Reducing Total Cost of Ownership across the Enterprise IT stack webinar 101117

Reduce Total Cost of Ownership across the
Enterprise IT Stack
Presenters
Madhusudan Shekar Krishnan Kannan
Principal Evangelist Head-Cloud Economics

Krishnan (Krish), is Head-Cloud economics, India for Amazon
Internet Services private Limited.
Prior to this, Krish was managing Enterprise business for North
region of India and has been helping various startups, working
closely with partner organization to helping organizations
improve agility, fasten go to market and above all save cost by
embracing AWS cloud. Krish has been with Amazon's cloud
business in India for over 5 years.
Head of Cloud Economics Business
Development, Amazon Web Services
Krishnan Kannan

What is Cloud Computing? It’s Similar to a Power Grid
Labor & Time Intensive
We Need To Manage
Responsible For Repairs
Build Your Own Power Plant

What is Cloud Computing? It’s Similar to a Power Grid
Labor & Time Intensive
We Need To Manage
Responsible For Repairs
Leverage Established Resources
Centrally Managed by 3rd Party
Upgrades Provided
Build Your Own Power Plant Plug Into A Power Grid

Large, Upfront Capital Investment
We’re Responsible For Upgrades
Slow To Get New Capabilities
Build Your Own Datacenter
Now, in the Context of Today’s IT Investments

Large, Upfront Capital Investment
We’re Responsible For Upgrades
Slow To Get New Capabilities
Pay For What You Use
Automatic Upgrades Of Functionality
Access To Feature-Rich Platform
Plug Into The Cloud
Now, in the Context of Today’s IT Investments
Build Your Own Datacenter

The Economics of the Cloud are Compelling
Infrastructure
cost $
Time

Infrastructure
cost $
Time
Predicted demand
Key:

Infrastructure
cost $
Time
Large
capital
expenditure
Predicted demand
Traditional hardware
Key:

Infrastructure
cost $
Time
Large
capital
expenditure
Predicted demand
Actual demand
Key:

Infrastructure
cost $
Time
Large
capital
expenditure
Opportunity
cost
Opportunity
cost
Predicted demand
Actual demand
Key:

Lost
opportunity
Infrastructure
cost $
Time
Large
capital
expenditure
Opportunity
cost
Opportunity
cost
Predicted demand
Actual demand
Key:

Lost
opportunity
Infrastructure
cost $
Time
Large
capital
expenditure
Opportunity
cost
Opportunity
cost
Predicted demand
Actual demand
Automated virtualization
Key:

But Cost Savings are Only
the Tip of the Iceberg…

What is TCO exactly and why does it matter ?
Definition: Comparative total cost of ownership analysis (acquisition
and operating costs) for running an infrastructure environment end-to-end
on-premises vs. AWS.
Used for:
1. Comparing the costs of running an entire infrastructure environment or
specific workload on premises or in a co-location facility versus on AWS.
2. Budgeting and building the business case for moving to cloud
3. Paralleling an existing AWS workload with an on premises or co-location
setup

How do customers lower their TCO with AWS?
Source: IDC Whitepaper, sponsored
by Amazon, “The Business Value of
Amazon Web Services Accelerates
Over Time.” December 2013
1
“Customers will have spent
63.4% more on average on-
prem or in co-location”
Remove over
provisioning and
move to pay for what
you use model
2
62 Price
Reductions
Economies of scale
allow AWS to
continually lower costs
3
Pricing model choice
to support variable &
stable workloads
4
Save more money as
you grow bigger
On-Demand
Reserved
Spot
Tiered Pricing
Volume
Discounts

“…we don’t make money
when we sell things. We
make money when we help
customers make purchase
decisions.”
Jeff Bezos (HBR 2013)

Continually lowering prices for customers is in
our DNA
Reduced
Prices
More
Customers
More AWS
Usage
More
Infrastructure
Economies of
Scale
Lower
Infrastructure
Costs
Ecosystem
Global Footprint
New Features
New Services
Infrastructure
Innovation
We pass the savings along
to our customers in the
form of low prices and
continuous reductions

A typical on-premises compute environment is
massively underutilized
Used IT
Capacity
Idle
Capacity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
On-Premises IT
Compute capacityTotal
Studies by Gartner, McKinsey and the
Uptime Institute have stated that typical
data centers are on average
less than 50% utilized
www.uptimeinstitute.org
anthesisgroup.com/wp-content/uploads/2014/08/Data-Center-Issue-Paper-final826.pdf
www.nytimes.com/2012/09/23/technology/data-centers-waste-vast-amounts-of-energy-belying-industry-image.html

