AWS Cloud Value Framework - AWS Transformation Days Raleigh 2018.pdf

© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Achieving Business Value with
AWS
Michael Chu
Cloud Economics

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

CloudValue Framework
Cost
Savings (TCO)
Staff
Productivity
Operational
Resilience
Business
Agility
What is it?
Examples
Infrastructure cost
savings/avoidance
from moving to the
cloud
50%+ reduction in
TCO (GE)
Over 500 hours per
year of server
configuration time
saved (Sage)
Efficiency
improvement by
function on a
task-by-task basis
Critical workloads run in
multipleAZs and
Regions for robust
DR (Expedia)
Benefit of improving
SLAs
and reducing
unplanned outages
Launch of new
products 75%
faster (Unilever)
Deploying new
features applications
faster and
reducing errors
Most Compelling
Cloud Benefits
Typical
Focus

Examples ofValue Realized
Staff ProductivityCost Savings Operational Resilience Business Agility
80% reduction in software R&D times (Apeejay
Stya & Svrán)
Time to launch digital campaigns cut from
weeks to 24 hours (91App)
Calc and reporting time cut from 10 days to 10
minutes (Aon Benfield)
Time to market cut from weeks to hours
(FlyDubai)
Clinical simulations 98% faster than on-premise
(Bristol-Myers Squibb)
Time to deploy IT compute reduced to <5
minutes (Alcatel-Lucent)
R&D RFS times reduced from 6 months to 1 day
(NewsCorp)
Provisioning time cut from 3–4 weeks to 2 days
(ENEL)
Test-run time cut to 10 minutes, from up to
2 hours (Yelp)
Launch new products 75% faster (Unilever)
5M financial investment policies recalculated in
minutes instead of overnight (ABSI)
DC footprint from 13 to 6 (The Weather Co.)
DC footprint reduced from 8 to 3 by 2018
(CapitalOne)
Storage costs reduced by up to 60% (ENEL)
Migrated 500 servers, 1 PB storage, &100 DB
servers in 3 months to AWS (Condé Nast)
Over 50% reduction in TCO (GE)
DC footprint from 45 to 6 (News Corp)
50% reduction in app costs (Time Inc.)
Cost savings of $20M p.a. (FINRA)
Computational cost reduced by 20%+ (ENEL)
Cloud deployment has saved US$34 million in
CAPEX and reduced OPEX by 85% (Samsung)
Cost reduction of $40k p.a. (Dow Jones)
Savings of $1.5M p.a. (Trainline)
30% reduction in OPEX (MacMillan)
12% reduction in OPEX (RWE Czech)
Scaled to handle a 400% increase in page views
(Kurt Geiger)
Improved security posture (CapitalOne)
8600 transactions/second (McDonalds)
Transfer of over 750 TB of data from pipeline
inspection machinery (GE)
Processing over 75 billion market events daily
(FINRA)
Critical applications run in multiple AZs, x-
Regions for robust disaster recovery (Expedia)
Supports over 300,000 requests per minute to
its API (Easy Taxi)
60% reduced downtime (Trainline)
Migration of SAP on Oracle to AWS with zero
unplanned downtime across five countries
(Kellogg’s)
SAP availability boosted to 100% (MacMillan)
Average annual staffing savings of $3M (Adroll)
Energy Marketing business prepared for
acquisition in only 6 months rather than 12
(Hess Corp)
Half the infrastructure team required to
manage infrastructure (2C2P)
Performance targets over-achieved by 43–66%
(McDonalds)
IT Infra consolidation completed in 20% of
expected time (Hearst)
60% of IT working on data proliferation, lack of
standards, security hardening all of which AWS
is addressing (Intuit)
Over 500 hours per year of server configuration
time saved (Sage)
39 years of Computational chemistry
condensed into 9 hours (Novartis)

Sample Output
Server
Storage
Network
$1,093,514
$688,514
$154,640
Savings
Staff ProductivityCost Savings Operational Resilience Business Agility
Total $1,936,688
Infrastructure
Facilities
Network
$405,000
$270,000
$337,500
Impr
$1,012,500
Value
30%
80%
20%
eCommerce1
After
$1,432,343
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
$4,349,922
Value
22.0%
35.0%
50.0%
33.3%
KPIUptime
TOTALANNUAL BENEFIT $8,731,433
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

Cost Savings: Modeling On-Premises
Facilities Cost
Space Power Cooling
Recurring ISP/bandwidth costs
Network hardware—LAN
switches, load balancer
Facilities Cost
Space Power Cooling
Storage software costs
(+ maintenance)
Hardware—Storage disks,
SAN/FC switches
1
2
3
Server Costs
Storage Costs
Network Costs
Facilities Cost
Space Power Cooling
Software—OS, virtualization licenses
(+ maintenance)
Hardware—Server, rack c
hassis 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
others.
illustrative

