow-back reports for each use type1. Inform 2. Improve 3. Maintain
  12. 12. Myths
  13. 13. Myth # 1Cloud is Cheap
  14. 14. TruthLike for Like - More ExpensiveBut it’s not Like-for-Like • Scalability & Flexibility • Resilience & Redundancy • OpEx not CapExMore Cost Effective for a lot of workloads
  15. 15. Myth # 2 The Cloud isCheaper than DIY
  16. 16. TruthVersus Fully Loaded Server Cost - True 90% of timeDo you know the true costs of your IT infrastructure?Cloud often ‘looks’ more expensive but is not.Netflix vs Zynga models -> both right
  17. 17. Myth # 3Pay for What You Use
  18. 18. TruthPay for What you Provision
  19. 19. Myth # 4“I can migrate easily”
  20. 20. TruthData IN is FREEData OUT is NOT. For a reason.Data Gravity : Data attracts more DataMore Data = More Costly to Move
  21. 21. Myth # 5The Cloud is Managed
  22. 22. TruthCloud Providers manage their Cloud Not Yours Ops is going Nowhere
  23. 23. Myth # 7Cloud is more Efficient
  24. 24. TruthJevons Paradox : The easier it becomes to consume aresource, the more of it that will be consumed.The Cloud has enormous efficiency capabilities.Waste is not a technology problem, it’s a people one.
  25. 25. AWS Costs Cheat SheetKnow the Units Instance Storage EBS Standard EBS PIOPS EBS Requests Storage N/A 10c /gb-month (provisioned) 12.5c /gb-month (provisioned) 10c per million Regional Cost Differences Region US East (Virginia) US West (Oregon) US West (California) Variation BASE 0% 12.5% EBS Provisioned IOPS 10c /month (2.628m requests) EU (Ireland) 8%Compute - CPU/hour EBS Snapshot S3 Standard S3 Reduced Redundancy 12.5c /gb-month (stored) 12.5c /gb-month (stored) 9.3c /gb-month (stored) Asia (Singapore) Asia (Toyko) South America (Sao Paulo) 8% 15% 45%Memory - GB/hour Glacier 1c /gb-month (stored) Instance Sizes Network API name Compute Memory Hourly Cost Data IN FREEStorage - GB/stored t1.mirco <2 0.613 0.02 Data OUT 12c /gb m1.small 1 1.7 0.08 Data within AZ FREE m1.medium 2 3.75 0.16 Data within Region 1c /gb m1.large 4 7.5 0.32 Managed Data (EIP/ELB) 1c /gbNetwork - GB/managed m1.xlarge 8 15 0.64 Load Balancer 2.5c /hour m2.xlarge 6.5 17.1 0.45 Load Balanced Traffic .8c /gb m2.2xlarge 13 34.2 0.9 IP Address Per Instance FREE m2.4xlarge 26 68.4 1.8 Extra or Unused IP Address .5c /hour c1.medium 5 1.7 0.165 c1.xlarge 20 7 0.66 Time Key cc1.4xlarge 33.5 23 1.3 Day = 24 Hours24 hours /day cc2.8xlarge 88 60.5 2.4 Week = 168 Hours cg1.4xlarge 33.5 22 2.1 Month = 730 Hours hi1.4xlarge 35 60.5 3.1 Year = 8,760 Hours Month = 2,628,000 Seconds168 hours /week Micro Instance On-Demand Instance Costs Hour 0.02 Day 0.48 Week 3.36 Month 15 Year 175730 hours /month Small 0.08 1.92 13.44 58 701 Medium 0.16 3.84 26.88 117 1402 Large 0.32 7.68 53.76 234 2803 Extra Large 0.64 15.36 107.52 467 56068,760 hours /year Extra Large High Memory Double Extra Large High Memory Quadruple Extra Large High Memory Medium High CPU 0.45 0.9 1.8 0.165 10.8 21.6 43.2 3.96 75.6 151.2 302.4 27.72 329 657 1314 120 3942 7884 15768 1445 Extra Large High CPU 0.66 15.84 110.88 482 5782 Quadruple Extra Large Cluster Compute 1.3 31.2 218.4 949 11388 Eight Extra Large Cluster Compute 2.4 57.6 403.2 1752 2102440 hours working week Quadruple Extra Large Cluster GPU Quadruple Extra Large High I/O SSD 2.1 3.1 50.4 74.4 352.8 520.8 1533 2263 18396 27156173 hours working month Light Average Reserved Instance Savings Type % Saving Yr 1 40 % Saving Yr 3 56 All Prices in Dollars, from US East Virginia as published2,076 hours working year Medium Heavy 48 53 65 70 11 October 2012. Tiered Discounts and Free Tier Amounts Not Applied. For more info go to www.cloudvertical.com
  26. 26. Optimise - RightsizeDevelopment Environment : 40 hours per week (24% available time)Load Test / System Patch / Software Upgrade: 8 hours / 1 day - once-offBack-office Applications : 40 hours per week ‘heavy’; outside hours 25% capacityTravel / E-Commerce Site : Busy Consumer Hours. Seasonal. Marketing Driven.
  27. 27. Resources www.cloudvertical.comDeck: blog.cloudvertical.comAWS Economics Centre : http://aws.amazon.com/economics/Cloudonomics Book: http://www.amazon.com/Cloudonomics-Website-Business-Value-Computing/dp/1118229967Microsoft Cloud Economics: http://www.microsoft.com/en-us/news/presskits/cloud/docs/the-economics-of-the-cloud.pdfAWS Costs Cheat Sheet: https://blog.cloudvertical.com/2012/10/aws-cost-cheat-sheet-2/On-Premise vs. Cloud Cost Model: http://andrewmcafee.org/2012/10/mcafee-cloud-costs-google-modelData Gravity: http://datagravity.org/

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