Part of this can be explained by buying for “peak
load” requirements with inflexible infrastructure
Application/Workload drivers
Fluctuating/“Spiky” Part-time Cyclical
Peak
Peak
Peak
Used IT
Capacity
Idle
Capacity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
On-Premises IT

But what else is driving this gap?
 Lengthy procurement process
Common IT purchasing behaviors and
limitations
 Buying everything up-front
 No “trade-ins” or “trade-backs”
Used IT
Capacity
Idle
Capacity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
On-Premises IT

Typical TCO considerations
Hardware – Server, Rack
Chassis PDUs, ToR
Switches (+Maintenance)
Software - OS,
Virtualization Licenses
(+Maintenance)
Facilities Cost
Hardware – Storage
Disks, SAN/FC Switches
Software - Backup
Network Hardware – LAN
Switches, Load Balancer
Bandwidth costs
Software – Network
Monitoring
Server Admin, Virtualization Admin, Storage Admin, Network Admin, Support Team
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.
Space Power Cooling
Project planning, Advisors, Legal, Contractors, Managed Services,
Training, Cost of capital
Business Value:
Cost of delays
Risk premium
Competitive abilities
Governance
Etc.
IT Labor Costs
Network Costs
Storage Costs
Server Costs
4
1
2
3
Extras5
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling

Traditional Capacity Planning
Limited Value, Wasted $, Increasing Cost
Initial Fixed
Capacity
Utilization
Unused Capacity = Wasted $
Downtime, Lost Customers, Lost Revenue (Impossible to measure)
More Wasted $
Time

Initial questions to consider when exploring TCO
Capacity
Planning
1 How do you plan for capacity?
How many servers have you added in the past year? Anticipating next year?
Can you switch your hardware on and off and only pay for what is used?
Utilization
2 What is your average server utilization?
How much do you overprovision for peak load?
Operations
3 Will you run out of data center space some time in the future?
What was your last year power utility bill for the Data Center(s)?
Have you budgeted for both average and peak power requirements?
Optimization
4 Are you on AWS today?
Is your architecture cost-optimized (Auto Scaling, RIs, Spot, Instances turn
on/off)?

What levers are available to customers to drive down
costs?
Matching Supply and Demand – Right-sizing
Matching Supply and Demand – Elasticity
Lowering the Unit Price – Reserved and SPOT Instances

Example – An APAC Airline
Three Year TCO
Environment On-premises (US$) Lift & Shift (US$)
Right-sized on AWS
(US$)
AWS Optimized Apps
(US$)
Test 6,852,872 4,468,062 3,874,600 2,761,619
Dev 7,102,348 4,506,412 3,937,795 2,731,962
Prod 12,313,415 9,965,267 8,524,232 6,266,904
Total 26,268,635 18,939,741 16,336,627 11,760,485
Savings over
on-premises (%)
27.9% 37.8% 55.2%
Additional savings of
13.7% over lift and
shift approach
Additional savings of
28% over right-sized
approach
Scope: Servers acquisition and operational costs, storage acquisition and operational costs, networking costs and manpower.

We have identified additional AWS savings by
modeling both optimization and re-platforming
On-
Premises
Lift & Shift Instance Right-
Sizing
Improved
Elasticity
Storage
Optimization
Optimized Lift
and Shift
Measure
Monitor and
Improve
Serverless
Architecture
Managed
Services
Replatformed
AWS
Optimized
Traditional TCO Comparisons

What are the key benefits categories?
Operational Costs
Workforce Productivity
Cost Avoidance
Operational Resilience
Business Agility

The Economic Benefits of Cloud Span Cost Savings to
Step Change Improvements in Agility and Productivity
Operational CostsWorkforce ProductivityCost AvoidanceOperational ResilienceBusiness Agility
• Reduced Risk
Profile/Reduced
cost of Risk
Mitigation
• Revenue & margin
improvements due
to reduced outages
• Reduced Time to
Market
• Increased
operational agility
(new market
penetration,
divestiture,
acquisition)
• Reduced cost &
increased Pace of
Experimentation
• Elimination of
hardware refresh
programs
• Elimination of
maintenance
programs
• Unit Price of
Infrastructure
• Ability to match
supply & demand
• Reinvention is
continuous – a true
efficiency dividend
• A pathway to
optionality
• An elastic Cost Base
• Transparency drives
a lean mindset
• Automation drives
maintenance
efficiencies
• Reduced cost of
planned and
unplanned outages
• Increased
Developer
Productivity

