Explore the financial considerations of owning and operating a traditional data center versus utilizing cloud infrastructure. The session will consider many cost factors which can be overlooked when comparing models, such as provisioning, procurement, training, support contracts and software licensing. Learn how to further reduce your current costs on AWS and improve your spend predictability.

1. The Total Cost of (Non) Ownership in the AWS Cloud
Kingsley Wood
Business Development
APAC

2. Infrastructure-as-a-Service
Market Share Leader
Leader in 2011 Gartner
IaaS Magic Quadrant
Leader in 2011 Forrester
Hadoop Wave
What Analysts are Saying about AWS

3. Gartner Magic Quadrant for
Cloud Infrastructure as a Service

4. innovation

5. Powering the Most Popular Internet Businesses

6. Free steak
campaign
Facebook
page
Mars
exploration ops
Consumer
social app
Ticket pricing
optimization
SAP &
Sharepoint
Securities Trading
Data Archiving
Gene
sequencing
Marketing
web site
Interactive TV
apps
Financial
markets
analytics
R&D data
analysis
Consumer
social app
Big data
analytics
Web site &
media sharing
Disaster
recovery
Media
streaming
Web and
mobile apps
Streaming
webcasts
Facebook
app
Consumer
social app
Every Imaginable Use Case

7. Thriving Partner Ecosystem
Consulting Partners Technology Partners

9. Elastic On Demand
Pay as you go
Focus on
YOUR
business

10. 0
10
20
30
40
50
60
0 12 24 36
DatainTB
Months
Actual Storage
Incremental Adoption Savings

11. 0
10
20
30
40
50
60
0 12 24 36
DatainTB
Months
Actual Storage Provisioned
Incremental Adoption Savings

12. 0
10
20
30
40
50
60
0 12 24 36
DatainTB
Months
Actual Storage Provisioned
Underutilized
= Waste
Incremental Adoption Savings

13. Traditional IT
capacity
Capacity
Time
Your IT needs
Elastic Capacity

14. On and Off Fast Growth
Variable Peaks Predictable Peaks
Elastic Capacity

15. On and Off Fast Growth
Predictable PeaksVariable Peaks
WASTE
CUSTOMER DISSATISFACTION
Elastic Capacity

16. When you turn off your cloud resources,
you actually stop paying for them

17. Elastic cloud capacity
Traditional IT capacity
Your IT needs
Time
Capacity
Elastic Capacity

18. Fast GrowthOn and Off
Predictable peaksVariable peaks
Elastic Capacity

22. Hardware, Software, Database, Network :
Procurement, Installation, Maintenance and Administration Costs

23. Amazon Web Services provides
services and infrastructure to build
reliable, fault-tolerant, and highly
available systems in the cloud.
These qualities have been designed
into our services both by handling
such aspects without any special
action by you and by providing
features that must be used
explicitly and correctly.

24. “Just moving a system into the
cloud doesn’t make it fault-
tolerant or highly available.”
aws.amazon.com/architecture

26. Putting it all together

27. Building Block Flexibility

28. 256
128
64
32
16
8
4
2
1
1 2 4 8 16 32 64 128 256
High I/O 4XL 60.5 GB
35 EC2 Compute Units
16 virtual cores
2*1024 GB SSD-based local instance storage
EC2 Compute Units
Memory(GB)
Small 1.7 GB,
1 EC2 Compute Unit
1 virtual core
Micro 613 MB
Up to 2 ECUs (for
short bursts)
Large 7.5 GB
4 EC2 Compute Units
2 virtual cores
$0.32/0.46
Hi-Mem XL 17.1 GB
6.5 EC2 Compute Units
2 virtual cores
Hi-Mem 2XL 34.2 GB
13 EC2 Compute Units
4 virtual cores
Hi-Mem 4XL 68.4 GB
26 EC2 Compute Units
8 virtual cores
High-CPU Med 1.7 GB
5 EC2 Compute Units
2 virtual cores
High-CPU XL 7 GB
20 EC2 Compute Units
8 virtual cores
Medium 3.7 GB,
2 EC2 Compute Units
1 virtual core
M3 XL 15 GB
13 EC2 Compute Units
4 virtual cores
EBS storage only
M3 2XL 30 GB
26 EC2 Compute Units
8 virtual cores
EBS storage only
Extra Large 15 GB
8 EC2 Compute Units
4 virtual cores
10 GB
Inter-Instance
Network
Cluster GPU 4XL 22 GB
33.5 EC2 Compute Units,
2 x NVIDIA Tesla “Fermi”
M2050 GPUs
Cluster Compute 4XL 23 GB
33.5 EC2 Compute Units
Cluster Compute 8XL 60.5 GB
88 EC2 Compute Units
High Storage 8XL 117 GB
35 EC2 Compute Units,
24 * 2 TB ephemeral drives
10 GB Ethernet
Hi-Mem Cluster Compute 8XL 244 GB
88 EC2 Compute Units
16 virtual cores
240 GB SSD

