The Total Cost of Ownership of Cloud Storage (TCO) - AWS Cloud Storage for the Enterprise 2012
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The document discusses factors to consider when calculating the total cost of ownership (TCO) of cloud storage versus on-premises storage. It notes that cloud storage costs less when properly accounting for: 1) usable versus raw storage capacity and utilization rates, 2) different redundancy and durability levels between storage classes, 3) all fixed costs including hardware, staffing, facilities, etc., 4) updated pricing models like price cuts, tiered pricing and recurring savings from optimization, and 5) intangible benefits of cloud like security, agility and support. The cloud's economies of scale allow for continuous price reductions while customers only pay for what they use.
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The Total Cost of Ownership of Cloud Storage (TCO) - AWS Cloud Storage for the Enterprise 2012
- 1. The Total Cost of (Non) Ownership of Storage In The Cloud Jinesh Varia jvaria@amazon.com Technology Evangelist
- 2. The AWS Cloud For Enterprises Tools to access services Cross Service features High-level building blocks Low-level building blocks
- 3. Pay as you go
- 5. When calculating TCO… #1 Understand the difference between useable vs. raw storage capacity and know your utilization
- 6. Report: File Storage Costs Less In The Cloud Than In-House
- 7. It’s Easy To Get An Incomplete And Incorrect Comparison Of Cloud And Internal Storage August 2011 “File Storage Costs Less In The Cloud Than In-House”
- 8. On-Premises Storage Allocation 1 PB Raw Storage 1,048,576 GB Disk storage volumes in a box Usable Storage 80% RAID protection, Formatted Ready Allocated Storage 90% Pre-allocation / Capacity Planning Utilized Storage 70%-80% Disk storage available to the database, Operating system Application Storage 1,820,133 GB Actual storage used by the application Source: Dave Merrill’s Blog
- 9. On-Premises Storage Amazon S3 Raw Storage Disk storage volumes in a box Usable Storage RAID protection, Formatted Ready Allocated Storage Pre-allocation 1 PB Utilized Storage Disk storage available to the database, Operating system Application Storage Actual storage used by the application
- 10. When calculating TCO… #1 Understand the difference between useable vs. raw storage capacity and know your utilization #2 Compare the redundancy and durability levels (Different classes of storage : Reduced Redundancy Store)
- 11. Multiple pricing models Standard Storage vs. Reduced Redundancy Storage
- 12. AWS Regions and Availability Zones
- 13. 99.999999999%
- 14. 99.99%
- 15. When calculating TCO… #1 Understand the difference between useable vs. raw storage capacity and know your utilization #2 Compare the redundancy and durability levels (Different classes of storage : Reduced Redundancy Store) #3 Take all the fixed costs into consideration (Don’t forget people, power, space, ….)
- 16. Take all the Fixed Costs in to consideration Cost Factors One-time Upfront Monthly AWS On-site On-site AWS On-site On- Backup DR Backup site Archive Archive DR Server Hardware 0 $$$ $$ $$ 0 0 Network Hardware 0 $$ $$ 0 0 0 Hardware Maintenance 0 $$ $$ 0 0 0 Software OS 0 $$ $$ $ 0 0 Power and Cooling and Data 0 0 $$ 0 0 $ Center Efficiency Data Center/co-lo Space 0 $$ $$ 0 0 0 Personnel (Administration) 0 $$ $$ $ $$ $$$ Storage and Redundancy 0 $$ $$ $ 0 0 Bandwidth $ $$ $ $$ $ $ Resource Management 0 0 0 $$ $ 0 Software Total
- 18. Traditional File Storage Systems Are Expensive To Buy And Run August 2011 “File Storage Costs Less In The Cloud Than In-House”
- 19. Cloud Storage Is More Straightforward And A Lot Cheaper Than Traditional Storage August 2011 “File Storage Costs Less In The Cloud Than In-House”
- 20. When calculating TCO… #1 Understand the difference between useable vs. raw storage capacity and know your utilization #2 Compare the redundancy and durability levels (Different classes of storage : Reduced Redundancy Store) #3 Take all the fixed costs into consideration (Don’t forget people, power, space, ….) #4 Use updated pricing and optimize (Price cuts, Tiered Pricing, Recurring Savings)
- 21. Pay less per unit when you use more
- 22. Massive economies of scale and efficiency improvements allow us to continually lower prices
- 24. 19 price cuts in last 5 years “It makes me look so good in front of my CFO. When he [CFO] sees the savings in our AWS monthly bill, he thinks that it is me who is working hard on driving the costs down and increasing efficiency of the company’s infrastructure. I get all the credit for all the hard work you guys are putting in.” CIO of F500 company Massive economies of scale and efficiency improvements allow us to continually lower prices.