GE Oil & Gas experienced business benefits across
all categories
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
14.2M
Investment
Focus
18
Months
311 Apps
in Cloud & 14M YOY
Savings

AWS Business Value Drivers
TCO
Resource Efficiency
Business
Value
Specificity
Accelerate Application
Deployment
Global Expansion
M&A or Divestures
Risk Mitigation
Business
Drivers
IT Drivers
Director of IT Executive Level

Madhusudan Shekar has been working on cloud computing
technologies from 2008.He engages with organizations of all
sizes, from startups and large enterprises to enable them to
adopt and be successful with AWS Cloud.
He has over 20 years of experience in developing large scale
systems for telecommunications, media, and automotive and
financial services industries. Prior to AWS he built the fleet
management system TATA Fleetman for automotive OEM TATA
Motors and built the third party API gateway for enterprise
smart payment systems at Ezetap.
Principal Technical Evangelist, Amazon India
Madhusudhan Shekar

Enterprise IT Stack
END USER
COMPUTING
BUSINESS
APPLICATIONS
CORPORATE
APPLICATIONS
INFRASTRUCTURE /
SHARED SERVICES
INFORMATION
SECURITY
• WorkDocs
• Workspaces
• Workmail
• Analytics (Redshift)
• App Services (SNS, SOS)
• Deployment & Management
• Mobile Services
• AWS Marketplace
• BYOL
• Licensing Partnerships
with SaaS vendors
• VMs, Auto Scaling
• Storage: Object, Block, Archival
• DB: Relational, NoSQL,
Caching
• Networking: VPC, DX, DNS
• Identity and Access Management
• Key Storage
• Usage Auditing
• Monitoring and Logs
• ERP
• CRM
• HRM
• Non-differentiated
• Firewalls
• Encryption services
• Threat monitoring
• Virtual Desktop
Infrastructure
• Collaboration tools
• Digital/ industry specific
applications
• Customer facing
applications
• Compute
• Storage
• Database
• Networking
Category Description AWS Offering

Why consider TCO for an Enterprise IT Stack?
Reason: Migration decisions are being evaluated at an
application/workload level, a move away from
infrastructure centric decision-making.
Impact: TCO for the entire application/workload is
becoming the decision-making factor.

How does AWS lower TCO across the
Enterprise IT Stack?
39

What are the different migration options?
END USER
COMPUTING
BUSINESS
APPLICATIONS
CORPORATE
APPLICATIONS
INFRASTRUCTURE /
SHARED SERVICES
INFORMATION
SECURITY
11 Mass Migration to AWS
– entire Enterprise IT
Stack
2 Workload by workload:
a. End-user Computing –
VDI
b. Business Application –
Website
c. Corporate Application –
SAP ERP, CRM and SCM
d. Infrastructure/Shared
Services – Compute and
Storage
Enterprise IT Stack
Amazon VPC, Security Groups,
Cloudtrail, Amazon IAM come pre-
built into the platform at no extra cost

What have we seen so far?
Kaplan Closes 8 Data Centers.
By Migrating Data Centers, Wilmar Saves 50%
in CAPEX.
Delaware North Moves Data Center to Save
$3.5M Over Five Years.
Hess Uses AWS to Streamline Data Center
Migration in 6 Months.
News UK Shortens Time to Market by 6 Months
by Migrating 60% of its Data Centers.

Let’s look at a recent analysis

Current State of the Enterprise IT
• Annual IT spending of USD578m per annum, excluding capital expense
requirements.
• Running 5 data centers across Asia-Pacific, all co-located with a third-party service
provider, amounting to USD24m per annum.
• Operating 12,000 servers, with 3,000 physical machines and 9,000 virtual machines.
These are running 1,268 applications, with an average of 9 servers per application.
Server break-down:
• Test – 2,840; Development – 2,800; and Production (incl. DR) – 6,360
• Managing 18 PB of Primary storage and 5 PB of Back-up storage.
• A total of 105 IT admin staff and 500 developers.

