These slides look at why IT transformation projects seem so challenging and whether ignoring the probability of success and failure through TCO analysis can make tools dangerous when poorly applied. We’ll also look at the cost of cloud, and whether it’s really lower than buying and running IT on premise; and examine the TCO of cloud adoption.

1. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
John Enoch
Principal Technical Business Development Manager, Amazon Web Services
Cloud Deep Dive: Total Cost of
Ownership

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Customers that AWS supports with a
business case adopt cloud about
60% faster than those who don’t.

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Decisions, Dependencies and Outcomes
Which IT
Platform?
How to use IT?
How to exit
legacy IT? Cost
Reduction
Agility
IT
Performance
Productivity
Customer
Needs
Business
Case
Innovation
Operate &
Optimise
Decision
Outcome
Uncertainty
Change Project
(suppliers, discovery, plan,
design, build)

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AWS Cloud Economics Tools & Method
ANCHORING THE
BUSINESS PROBLEM
RISK APPETITE
AND DECISION
CULTURE
21
VALUE ANALYSIS
AND CLOUD
ECONOMICS
APPLICATION
MIGRATION
ANALYSIS
3 4
STRATEGIC
DECISION
OPTIMISATION
& BENEFITS
REALISATION
5 6
Problem & Objectives… Options & Outcomes… Trade-Offs & Tracking

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© 2017, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
HOW?
WHY? WHAT? WHEN?
Change IT platform? Cloud?
“Hybrid”?
On-premise?
Which partner(s)?
Capability & systems upgrades?
Application due diligence?
Governance?
Project planning?
Which supplier(s)?
Where is the Customer in their Decision Cycle?
Analysis:
Cost, Risk, Value?
Window of Opportunity?
Important to Urgent?

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Comparing TCO is not easy
(But We’re Going to Try)
≠

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How Do Customers Lower Their TCO with AWS?
1
CLOUD
Replace up-front
capital expense with
lower “pay for what
you use” variable
cost model
3
Periodic Price
Reductions
OPTIMISATION
Economies of scale
allow AWS to
continually lower
costs
2
TRADE-OFFS
Pricing model choice
to support variable &
stable workloads
On-Demand
Reserved
Spot
Dedicated
Flexibility +
Data

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APPLICATION
CHOICES
INFRASTRUCTURE
INFLATION
PEOPLE & TALENT
INNOVATION
DECOMM
INSURANCE
PROCUREMENT
Cost

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Average data center server utilization < 50%
Data Centers are operationally inefficient & underutilized
All 45%
Best-in-class 58%
Average 45%
Laggard 39%
Source: Aberdeen Group,
May 2012
Source: McKinsey
Average Server
Utilization

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Comparing the Economic Benefits
• Provide a list of IT assets
• Agree assumptions on costs and allocation
• Output: a granular TCO model

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Strike a Balance
Finding balance between pricing options
Reserved
Instances
On-Demand Spot

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The Five Pillars of Cost Optimization
Right-Sizing Your
Instances
Pick the Right
Pricing Model
Increase
Elasticity
Measuring &
Monitoring
Match Usage to
Storage Class

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16MM Ledger Saving Velocity = 50 apps/qtr.
Operational CostsWorkforce ProductivityCost AvoidanceOperational ResilienceBusiness Agility
• 98% reduction in
P1/P0’s
• 77% faster to deliver
business applications
• 52% average
TCO savings
• 35% reduction in
compute assets (792)
• 15 automated bots
developed
• 80% cloud first
adoption
• 15 cloud services
created
• 50 applications
decommissioned
• 8 cloud migration
parties
• Improved security
posture
• Shift to self-service
culture
• Rapid
experimentation
• Reduced technical
debt
• 14M YOY Savings
• Improved
Performance
• Streamlined M&A
Activity
• DevOps in Practice
Progress as of May 2016
14.2M
Investment
Focus
18
Months
311 Apps
in Cloud &
14M YOY
Savings
A Customer Case Study: GE
http://www.slideshare.net/AmazonWebServices/demystifying-cloud-economics-how-to-build-an-investment-case-for-scale-migration-to-the-cloud-business

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© 2017, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
1. Measure Impact
Operational
Financial
QRM*
*QRM: “Quality and risk management”
QRM*
K
P
I
s
VALUATION

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© 2017, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
2. Optimise Cost & Usage
a. Change Org. Process?
b. Exit legacy IT assets? Retire apps?
1. Pricing: Cost vs Commitment
Reserved
Instances
On-
Demand
Spot
2.Transparency:
Tag,
Trigger,
Report,
Automate.
3. Key Decisions

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Thank You
johnenoc@amazon.co.uk