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How serverless changes the cost paradigm

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How serverless changes the cost paradigm

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One of the key characteristics of serverless components is the pay-per-use pricing model. For example, with AWS Lambda, you don’t pay for the uptime of the underlying infrastructure but for the no. of invocations and how long your code actually runs for.

This important characteristic removes the need for many premature micro-optimizations as your cost is always tightly linked to usage and minimizes waste. As a result, many applications would run at a fraction of the cost if they were moved to serverless.

The pay-per-use pricing model also enables more accurate cost prediction and monitoring based on your application’s throughput. This gives rise to the notion of FinDev, where finance and development can intersect and allows optimization to be targeted to give the optimal return-on-invest on the engineering efforts.

And by building your application on serverless components, you can also leverage it as a business advantage and offer a more competitive, usage-based pricing to your customers. Which is going to be crucial at a time when businesses all around the world are affected by COVID and are looking for better efficiencies.

In this webinar, we will cover topics such as:
- How does the cost of serverless differ from serverful applications?
- How to predict and monitor cost in serverless applications?
- When should you optimize for cost?
- How can you leverage usage-based pricing as a business advantage?

One of the key characteristics of serverless components is the pay-per-use pricing model. For example, with AWS Lambda, you don’t pay for the uptime of the underlying infrastructure but for the no. of invocations and how long your code actually runs for.

This important characteristic removes the need for many premature micro-optimizations as your cost is always tightly linked to usage and minimizes waste. As a result, many applications would run at a fraction of the cost if they were moved to serverless.

The pay-per-use pricing model also enables more accurate cost prediction and monitoring based on your application’s throughput. This gives rise to the notion of FinDev, where finance and development can intersect and allows optimization to be targeted to give the optimal return-on-invest on the engineering efforts.

And by building your application on serverless components, you can also leverage it as a business advantage and offer a more competitive, usage-based pricing to your customers. Which is going to be crucial at a time when businesses all around the world are affected by COVID and are looking for better efficiencies.

In this webinar, we will cover topics such as:
- How does the cost of serverless differ from serverful applications?
- How to predict and monitor cost in serverless applications?
- When should you optimize for cost?
- How can you leverage usage-based pricing as a business advantage?

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How serverless changes the cost paradigm