Current State – Application Categorization
The current estate is dominated by business and digital applications that account for
~60% of the applications and ~53% of the servers.
Business
Applications
Digital
Applications
Batch
Processing
Applications
End-user
Computing
Applications
APPLICATIONS BREAK-DOWN BY
CATEGORY
Business
Applications
Digital
Applications
Batch
Processing
Applications
End-user
Computing
Applications
SERVERS BY APPLICATION CATEGORY

Five Year “Do Nothing” Cost Base
0
100
200
300
400
500
600
700
Year 1 Year 2 Year 3 Year 4 Year 5
USDm
Capital Requirements
Application and related
costs
Operations and service
management costs
Infrastructure Opex
USD2.9 billion cost base over 5 years
Based on the current level of business activity, the projected five year IT cost base amounts
to USD2.9b, including capital requirements of USD53m.
Cumulative 5 year Spend USD m
Infrastructure 469
Ops & Service Management 976
Apps & Related Costs 1,445
Capital Requirements 53
Total 2,942

What is Different?
0
100
200
300
400
500
600
700
USDm
Capital Requirements
Application and related
costs
management costs
Infrastructure Opex
Application and related costs:
Includes planning, testing and
development of new applications
and systems/service management
management costs: Includes
licensing, support, patching,
updates and manpower

Future State – AWS Environment
• A steady state IT cost base of USD368m per annum, with no capital
investments or refresh cycles, a reduction of 36%.
• Running all-in on AWS across three regions – Singapore, Sydney and
Tokyo, providing better uptime and reliability.
• Infrastructure details:
• 12,000 EC2 instances
• 2.5 PB of EBS volumes
• 3 PB of S3
• Monthly data transfer of 12.6 TB
• IT admin staff of 32 (down from 105 in current state) and 500 developers
(increased developer productivity by 30% or USD26.3m, this saving is
primarily in applications and related costs).

Five Year “AWS Transformation” Cost Base
USD2.3 billion cost base over 5 years
Assuming same levels of business activity as in the current environment, the projected five
year AWS Transformation Cost Base amounts to USD2.3b, including an investment of
USD113.7m.
Cumulative 5 year Spend USD m
Legacy environment 742
AWS environment 1,457
Transformation 144
Total 2,343
0
100
200
300
400
500
600
700
USDm
Transformation
AWS
Legacy

Projected Cash Flow
Over a 5 year term, an investment of USD236m (20%) will deliver a savings of
USD591m with a payback period of 2.5 years.
Investment USD m
Parallel environments 92
Transformation 114
DC write-off 30
Total 236

What factors drive these benefits?
Application Transformation Patterns
Infrastructure re-evaluation and right-sizing – no over provisioning
Migration to open source technologies and AWS services, such as Linux and RDS
Platform development which drastically improves Automation, Monitoring and Standardization
Reduced licensing costs – leaner infrastructure, built-in information security and monitoring
Built-in resiliency leading to improved up-time and reliability

"As the global leader in CRM, Salesforce is committed to delivering the
most trusted, reliable and resilient infrastructure available to our
customers," said Parker Harris, Co-Founder and CTO, Salesforce. "Our
alliance with AWS, an industry-leading global public cloud infrastructure,
allows us to expand our infrastructure presence more quickly and
efficiently so we can support our fast-growing customer base in Canada
and around the world."

2. Workload by Workload
VDI to Workspaces
54

TCO of VDI versus Workspaces
Note: Above example assumes pricing for Sydney for all on-premises component costs and AWS
workspaces.
$-
$100,000
$200,000
$300,000
$400,000
$500,000
On-Premises AWS WorkSpaces
Five Year TCO
Hardware Costs Software Costs Administration Costs AWS Workspaces
US$428,957
US$275,000
36%
Total Cost of Ownership of 1,000 users using a desktop computing service, such
as Amazon WorkSpaces, can be 36% less than the cost of running and managing
an equivalent VDI solution on an on-premises infrastructure.