Cost Savings: Example
1 non-virtualized physical server, 16 cores, & 64 GB RAM at 50% utilization
1 c4.4xl (3 yrTCO)
Server HW
Maintenance
Rack
Facilities
Labor
Software
TOTAL (3 yr)
$8K
$3.6K
$2K
$10.8K
$4K
$0
$28.4K
On premises
EC2 3-yr RI
Labor
Support
TOTAL (3 yr)
$8K
$1K
$1K
$10K
AWS

Cost Savings: Case Studies
“We’ve been able to seamlessly scale our
infrastructure, better serve our
customers across the globe, and reduce
our fixed costs by 75% and operational
costs by 83%.”
—ValentinoVolonghi, CTO
“Three years on, we’ve saved over $100
million in avoided capital and are about
65% in the cloud.”
— Dominic Shine, CIO
“As a result of going all-in into theAWS
Cloud, the company reduced costs by
40% and increased operational
performance
by 30–40%.”
“Saved $1M in hardware refresh
costs and $200K annually in
opex costs.”
“Estimated 15–20% annual opex
savings; realized 35%.”
“We’ve realized a 52% reduction inTCO.
That stems from a number of factors... [a
push for self-service, dynamic storage,
using lower-costVMs]. Ultimately, these
savings are a byproduct of doing the right
thing.”
— Ben Cabanas, CTO

Staff Productivity: Focus onValue-AddWork
Tactical (undifferentiated)
Strategic (differentiated)
Current state “Lift & shift” to AWS High-level AWS services
Activities
Customer maturity on AWS

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 in 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

Staff Productivity: Example
Server Administrator
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 in occasion of
hardware failure
100%
Installing, upgrading, and
removing software
50%
x
75% reduction w/AWS
18.8% efficiency gain
25% of time

Staff Productivity: Case Studies
Pharma Services
Provider
“[Our staff] spends 60% of work on things like
data proliferation, lack of standards, security
hardening ...AWS is addressing these needs.”
— Raji Arasu, SVP of Platform and Services
$3M staffing cost savings; reduced
operational costs by 83%
51% efficiency improvements in
compute-related functions;
20% improvement in application
development functions
Telco Provider
60% reduction in application
support FTEs
50% reduction in administrative overhead,
including server management and backup
operations

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

Operational Resilience: Quantifying Cost
Cost Category % ofTotal Definition
Third Parties 1.3% The cost of contractors, consultants, auditors and other specialists engaged to help resolve unplanned outages
Equipment 1.3% 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 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
illustrative
FTE cost = $1,500/minute
1. Business user productivity
# of users = 1,500
FTE ($) = $125K
FTE cost = $750/minute
2. Other categories
~50% of cost
0.1% improvement = 525.6 minutes
X $2,250
$1.2M
Calculate cost-per-minute of unplanned downtime

Operational Resilience: Case Studies
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 toAWS.”
With its on-premises setup, the
availability of its system ran to 98%, but
on its cloud infrastructure, this has risen
to 99.965%
Migrated all workloads toAWS to
reduce downtime by 60% with an
annual savings of £1.2M
Rebuilt patient engagement portal
on AWS and reduced downtime
from 120 to
<5 min/month
Migrated toAWS in 6 weeks with no
downtime and improved availability
to 99.99%+

Business Agility:Track & Measure KPIs
KPI
New applications launched per year Mean time to resolution
Time to market for new applications Response time to defects (hrs)
% of new applications launched on-time % of failed deployments
Time to provision new environments (days) Customer retention (%)
Deployment frequency (revs/yr) 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
% 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

Business Agility: Case Studies
“More than 80% of IT expenditure atAFG
was consumed by IT operational costs…
Today, 60 percent 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."
“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%
Deploy instances 90% faster
Provisioning time reduced from
four weeks to two days

Process to Build a Business Case
Kick off
Project overview
Executive alignment
Define timeline, scope, & roles
Review data
Initial analysis
ID open questions, assumptions
InitialAssessment
Full assessment
Data Collection
(1–2 weeks)
Q&A
(~1 week)
Iterate & finalize
(~1 week)
Customer
Report Out
Full analysis
Incorporate new data
Repeat as needed

Best Practices
1. Present the overall value of the cloud, not just TCO
2. Build the business case collaboratively with your stakeholders
in multiple iterations
3. Involve the right stakeholders (Finance, Procurement, IT, Engineering,
Business)
4. Assign value to hard areas to quantify, like business agility
5. Start the business case process early in the decision-making process

Resources to GetYou Started
AWS TCO Calculator
https://awstcocalculator.com
AWS Economics Center
aws.amazon.com/economics/
Case Studies and Research
aws.amazon.com/solutions/case-studies
Value Realization Studies
Available Now

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