29. Go Global in Minutes

30. Global
Infrastructure
Components
Regions
An independent collection of AWS resources in a defined
geography
A solid foundation for meeting location-dependent privacy
and compliance requirements
Availability Zones (AZ)
Designed as independent failure zones
Physically separated within a typical metropolitan region
Edge Locations
To deliver content to end users with lower latency
A global network of edge locations supports global DNS
infrastructure (Route53) and Cloud Front CDN

31. 9 Regions
US-WEST (Oregon) EU-WEST (Ireland)
ASIA PAC
(Tokyo)
ASIA PAC
(Singapore)
US-WEST (N. California)
SOUTH AMERICA (Sao
Paulo)
US-EAST (Virginia)
GOV CLOUD
ASIA PAC
(Sydney)
On a global footprint

32. 25 Availability Zones
On a global footprint

33. US West Region (Oregon)
Availability
Zone A
Availability
Zone B
Singapore
Availability
Zone A
Availability
Zone B
EU West Region
Availability
Zone A
Availability
Zone C
Availability
Zone B
Each Region has multiple Availability Zones. 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.

34. 40 Edge Locations
Dallas(2)
St.Louis
Miami
JacksonvilleLos Angeles (2)
Palo Alto
Seattle
Ashburn(2)
Newark
New York (2)
Dublin
London(2)
Amsterdam
Stockholm
Frankfurt(2)
Paris(2)
Singapore(2)
Hong Kong
Tokyo
Sao Paulo
South Bend
San Jose
Osaka
Milan
Sydney
Seoul
On a global footprint

35. AWS Platform

36. Steady State
Example:
Corporate Data Logging
Spiky Predictable
Example:
Marketing
Promotions Website
Uncertain Unpredictable
Example:
Web Apps
Application Usage Patterns

37. On-Demand, Reserved Instances and Spot
Multiple pricing models allow you to optimize costs for both
variable and stable workloads

38. On-demand
Instances
• Pay as you go
• Starts from
$0.02/Hour
Reserved
Instances
• One time low upfront
fee + Pay as you go
• $23 for 1 year term
and $0.012/Hour
Heavy
Utilization
Medium
Utilization
Light
Utilization
1 and 3
year terms
Save more when you reserve

39. 0
2
4
6
8
0 6 12 18 24 30 36
TrafficinInstances
Months
Traffic pattern
Physical
Reserved
Steady State Usage Pattern

40. TCO Web Application - Steady State Usage Pattern
Amortized monthly costs over 3 years
On-Premises
Option
AWS Option 1
All Reserved
(3-Year Heavy)
AWS Option 2
Mix of On-Demand
and Reserved
AWS Option
3
All On-Demand
Compute/Server Costs
Server Hardware $306.36 $0.00 $0.00 $0.00
Network Hardware $62.04 $0.00 $0.00 $0.00
Hardware Maintenance $47.10 $0.00 $0.00 $0.00
Power and Cooling $172.02 $0.00 $0.00 $0.00
Data Center Space $144.48 $0.00 $0.00 $0.00
Personnel $1,200.00 $0.00 $0.00 $0.00
AWS Instances $0.00 $618.33 $1,079.42 $2,138.40
Total - Per Month $1,932.00 $618.33 $1,079.42 $2,138.40
Total - 3 Years $69,552.00 $22,260.00 $38,859.20 $76,982.40
Savings over On-Premises Option 68.0% 44.1% -10.7%
Option 1: All Reserved
Recommended Option (Most Cost-effective)
Option 2: Mix of On-Demand and Reserved
Option 3: All On-Demand
Commitment-free and Risk-free Option
TCO of Steady State Web Application