Key Cost Components of VDI
• Hardware
• Server Hardware Costs – for hosting the virtual desktop and for managing the control plane for
the system, you need server hardware to run Windows Server OS, Microsoft SQL Server
Database and access gateways.
• Storage Hardware Costs – you need Network-Attached Storage for persistent desktops.
• Network Hardware Costs – you need networking gear to connect all the servers, storage, and
control plane with users.
• Hardware Maintenance Costs – hardware failures are unavoidable, so you will incur ongoing
expenses for keeping the system functioning to spec.
• Power and Cooling Costs – once the servers start running, you must consider the operational
expenses of both powering and cooling the servers.
• Data Center Space Costs – you need real estate space to rack and stack the physical server
• Software Costs to use VDI - you need VDI software that will allow you to set up and manage users,
and their virtual desktop environments. While the software license costs might vary depending on the
vendor you select, we believe their costs are comparable relative to the value they deliver.
• Administration Costs – setting up and managing hardware infrastructure, VDI environments and
desktops is difficult and needs specialist IT staff. We believe you need at least two specialists per
1000 users to manage your desktop solution. We assume fully loaded cost of full-time IT specialist in
the US is US$120K/year. Your admin costs might vary based on your location and the experience
levels of your staff.

TCO of VDI versus Workspaces - Detailed
Number of Users 1000
TCO for 1 Month (Amortized)
Costs Items On-Premises
Amazon
WorkSpaces
Hardware Costs
Server Hardware For Compute Hosts $ 12,600 $ -
Server Hardware For Management Hosts $ 1,125 $ -
Server Hardware For Database Hosts $ 1,750 $ -
Storage Hardware $ 16,667 $ -
Network Hardware $ 3,095 $ -
Hardware Maintenance $ 3,214 $ -
Power and Cooling $ 10,814 $ -
Data Center Space $ 235 $ -
Software Costs
Load Balancer/Access Gateways $ 1,375 $ -
Virtual Desktop Software $ 2,917 $ -
Client Access Licenses $ 2,000 $ -
Administration Costs
Hardware Admin Costs $ 10,000 n/a
VDI Admin Costs $ 10,000 n/a
Desktop Management Admin Costs $ 10,000 $ 10,000
Cloud Resources $ - $ 45,000
Total Costs $ 85,791 $ 55,000
Savings Over On-Premises Option 35.89%
Summary of Cost Comparision between On-Premises
Virtual Desktop Infrastructure and Amazon WorkSpaces
VDI Solution

Business Application
58

Background
Customer: This case study is for a large Australian digital business running
multiple online assets.
Situation: The customer was witnessing rapid growth in business and IT
was not able to keep pace with business growth. This created challenges
around resource availability at peaks and impacted customer experience.
With an impending refresh cycle, the customer wanted to evaluate if AWS
could be a suitable alternative.
Objective: The TCO was created to help the management decide between an
implementation on AWS or a large infrastructure capex.

Customer Environment
Non-Virtualized Physical Servers
Cluster Name # of Servers
# of Procs /
Server
# of Cores
/Processor
Peak CPU
Utilization (%)
Ave. RAM
(GB)
Peak RAM
Utilization (%)
Host OS
Average
Usage (%)
Match By
(CPU/RAM)
File Server 1 1 2 50% 32 70% Windows 100% RAM
6
Virtualized Servers
Environment Name # of VMs Avg. vCPU
Peak CPU
Utilization (%)
Avg. vRAM
Peak RAM
Utilization
Hypervisor Guest OS
Avg. VM
Usage %
Optimize by?
Virtualization
Host
Backups 1 2 50% 8 70% VMware Windows 100% RAM Host 1
Archives 1 1 50% 4 70% VMware Windows 100% RAM Host 1
SQL Host 1 4 50% 32 70% VMware Windows 100% RAM Host 1
File Server 1 1 50% 4 70% VMware Windows 100% RAM Host 1
SCCM Host 1 6 50% 16 70% VMware Windows 100% RAM Host 1
EXC Host 1 2 50% 16 70% VMware Windows 100% RAM Host 1
Sharepoint Support 1 4 50% 12 70% VMware Windows 100% RAM Host 1
Sharepoint 1 4 50% 24 70% VMware Windows 100% RAM Host 1
Sharepoint 1 4 50% 16 70% VMware Windows 100% RAM Host 1
Terminal Server 1 4 50% 16 70% VMware Windows 100% RAM Host 1
SEC Host 1 2 50% 8 70% VMware Windows 100% RAM Host 1
Monitoring Host 1 2 50% 8 70% VMware Windows 100% RAM Host 1
DC Domain 1 2 50% 8 70% VMware Windows 100% RAM Host 1
Print Server 1 4 50% 4 70% VMware Windows 100% RAM Host 1
Licensing Server 1 1 50% 4 70% VMware Windows 100% RAM Host 1
SAM Host 1 4 50% 4 70% VMware Windows 100% RAM Host 1
TS Host 1 2 50% 16 70% VMware Windows 100% RAM Host 1
Template Host (Can 1 1 50% 4 70% VMware Windows 100% RAM Host 1
DirSync Server 1 2 50% 8 70% VMware Windows 100% RAM Host 1
Application Server 1 1 50% 8 70% VMware Windows 100% RAM Host 1
Helpdesk Server 1 2 50% 8 70% VMware Windows 100% RAM Host 1
O365 Test vm 1 2 50% 8 70% VMware Windows 100% RAM Host 1
Sharepoint Test VM 1 2 50% 4 70% VMware Windows 100% RAM Host 1
Unknown 1 1 50% 2 70% VMware Windows 100% RAM Host 1
ilt Host 1 2 50% 2 70% VMware Linux 100% RAM Host 1
29