- 25. Price cuts Cloud Storage Costs of 100 TB $251,600 $195,100 August 2011 “File Storage Costs Less In The Cloud Than In-House”
- 26. Did you know? AWS Free Usage Tier Free Services Data Transfer New Customers Amazon EC2 (Linux & Windows) Amazon ELB AWS Elastic Beanstalk No Charge for Inbound Amazon S3 AWS CloudFormation Data Transfer Amazon EBS AWS IAM Auto Scaling No Charge for Data For all customers Consolidated Billing Transfer Between Services within a region Amazon SQS/SNS Amazon DynamoDB Amazon SES Amazon SWF And more…
- 27. Expensive Tape Robot Library
- 28. TimedStorage-ByteHours = KilowattHour $0.125 GB/Month
- 29. When you turn off your cloud resources, you actually stop paying for them
- 30. Continuous optimization in your architecture results in recurring savings as early as your next month’s bill
- 31. Individual developer has the power to save a ton of money for the company
- 32. When calculating TCO… #1 Understand the difference between useable vs. raw storage capacity and know your utilization #2 Compare the redundancy and durability levels (Different classes of storage : Reduced Redundancy Store) #3 Take all the fixed costs into consideration (Don’t forget people, power, space, ….) #4 Use updated pricing and optimize (Price cuts, Tiered Pricing, Recurring Savings) #5 Intangible Costs – Take a closer look at what you get as part of AWS
- 33. AWS delivers a premium security spec at non-premium prices Certifications Physical Security HW, SW, Network SOC 1 Type 2 Datacenters in Systematic change (formerly SAS-70) nondescript facilities management ISO 27001 Physical access Phased updates strictly controlled deployment PCI DSS for EC2, S3, EBS, VPC, RDS, Must pass two-factor Safe storage ELB, IAM authentication at decommission least twice for floor FISMA Moderate Automated access Compliant Controls monitoring and self- Physical access audit HIPAA & ITAR logged and audited Compliant Advanced network Architecture protection
- 34. Reduced Time to Market = More Revenue
- 35. Opportunity Cost
- 38. When calculating TCO… #1 Understand the difference between useable vs. raw storage capacity and know your utilization #2 Compare the redundancy and durability levels (Different classes of storage : Reduced Redundancy Store) #3 Take all the fixed costs into consideration (Don’t forget people, power, space, ….) #4 Use updated pricing and optimize (Price cuts, Tiered Pricing, Recurring Savings) #5 Intangible Costs – Take a closer look at what you get as part of AWS
- 39. How customers are saving money with AWS AWS Economics Center TCO Whitepapers Calculator Tools Case Studies Other Resources
- 40. AWS Pricing Philosophy Pay as you go • No minimum commitments or long-term contracts required • Capex -> Opex • Turn off when you don’t need it Pay less per unit when you use more • Tiered Pricing and Volume Discounts Pay even less when you reserve • Reserved pricing Pay even less as AWS grows • Efficiencies, optimizations and economies of scale result in passing the savings back to you in the form of lower pricing Custom Pricing
- 41. Thank you! Jinesh Varia jvaria@amazon.com Twitter:@jinman
Editor's Notes
- While the number and types of services offered by AWS has increased dramatically, our philosophy on pricing has not changed: at the end of each month, you pay only for what you use, and you can start or stop using a product at any time. No long-term contracts are required
- Our strategy of pricing each service independently gives you tremendous flexibility to choose the services you need for each project and to pay only for what you use
- The best study so far!
- To get 1 PB of actual application storage, you actually need to account for 1.820133 PB of storage.
- To get 1 PB of actual application storage, you actually need to account for 1.820133 PB of storage.
- You can choose to deploy and run your applications in multiple physical locations within the AWS cloud. Amazon Web Services are available in geographic Regions. When you use AWS, you canspecify the Region in which your data will be stored, instances run, queues started, and databases instantiated.For most AWS infrastructure services, including Amazon EC2, there are seven regions: US East (Northern Virginia), US West (Northern California), EU (Ireland), Asia Pacific (Singapore) and Asia Pacific (Tokyo), AWS GovCloud (US) and US West (Oregon).Within each Region are Availability Zones (AZs). Availability Zones are distinct locations that are engineered to be insulated from failures in other Availability Zones and provide inexpensive, low latency network connectivity to other Availability Zones in the same Region. By launching instances in separate Availability Zones, you can protect yourapplications from a failure (unlikely as it might be) that affects an entire zone. Regions consist of one or more Availability Zones, are geographically dispersed, and are in separate geographic areas or countries. The Amazon EC2 service level agreement commitment is 99.95% availability for each Amazon EC2 Region.