41. 0
2
4
6
8
10
12
0 6 12 18 24 30 36
TrafficinInstances
Months
Traffic Pattern
Reserved
Physical
On-Demand
Spiky Predictable Usage Pattern

42. When you turn off your cloud resources,
you actually stop paying for them

43. Setting Threshold

44. Configure Action

45. TCO Web Application - Spiky Usage Pattern
Amortized monthly costs over 3 years
On-Premises
Option
AWS Option 1
All Reserved
AWS Option 2
Mix of On-Demand
and Reserved
AWS Option
3
All On-Demand
Compute/Server Costs
Server Hardware $510.60 $0.00 $0.00 $0.00
Network Hardware $103.40 $0.00 $0.00 $0.00
Hardware Maintenance $78.50 $0.00 $0.00 $0.00
Power and Cooling $286.70 $0.00 $0.00 $0.00
Data Center Space $240.80 $0.00 $0.00 $0.00
Personnel $2,000.00 $0.00 $0.00 $0.00
AWS Instances $0.00 $992.16 $881.42 $1,940.40
Total - Per Month $3,220.00 $992.16 $881.42 $1,940.40
Total - 3 Years $115,920.00 $35,717.60 $31,731.20 $69,854.40
Savings over On-Premises Option 69.2% 72.6% 39.7%
Option 1: All Reserved
Option 2: Mix of On-Demand and Reserved
Recommended Option (Most Cost-effective)
Option 3: All On-Demand
Commitment-free and Risk-free Option
TCO of Spiky Predictable Web Application

46. 0
4
8
12
16
20
0 6 12 18 24 30 36
TrafficinInstances
Months
Actual Traffic
Expected Traffic
Reserved
Physical
On-Demand
Uncertain Unpredictable Usage Pattern

47. TCO Web Application - Unpredictable Usage Pattern (Failure case)
Amortized monthly costs over 3 years
On-Premises
Option
AWS Option 1
All Reserved
AWS Option 2
Mix of On-Demand
and Reserved
AWS Option 3
All On-Demand
Compute/Server Costs
Server Hardware $816.96 $0.00 $0.00 $0.00
Network Hardware $165.44 $0.00 $0.00 $0.00
Hardware Maintenance $125.60 $0.00 $0.00 $0.00
Power and Cooling $458.72 $0.00 $0.00 $0.00
Data Center or Co-located Space $385.28 $0.00 $0.00 $0.00
Personnel $3,200.00 $0.00 $0.00 $0.00
AWS Instances $0.00 $1,552.89 $1,275.46 $1,009.80
Total - Per Month $5,152.00 $1,552.89 $1,275.46 $1,009.80
Total - 3 Years $185,472.00 $55,904.00 $45,916.48 $36,352.80
Savings over On-Premises Option 69.9% 75.2% 80.4%
Option 1: All Reserved
Option 2: Mix of On-Demand and Reserved
Option 3: All On-Demand
Commitment-free and Risk-free Option
Recommended Option (Most Cost-effective)
TCO of uncertain unpredictable web application when it fails

48. 0
10
20
30
40
0 6 12 18 24 30 36
TrafficinInstances
Months
Actual Traffic
Expected Traffic
Reserved
Physical
On-Demand
Disappointed
Customers
(On-Premises
Option)
Uncertain Unpredictable Usage Pattern (Success Case)

49. Incremental RI Purchases to grow a Resource Pool
0
5
10
15
20
25
30
35
1 2 3 4 5 6 7 8 9 10 11 12
E
D
C
B
A
Reserved Instance
Pool

50. Consolidated Billing

51. On-demand
Instances
• Pay as you go
• Starts from
$0.02/Hour
Reserved
Instances
• One time low upfront
fee + Pay as you go
• $23 for 1 year term
and $0.012/Hour
Spot Instances
• Requested Bid Price
and Pay as you go
• Varying…$0.005/Hour
at 9am today
Heavy
Utilization
Medium
Utilization
Light
Utilization
1 and 3
year terms
Save more money by using Spot Instances

52. Save more money by using Spot Instances

53. Spot Use cases
Use Case Types of Applications
Batch Processing Generic background processing (scale out computing)
Hadoop Hadoop/MapReduce processing type jobs (e.g. Search, Big Data,
etc.)
Scientific Computing Scientific trials/simulations/analysis in chemistry, physics, and
biology
Video and Image
Processing/Rendering
Transform videos into specific formats
Testing Provide testing of software, web sites, etc
Web/Data Crawling Analyzing data and processing it
Financial Hedgefund analytics, energy trading, etc
HPC Utilize HPC servers to do embarrassingly parallel jobs
Cheap Compute Backend servers for Facebook games