  1. 1. Yan Cui http://theburningmonk.com @theburningmonk Developer Advocate @ Independent Consultant AWS user since 2009 since 2018 yan@lumigo.io
  2. 2. Uri Parush @uri82042753 System Architect @ uri@lumigo.io
  3. 3. “Serverless”
  4. 4. Gojko Adzic It is serverless the same way WiFi is wireless. http://bit.ly/2yQgwwb
  5. 5. Serverless means… don’t pay for it if no-one uses it don’t need to worry about scaling don’t need to provision and manage servers
  6. 6. in other words, it’s a lot like taking a cab
  7. 7. Ownership Fuel Navigate To get there! Focus on getting there!
  8. 8. API Gateway IOT Core SNS SQS S3
  9. 9. HW Ownership OS Runtime & Scale Code Focus on business logic! Physical Servers Virtual Machines Containers Serverless
  10. 10. auto-scaled by demand
  11. 11. twitter.com/ben11kehoe/status/1187027628152115200
  12. 12. www.youtube.com/watch?v=C0pA5eZkmFk
  13. 13. aws.amazon.com/solutions/case-studies/bustle
  14. 14. scales to zero
  15. 15. scales to zero don’t pay for idle
  16. 16. Serverless means… don’t pay for it if no-one uses it don’t need to worry about scaling don’t need to provision and manage servers
  17. 17. aws.amazon.com/solutions/case-studies/finra-data-validation
  18. 18. Shared Responsibility Model
  19. 19. Shared Responsibility Model
  20. 20. www.buzzsprout.com/877747/3133243
  21. 21. us-east-1a us-east-1b us-east-1c multi-AZ by default
  22. 22. idea production choose language + framework master language + framework figure out deployment configure AMI configure ELB configure autoscaling capacity planning over-provision for launch are we doing microservices? configure CI/CD
  23. 23. idea production choose language + framework master language + framework figure out deployment configure AMI configure ELB configure autoscaling capacity planning over-provision for launch are we doing microservices? configure CI/CD
  24. 24. idea production greater Velocity from idea to product
  25. 25. youtube.com/watch?v=evsz__BDprs It used to take me longer to configure infrastructure for my application!
  26. 26. AppSync DynamoDB
  27. 27. Lambda
  28. 28. Scalable Robust Performant Cost efficient Agility
  29. 29. what used to takes teams of engineers to achieve over months can now be done by individuals over a matter of weeks
  30. 30. Yan Cui I’m not a great programmer; I just build my app on services that great programmers built.
  31. 31. pages.awscloud.com/Gated_IDC_Generating_Value_Through_IT_Agility.html
  32. 32. pages.awscloud.com/Gated_IDC_Generating_Value_Through_IT_Agility.html
  33. 33. Thinking about serverless costs the right way
  34. 34. Model Training Low-latency Prediction Serving via Batching
  35. 35. yes, some workloads will be more expensive to run on serverless
  36. 36. yes, some workloads will be more expensive to run on serverless from the infrastructure cost perspective
  37. 37. what businesses care about
  38. 38. what businesses care about what we can easily measure
  39. 39. what businesses care about what we can easily measure what most of our budget is spent on
  40. 40. AWS bill per month serverless containers $500 $100
  41. 41. Staffing cost per month $10000 $0 AWS bill per month serverless containers $500 $100
  42. 42. Don’t be “penny-wise, pound foolish”
  43. 43. Always think of cost in terms of Total Cost of Ownership
  44. 44. Simon Wardley https://blog.gardeviance.org/2016/11/why-fuss-about-serverless.html
  45. 45. Simon Wardley https://blog.gardeviance.org/2016/11/why-fuss-about-serverless.html the new business models around worth based development and the collision of finance and development will literally knock your socks off. Which is why the moniker "FinDev". Beyond the initial investment in coding, I can create an almost variable cost business model and redirect investment to maximise returns in ways that most of you have never experienced. I know, I’ve been there.
  46. 46. Simon Wardley https://blog.gardeviance.org/2016/11/why-fuss-about-serverless.html and redirect investment to maximise returns in ways that most of you have never experienced.
  47. 47. “what’s the ROI for a feature X?”
  48. 48. how much time does it take to build? how many engineer does it take to build?
  49. 49. how much does it cost to run it?
  50. 50. $5/hr $5/hr 1 TPS 1000 TPS $0.00138888888 per transaction $0.00000138888 per transaction actual cost per transaction depends on usage, which is outside your control
  51. 51. TPS Cost/Transaction add server add server add server add server
  52. 52. $5/hr ? TPS runs multiple services/features how do you attribute the cost for each feature?
  53. 53. understanding the operational cost for individual features are very difficult
  54. 54. unless you know exactly how much each transaction would cost you
  55. 55. AppSync DynamoDB
  56. 56. API Gateway Lambda DynamoDB $0.0000035 $0.0000004083 $0.00000125 cost per transaction: $0.0000051583
  57. 57. more CPU more network
  58. 58. more CPU more network more expensive
  59. 59. Donald Knuth We should forget about small efficiencies, say about 97% of the time: premature optimization is the root of all evil.
  60. 60. We should forget about small efficiencies, say about 97% of the time: premature optimization is the root of all evil. Yet we should not pass up our opportunities in that critical 3%. Donald Knuth
  61. 61. input output engineering time lower operational cost to run the feature
  62. 62. input output engineering time lower operational cost to run the feature this is pretty $$$
  63. 63. cost of the conversation: ~$50 per dev per hour x 8 = $400 potential saving: $10/month
  64. 64. cost of the conversation: ~$50 per dev per hour x 8 = $400 potential saving: $10/month break-even time for conversation: $400 ÷ $10/month = 40 months!!!
  65. 65. Donald Knuth We should forget about small efficiencies, say about 97% of the time: premature optimization is the root of all evil. Yet we should not pass up our opportunities in that critical 3%.
  66. 66. optimization is as much an engineering decision as it is a financial decision
  67. 67. choose wisely.
  68. 68. lumigo-cli powertune-lambda -r us-east-1 -n cpu-bound-example -s balanced
  69. 69. lumigo-cli powertune-lambda -r us-east-1 -n cpu-bound-example -s balanced
  70. 70. more CPU = shorter execution time
  71. 71. shorter execution time = cheaper
  72. 72. Node is single-threaded…
  73. 73. IO-bound functions don’t see drastic improvements with more memory
  74. 74. In 2019, the tourism industry in the UK generated 9% of its GDP and employed 2.6 million jobs
  75. 75. consumers have less disposible income B2C businesses have less revenue
  76. 76. consumers have less disposible income B2C businesses have less revenue B2B businesses have less revenue
  77. 77. consumers have less disposible income B2C businesses have less revenue B2B businesses have less revenue job losses/furloughed
  78. 78. consumers have less disposible income B2C businesses have less revenue B2B businesses have less revenue job losses/furloughed
  79. 79. Businesses have to become more efficient or die
  80. 80. “get more done with less”
  81. 81. pages.awscloud.com/Gated_IDC_Generating_Value_Through_IT_Agility.html
  82. 82. “be more competitive”
  83. 83. Simon Wardley https://blog.gardeviance.org/2016/11/why-fuss-about-serverless.html the new business models around worth based development and the collision of finance and development will literally knock your socks off. Which is why the moniker "FinDev". Beyond the initial investment in coding, I can create an almost variable cost business model…
  84. 84. API Gateway Lambda DynamoDB $0.0000035 $0.0000004083 $0.00000125 cost per transaction: $0.0000051583
  85. 85. subscription-based services
  86. 86. £ subscription fee percentile
  87. 87. £ subscription fee percentile what the customer has cost you
  88. 88. £ subscription fee percentile 80% profit! loss… what the customer has cost you
  89. 89. transactional/metered/pay-per-use
  90. 90. £ time your premium what you charge your customer what the customer has cost you
  91. 91. A pure pay-per-use play is difficult to pull off
  92. 92. Not everything in your stack is pay-per-use
  93. 93. AppSync DynamoDB
  94. 94. Factor fixed-cost components into your margin
  95. 95. Mix subscription with pay-per-use
  96. 96. time your profit what you charge your customer what the customer has cost you subscription fee £
  97. 97. £ time your profit what you charge your customer what the customer has cost you subscription fee competitor’s subscription fee
  98. 98. Enterprises want predictable pricing
  99. 99. Offer enterprise pricing options
  100. 100. what businesses care about what we can easily measure what most of our budget is spent on
  101. 101. Always think of cost in terms of Total Cost of Ownership
  102. 102. pages.awscloud.com/Gated_IDC_Generating_Value_Through_IT_Agility.html
  103. 103. more CPU more network
  104. 104. optimization is as much an engineering decision as it is a financial decision
  105. 105. We should forget about small efficiencies, say about 97% of the time: premature optimization is the root of all evil. Yet we should not pass up our opportunities in that critical 3%. Donald Knuth
  106. 106. £ time your premium what you charge your customer what the customer has cost you

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