TCO for the Website – Co-location versus AWS
Total Cost of Ownership: Colo vs. AWS
Colo AWS
$211,811 $148,835
$109,080 $68,505
$122,338 $54,326
$0 $25,721
$443,228 $297,388
Server
Storage
Network
AWS Support
Total
Savings Summary (3 Years)
3 Yr. Total Cost of Ownership
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Colo AWS
Server
Storage
Network
AWS Support
Colo is more expensive by 33%
Annual savings on AWS – US$48,614

Cash Flow Analysis
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
3-Yr Total Year 1 Year 2 Year 3
Colo AWS
AWS vs. Co-location Cash Flow View

“We believe [AWS] enables
us to operate more securely
in the public cloud than we
can in our own data
centers.”
Rob Alexander
Chief Information Officer
Capital One: Increasing Security,
Availability and Elasticity
• Capital One selected AWS for its:
• Shared security model
• Elasticity to handle purchasing
demands at peak times
• High availability
• Capital One is using AWS to reduce its
data centers from eight to three by
2018

Corporate Application
64

Background
Customer: This case study is for a large manufacturing firm with pan-India
presence and more than 15,000 employees.
Situation: The customer wanted to upgrade its SAP environment to the
latest version while they implemented SAP HANA. Their SAP environment
comprised of ERP, CRM and SCM solutions.
Objective: The business case was created to help the management decide
between an implementation on AWS or a third-party data center.

SAP TCO – Co-location versus AWS
The manufacturing firm was able to reduce TCO of running their SAP environments
by 31% over a 3 year period, on a US$2.2 m base.
Co-location AWS
Three Year TCO
Compute Storage Networking Manpower
• Cost of Capital is High @ 16% –> 6 additional
percentage point savings.
• Other non tangible benefits:
• Reduced implementation time – 24% -
faster benefits realization!
• Reduced lag between license procurement
and consumption
• Greater agility and flexibility
US$2.2 m
US$1.6 m
25%
Note: Solutions implemented - CRM, ERP and SCM on SAP HANA. Since the license and maintenance cost are the same in both cases, we
have excluded it from the comparison. We estimate the total SAP Software cost at US$5.5 million for the three years.
Cost Head Savings (%)
Compute 3%
Storage 23%
Networking 75%
Manpower 22%

Current Plan – Summary
Compute:
• 6 SAP HANA appliances – 32 core; 1.5 TB RAM
• 6 application servers – 8 core; 64 GB RAM
Storage:
• 15.6 TB of primary data
• 18.0 TB of back-up data

Current Plan - Cost Base
3 year cost base - US$2.2 million
• Year 1 cash outflow of 71% of total TCO
• Net present value of US$2.0 million
Cost Head US$ mn
Server $708,091
Storage $125,050
Networking $376,932
Manpower $969,000
Total $2,179,072
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
Year 1 Year 2 Year 3
Cash Flows

AWS Environment – Compute
SAP HANA
(Production)
AZ 1
ERP CRM SCM
SAP HANA
(Dev + Test + DR)
AZ 2
ERP CRM SCMActive-Passive DR
Application Servers
(Production)
AZ 1
ERP CRM SCM
Application Servers
(Dev + Test + DR)
AZ 2
Like for Like
2 TB 2 TB 2 TB 2 TB 2 TB 2 TB

Question
Do they really need 2 TB instances
today?
Answer
No – we can right-size their
environment!