54. 0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
PercentageoftheDistribution
Bid Price as Percentage of the On-Demand Price
Bid Distribution
Typical Spot Bidding Strategies

56. Optimizing Video Transcoding Workloads
Free Offering
• Optimize for reducing cost
• Acceptable Delay Limits
Implementation
• Set Persistent Spot Requests
• Use on-demand Instances, if
delayed on Spot
Maximum Bid Price
< On-demand Rate
Get your set reduced price for your
workload
Premium Offering
• Optimized for Faster response times
• No Delays
Implementation
• Invest in RIs
• Use on-demand for Elasticity
Maximum Bid Price
>= On-demand Rate
Get Instant Capacity for higher price

57. • Security groups for EC2
and VPC
Network ACL
• Multi-Factor Authentication
• CloudHSM
• RDS Oracle transparent
encryption
• VPC
• Direct connect
• Dedicated instances
• Identity & Access
Management
• S3 Encryption
Comprehensive Security Capabilities to
Support Virtually Any Workload

58. “Amazon Virtual
Private Cloud offers
an additional level of
security and an
ability to integrate
with other aspects of
our infrastructure.”
Dr. Michael Miller
Head of HPC for R&D
Motion Picture Association of
America
Certifications & Accreditations for Workloads that Matter

59. The AWS Price Reduction Philosophy
Ecosystem
Global
Footprint
New Features
New Services
Infrastructure
Innovation
More AWS
Usage
More
Infrastructure
Economies
of Scale
Lower
Infrastructure
Costs
Reduced
Prices
More
Customers

60. Pay less when you use more

61. “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

62. AWS Trusted Advisor
Cost optimizations
Security & Availability checks
Performance
recommendations
399,000
recommendations
$69M
in annualized
savings
Past 90 Days
To: AWS Customer
From: Amazon Web Services
Subject: Potential Cost Savings
Dear Customer,
We have identified $49,000 of potential
savings in your current AWS deployment.
-Amazon Web Services
To: AWS Customer
From: Amazon Web Services
Subject: Potential Cost Savings
Dear Customer,
We have identified $49,000 of potential
savings in your current AWS deployment.
-Amazon Web Services
To: AWS Customer
From: Amazon Web Services
Subject: Potential Cost Savings
Dear Customer,
We have identified $49,000 of potential
savings in your current AWS deployment.
-Amazon Web Services
Obsessed with Helping Customers Save Money

63. Ongoing Innovation
drives Continuous Optimization
in your architecture resulting in
recurring savings
as early as your next month’s bill

64. Enterprises are Adopting AWS to
Achieve the Benefits of the Cloud
✔ ✔ ✔ ✔ ✔
Replace
CapEx with
OpEx
Lower
Overall
Costs
No More
Guessing
Capacity
Agility /
Speed /
Innovation
Shift Focus to
Differentiation
Go
Global in
Minutes
✔

65. The Benefits Of The Cloud Are ONLY
Possible IN THE CLOUD
“Private
Cloud” x x x xx x
✔ ✔ ✔ ✔ ✔
Replace
CapEx with
OpEx
Lower
Overall
Costs
No More
Guessing
Capacity
Agility /
Speed /
Innovation
Shift Focus to
Differentiation
Go
Global in
Minutes
✔

66. Forrester Foresights
Survey data , Q3 2012
Self-service
Portals
24%
Resource
Automation
27%
Resource
Tracking
29%
Cost
Chargeback
14%
Customers are Struggling to Deliver on
Promises of the “Private Cloud” Vendors
Have you
implemented these
cloud features?

67. 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

68. http://aws.amazon.com/tco-calculator/

69. How customers are
saving money with AWS
AWS Economics Center
aws.amazon.com/economics
TCO Whitepapers
Calculator Tools
aws.amazon.com/tco-calculator
Case Studies
IDC Report: The Business
Value of AWS
Accelerates Over Time

70. IDC Report
• Commissioned by AWS in 2012
– 11 organizations
• Highlights derived benefits
– downtime reduction
– productivity increases
• Learn how they reduced
TCO by an average of 70%

72. Kingsley Wood
Business Development, APAC
Thank You !