- Some of the biggest innovations inside Amazon S3 have been how to use software techniques to mask many of the issues that would easily have paralyzed every other storage system.core to the design of S3 is that we go to great lengths to never, ever lose a single bit. We use several techniques to ensure the durability of the data our customers trust us with, and some of those (e.g. replication across multiple devices and facilities) overlap with those we use for providing high-availability. One of the things that S3 is really good at is deciding what action to take when failure happens, how to re-replicate and re-distribute such that we can continue to provide the availability and durability the customers of the service have come to expect. the durability of an object stored in Amazon S3 is 99.999999999%. If you store 10,000 objects with us, on average we may lose one of them every 10 million years or so. This storage is designed in such a way that we can sustain the concurrent loss of data in two separate storage facilities.
- Some of the biggest innovations inside Amazon S3 have been how to use software techniques to mask many of the issues that would easily have paralyzed every other storage system.core to the design of S3 is that we go to great lengths to never, ever lose a single bit. We use several techniques to ensure the durability of the data our customers trust us with, and some of those (e.g. replication across multiple devices and facilities) overlap with those we use for providing high-availability. One of the things that S3 is really good at is deciding what action to take when failure happens, how to re-replicate and re-distribute such that we can continue to provide the availability and durability the customers of the service have come to expect. the durability of an object stored in Amazon S3 is 99.999999999%. If you store 10,000 objects with us, on average we may lose one of them every 10 million years or so. This storage is designed in such a way that we can sustain the concurrent loss of data in two separate storage facilities.
- It is very important to know your costs. Most organizations get TCO calculations but they don’t know what the TCO of the indivual App is because central IT had cut a big fat check earlier in the past. In order to do real TCO analysis of App-level, you have to know that there are costs of Power, cooling, real estate system administration costs in case of on-premise data center and co-lo which is not in that of the cloud. I am even taking into account the value of “Headache” and cost of this undifferentiated heavy lifting. When you use AWS, all these costs are already baked in to your costs. You really don’t have to worry about all these costs. The other very important item that customers miss is Reserved Instances when doing long-term TCO calculations. Reserved instances can save you upto 50% for a 3-year term. Its our commitment to you and not your commitment to us. Andy took this into two things into consideration : know what he is currently paying for the app and understanding the reserved instance pricing
- Personnel costs include the cost of the sizable IT infrastructure teams that are needed to handle the “heavy lifting”— managing heterogeneous hardware and the related supply chain, staying up-to-date on data center design, negotiating contracts, dealing with legacy software, operating data centers, moving facilities, scaling and managing physical growth, etc. – all the things that an enterprise needs to do well if it wants to achieve low infrastructure costs in the areas discussed above. For example: Storage Hardware procurement teams are needed. These teams have to spend a lot of time evaluating hardware, negotiating, holding hardware vendor meetings, managing delivery and installation, etc. It’s expensive to have a staff with sufficient knowledge to do this well.Storage Data center design and build teams are needed to create and maintain reliable and cost-effective facilities.Storage Operations staff is needed 24/7/365 in each facility.Networking teams are needed for running a highly available network. Expertise is needed to design, debug, scale, and operate the network and deal with the external relationships necessary to have cost-effective internet transit.Storage Security personnel are needed at all phases of the design, build, and operations process.
- The best study so far!
- The best study so far!
- To this….