SAP HANA
(Production)
AZ 1
SAP HANA
(Dev + Test + DR)
AZ 2
Application Servers
(Production)
AZ 1
ERP CRM SCM
Application Servers
(Dev + Test + DR)
AZ 2
ERP CRMActive-Passive DR
AWS Optimized
ERP CRM SCM ERP CRM SCMActive-Passive DR
SCM
We can run 2 apps on 1
instance as each instance has 2
TB of RAM.
For Test & Dev, we need only 2
instances of 1 TB each.

SAP HANA
(Production)
AZ 1
SAP HANA
(Dev + Test + DR)
AZ 2
Application Servers
(Production)
AZ 1
ERP CRM SCM
Application Servers
(Dev + Test + DR)
AZ 2
ERP CRMActive-Passive DR
AWS OptimizedERP
+
SCM CRM Active-Passive DR
SCM
CRM
ERP
+
SCM
2 TB 2 TB 1 TB 1 TB

What if I need more capacity for testing and
development?

SAP HANA
(Production)
AZ 1
SAP HANA
(Dev + Test + DR)
AZ 2
Application Servers
(Production)
AZ 1
ERP CRM SCM
Application Servers
(Dev + Test + DR)
AZ 2
AWS OptimizedERP
+
SCM CRM Active-Passive DR
Additional Instance
for Peaks
2 TB 2 TB 1 TB 1 TB 2 TB
CRM
ERP
+
SCM

AWS Cost Base
3 year cost base - US$1.6 million
• Year 1 cash outflow of 53% of total TCO
• Net present value of US$1.4 million
Cost Head US$
Server $687,127
Storage $96,879
Networking $92,407
Manpower $755,660
Server $1,632,073
$0
$500,000
$1,000,000
Year 1 Year 2 Year 3
Cash Flows

The Kellogg Company
Overview:
• The Kellogg Company, $15.0b revenue, 30k employees
Scope / Challenge:
• Trade Promotion Management System
• 16tb of weekly sales data processed (growing to 50tb)
• Current on-prem solution allowed for one simulation a
day
Benefits:
• Run dozens of simulations a day
• $900k savings in dev/test hardware
• Changes to trade spend analyses went from 30 days to
immediate & staff now deploys instances 90% faster
• DR across multiple AZs w/o need for another DC
Source: https://aws.amazon.com/solutions/case-studies/kellogg-company/
Using AWS lets us develop and
deliver business services much
more quickly than before, so that
we can keep one step ahead of
the market.
Stover McIlwain
Sr Director of IT Infrastructure
Engineering

Brigade Group Expected to Reduce SAP S/4 HANA
TCO by 25%
Source: Brigade Group Reduces Expected IT TCO by 25% Using AWS, AWS Website, https://aws.amazon.com/solutions/case-studies/brigade_group/;
http://cio.economictimes.indiatimes.com/news/case-studies/how-brigade-group-became-the-first-real-estate-company-in-india-to-host-s/4-hana-on-cloud/58233376
“The TCO for our SAP S/4HANA environment is less
compared with our on-premises SAP environment,
because we no longer have the same CAPEX costs.
By using AWS, Brigade Group expects to reduce the
TCO for SAP S/4HANA by 25 percent over the next
five years.”
“By running our SAP S/4HANA infrastructure, we have
an ‘always on’ computing platform that is highly
redundant, incorporating multiple AWS regions and
Availability Zones to maintain availability.”
Nilesh Patel
Head of IT
Real-time business insights:
20% faster report turnaround
time helps monitor project
schedules and budgets.
Cost avoidance: Eliminate
refresh cycles which were
typically 3-5 years.
An “always-on”
environment: Deploy a highly
redundant solution
incorporating a multi-region
and multi-AZ strategy.
Why did Brigade Group choose AWS?

RESOURCE EFFICIENCYCOST 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 <
5minutes (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
two hours (Yelp)
Launch new products 75% faster (Unilever)
5M financial investment policies recalculated
in minutes instead of overnight (ABSI)
Examples of Value Realized
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, 1PB 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)
Queries run on 450,000 online subscribers 98
percent faster and 80 percent cheaper (FT)
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)
Over 200 Solutions Architects trained
in cloud (Hitachi)
Energy Marketing business prepared
for acquisition in only 6 months rather
than 12 (Hess Corp)
Performance targets over-achieved
by 43-66% (McDonalds)
IT Infra consolidation completed in
20% of expected time (Hearst)
25,000 Amazon Workspaces cloud-
based desktops deployed (Johnson &
Johnson)
Over 500 hours per year of server
configuration time saved (Sage)
39 years of Computational chemistry
condensed into 9 hours (Novartis)

Infrastructure/Shared Services
79

What dominates the enterprise IT environment?
Windows OS
Others
Server OS Market Share
According to IDC, over 70% of all
enterprise workloads run on Windows
server OS.
Source: IDC

What are the challenges in migrating Windows
workloads to AWS?
• Varying licensing models
• BYOL or LI EC2 Instances for Server OS
• SA + License Mobility
• Active-Passive systems (SQL)
• Proc/Core-based versus User-based
• Future state on AWS
• EC2 Instances versus Dedicated Hosts versus Dedicated Instances

Windows Server Licensing Options
Flexible options for using Microsoft software licenses in the AWS cloud
Buy licenses from AWS (License
Included)
Fully compliant Microsoft Windows Server
licenses bundled with EC2 or RDS instances.
• Pay as you go
• No upfront costs or long-term investments
Bring licenses to AWS (BYOL)
If customer already licensed Microsoft Windows
Server, bring your own licenses to the AWS
cloud. Use Amazon EC2 Dedicated Hosts to
run Microsoft Windows Server software on
hardware fully dedicated to customer’s use.

How do EC2 Dedicated Hosts benefit Licensing and
Compliance?
• Use per-socket or per-core licenses
• AWS Config: data source for license reporting
– Tagging instances helps
• Enable compliance through control of instance
placement on hosts over time
• Enables BYOL Microsoft licenses without Software
Assurance
Sockets = 2
Physical Cores = 20

To evaluate the TCO for Windows server OS, we
looked at 4 user scenarios

TCO of Windows Server OS – 12-34% lower
Scenario 1 Scenario 2 Scenario 3 Scenario 4
A Singapore-based
enterprise running a
Windows OS server farm
on 1,000 physical servers.
An India-based enterprise
running 3,000 Windows
servers virtualized on
Hyper-V.
An Australia-based small
business running 100
physical Windows OS
servers in a third-party
data center facility, i.e., co-
location.
A Singaporean-based
small business running
Hyper-V-based 300
virtualized Windows OS
servers in co-location.
DescriptionComparativeTCOSavings
• BYOL – 15%
• LI EC2 Instances – 34%
• BYOL – 12%
• BYOL – 17%
• BYOL – 18%
Current AWS (BYOL) AWS (LI)
Three Year TCO
Server Windows License
Storage Networking
Manpower AWS Support
Three Year TCO
Storage Networking
Three Year TCO
Storage Networking
Three Year TCO
Storage Networking
Note: For each geo, we have used the local pricing for all TCO components.

Summary
END USER
COMPUTING
BUSINESS
APPLICATIONS
CORPORATE
APPLICATIONS
INFRASTRUCTURE /
SHARED SERVICES
INFORMATION
SECURITY
11 Mass Migration to AWS
– entire Enterprise IT
Stack
2 Workload by workload:
a. End-user Computing –
VDI
b. Business Application –
Website
c. Corporate Application –
SAP ERP, CRM and SCM
d. Infrastructure/Shared
Services – Compute and
Storage
Enterprise IT Stack
Amazon VPC, Security Groups,
Cloudtrail, Amazon IAM come pre-
built into the platform at no extra cost
36%
36%
33%
31%
34%
12-
34%

Video Resources (found on YouTube)
 re:Invent 2015 | (ISM402) Cost Optimisation at Scale
bit.ly/co17_video1
 re:Invent 2016 | (ARC310) Cost Optimising Your Architecture:
Practical Design Steps For Savings
bit.ly/co17_video2
 re:Invent 2016 | (ENT202) Driving AWS Cost Efficiency at Your Company
https://youtu.be/D3uRBcb81uE
 re:Invent 2014 | (ARC201) Cloud-Native Cost Optimisation
bit.ly/co17_video3
 re:Invent 2015 | (ISM309) Efficient Innovation:
High-Velocity Cost Management at Netflix
bit.ly/co17_video4

Other TCO and CO Resources
• Online TCO Calculator:
https://awstcocalculator.com
• AWS Economics Center:
http://aws.amazon.com/economics/
• Slide share: Value, TCO & Cost Optimization
https://www.slideshare.net/AmazonWebServices/v
alue-tco-cost-optimisation-on-aws

Reducing Total Cost of Ownership across the Enterprise IT stack webinar 101117

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