- 23% price reduction
- Prorated chargeThe volume of storage billed in a month is based on the average storage used throughout the month. This includes all object data and metadata stored in buckets that you created under your AWS account. We measure your storage usage in “TimedStorage-ByteHrs,” which are added up at the end of the month to generate your monthly charges.Storage Example:Assume you store 100GB (107,374,182,400 bytes) of standard Amazon S3 storage data in your bucket for 15 days in March, and 100TB (109,951,162,777,600 bytes) of standard Amazon S3 storage data for the final 16 days in March.At the end of March, you would have the following usage in Byte-Hours:Total Byte-Hour usage = [107,374,182,400 bytes x 15 days x (24 hours / day)] + [109,951,162,777,600 bytes x 16 days x (24 hours / day)] = 42,259,901,212,262,400 Byte-Hours.Let’s convert this to GB-Months:42,259,901,212,262,400 Byte-Hours x (1 GB / 1,073,741,824 bytes) x (1 month / 744 hours) = 52,900 GB-MonthsThis usage volume crosses three different volume tiers. The monthly storage price is calculated below assuming the data is stored in the US Standard Region:1 TB Tier: 1024GB x $0.125 = $128.001 TB to 50 TB Tier: 50,176 GB (49×1024) x $0.110 = $5,519.3650 TB to 450 TB Tier: 1,700 GB (remainder) x $0.095 = $161.50Total Storage Fee = $128.00 + $5,519.36 + $161.50 = $5,808.86
- Only happens in the cloud
- Cloud is highly cost-effective because you can turn off and stop paying for it when you don’t need it or your users are not accessing. Build websites that sleep at night
- Individual developer has the power to optimize and save a ton of money
- Examining AWS, you’ll see that the same security isolations are employed as would be found in a traditional datacenter. These include physical datacentre security, separation of the network, isolation of the server hardware, and isolation of storage. AWS customers have control over their data: they own the data, not us; they can encrypt their data at rest and in motion, just as they would in their own datacenter. Amazon Web Services provides the same, familiar approaches to security that companies have been using for decades. Importantly, it does this while also allowing the flexibility and low cost of cloud computing. There is nothing inherently at odds about providing on-demand infrastructure while also providing the security isolation companies have become accustomed to in their existing, privately-owned environments.AWS is a secure, durable technology platform with industry-recognized certifications and audits: PCI DSS Level 1, ISO 27001, FISMA Moderate, HIPAA, SAS 70 Type II. Our services and data centers have multiple layers of operational and physical security designed to protect the integrity and safety of your data. Visit our Security Center to learn more http://aws.amazon.com/security/.Certifications and Accreditations: AWS has successfully completed a SAS70 Type II Audit, and will continue to obtain the appropriate security certifications and accreditations to demonstrate the security of our infrastructure and services. PCI DSS: We finalized our 2011 PCI compliance audit, publishing our extensive Report on Controls (ROC) with an expanded scope. Our new November 30, 2011 PCI Attestation of Compliance, a document from our auditor stating we are compliant with all 12 PCI security standard domains, is available now for customers considering or working on moving PCI systems to AWS. The new Attestation of Compliance document includes some key changes this year: This year we’ve added RDS, ELB, and IAM as in-scope services. The addition of these services is fantastic news for PCI customers since they can now leverage RDS to store cardholder and transaction data, use ELB to manage card transaction traffic, and rely on IAM features as validated control mechanisms that satisfy PCI security standard requirements. Consistent with last year, EC2, S3, EBS, and VPC continue to be in scope. Physical Security: Amazon has many years of experience in designing, constructing, and operating large scale data centers. AWS infrastructure is housed in Amazon-controlled data centers throughout the world. Only those within Amazon who have a legitimate business need to have such information know the actual location of these data centers, and the data centers themselves are secured with a variety of physical barriers to prevent unauthorized access.Secure Services: Each of the services within the AWS cloud is architected to be secure and contains a number of capabilities that restrict unauthorized access or usage without sacrificing the flexibility that customers demand. Data Privacy: AWS enables users to encrypt their personal or business data within the AWS cloud and publishes backup and redundancy procedures for services so that customers can gain greater understanding of how their data flows throughout AWS.“In essence, the security system of AWS’s platform has been added to our existing security systems. We now have a security posture consistent with that of a multi-billion dollar company.” - Jim Warren, CIO, Recovery Accountability and Transparency Board (RATB)
- Reduced TCO remains one of the core reasons why customers choose the AWS cloud. However, there are a number of other benefits when you choose AWS, such as reduced time to market and increased business agility, which cannot be overlooked.
- While the number and types of services offered by AWS has increased dramatically, our philosophy on pricing has not changed: at the end of each month, you pay only for what you use, and you can start or stop using a product at any time. No long-term contracts are requiredPay as you go. No required minimum commitments, no longterm contracts. This flexibility minimizes the need for detailed resource planning. Pay per use. Pay only for what you use. With AWS, there’s no need to pay up-front for excess capacity or get penalized for under-planning. For compute resources, you pay on an hourlybasis from the time you launch a resource until the time you terminate it. For data storage and transfer, you pay on a per gigabyte basis. We charge based on the underlying infrastructure and services you consume. Pay less by using more. For storage and data transfer, pricing is tiered. The more you use, the less you pay per gigabyte. Pay even less when you reserve. For certain products, you can invest in reserved capacity. In that case, you pay a one-time low upfront fee, and your on-demand rate is reduced by 28% to 58%. Custom pricing. What if none of our pricing models work for your project? Custom pricing is available for high volume projects with unique requirements. For assistance, contact us to speak with a sales representative.