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Achieving Business Value with AWS

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It is well understood by the enterprise that cloud computing enables companies to host applications, mission critical workloads, and special projects on infrastructure that is built and managed by a third-party provider such as AWS. However, many customers find themselves having a difficult time in assigning value to the benefits of the cloud. In this session we will introduce a framework that can be used to identify the impact of moving to the cloud and the business value around areas such as cost savings, staff productivity, operational resilience, and business agility.

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Achieving Business Value with AWS

  1. 1. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Achieving Business Value with AWS Leslie Goldstein AWS Cloud Economics Michael Chalmers Contino
  2. 2. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Session Agenda 1 Cloud value framework 2 Areas of business value Cost savings Staff productivity Operational resilience Business agility 3 Process & best practices
  3. 3. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Cloud Value Framework Cost Savings (TCO) Staff Productivity Operational Resilience Business Agility What is it? Examples Infrastructure cost savings/avoidance from moving to the cloud 50%+ reduction in TCO (GE) Over 500 hours per year of server configuration time saved (Sage) Efficiency improvement by function on a task-by-task basis Critical workloads run in multiple AZs and Regions for robust DR (Expedia) Benefit of improving SLAs and reducing unplanned outages Launch of new products 75% faster (Unilever) Deploying new features applications faster and reducing errors Most Compelling Cloud Benefits Typical Focus
  4. 4. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Examples of Value Realized Staff ProductivityCost 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 <5 minutes (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 2 hours (Yelp) Launch new products 75% faster (Unilever) 5M financial investment policies recalculated in minutes instead of overnight (ABSI) 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, 1 PB 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) 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) Average annual staffing savings of $3M (Adroll) Energy Marketing business prepared for acquisition in only 6 months rather than 12 (Hess Corp) Half the infrastructure team required to manage infrastructure (2C2P) Performance targets over-achieved by 43– 66% (McDonalds) IT Infra consolidation completed in 20% of expected time (Hearst) 60% of IT working on data proliferation, lack of standards, security hardening all of which AWS is addressing (Intuit) Over 500 hours per year of server configuration time saved (Sage) 39 years of Computational chemistry condensed into 9 hours (Novartis)
  5. 5. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Sample Output Server Storage Network $1,093,514 $688,514 $154,640 Savings Staff ProductivityCost Savings Operational Resilience Business Agility Total $1,936,688 Infrastructure Facilities Network $405,000 $270,000 $337,500 Impr $1,012,500 Value 30% 80% 20% eCommerce1 After $1,432,343 Value 99.00% Before 99.50% $1,432,343 Time to Deploy Total Defects Customer NPS Employee NPS $656,232 $640,360 $1,302,274 $1,751,055 Impr $4,349,922 Value 22.0% 35.0% 50.0% 33.3% KPIUptime TOTAL ANNUAL BENEFIT $8,731,433 Typical Focus Most Compelling Cloud Benefits
  6. 6. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Cost Savings: Economics of the Cloud Traditional hardware Actual demand AWS Predicted demand Key: Infrastructure cost $ Time Large capital expenditure Opportunity cost Lost opportunity
  7. 7. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Cost Savings: Modeling On-Premises Facilities Cost Space Power Cooling Recurring ISP/bandwidth costs Network hardware—LAN switches, load balancer Facilities Cost Space Power Cooling Storage software costs (+ maintenance) Hardware—Storage disks, SAN/FC switches 1 2 3 Server Costs Storage Costs Network Costs Facilities Cost Space Power Cooling Software—OS, virtualization licenses (+ maintenance) Hardware—Server, rack c hassis PDUs, ToR switches (+ maintenance) Diagram doesn’t include every cost item. For example, software costs can include database, management, and middle tier software costs. Facilities costs can include costs associated with upgrades, maintenance, building security, taxes, and others. illustrative
  8. 8. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Cost Savings: Example 1 non-virtualized physical server, 16 cores, & 64 GB RAM at 50% utilization 1 c5.4xl (3 yr TCO) Server HW Maintenance Rack Facilities Labor Software TOTAL (3 yr) $6K $2.7K $2K $10.8K $4K $0 $25.5K On premises EC2 3-yr RI Labor Support TOTAL (3 yr) $6.5K $1K $1K $8.5K AWS
  9. 9. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Cost Savings: Case Studies “We’ve been able to seamlessly scale our infrastructure, better serve our customers across the globe, and reduce our fixed costs by 75% and operational costs by 83%.” — Valentino Volonghi, CTO “Three years on, we’ve saved over $100 million in avoided capital and are about 65% in the cloud.” — Dominic Shine, CIO “As a result of going all-in into the AWS Cloud, the company reduced costs by 40% and increased operational performance by 30–40%.” “Saved $1M in hardware refresh costs and $200K annually in opex costs.” “Estimated 15–20% annual opex savings; realized 35%.” “We’ve realized a 52% reduction in TCO. That stems from a number of factors... [a push for self-service, dynamic storage, using lower-cost VMs]. Ultimately, these savings are a byproduct of doing the right thing.” — Ben Cabanas, CTO
  10. 10. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Staff Productivity: Focus on Value-Add Work Tactical (undifferentiated) Strategic (differentiated) Current state “Lift & shift” to AWS High-level AWS services Activities Customer maturity on AWS
  11. 11. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Task Typical Reduction Description Server budgeting and planning 90% There is no capital server budget or plan in the AWS Cloud Server purchasing process 75% Instance purchasing requires minimal effort in comparison to server purchasing Long-term capacity planning 75% Capacity planning is simply a matter of initiating new instances based on thresholds and much of this can be automated Project budgeting and planning 75% Project budgeting and planning effort should be significantly reduced Prepare detailed implementation plans 75% Implementation plans will be reduced since instance initiation is very straightforward Arrange repair for hardware in occasion of hardware failure 100% Not necessary with AWS Installing/upgrading/removing software 50% Simplify and automate OS patching/updating Staff Productivity: Example Server Administrator
  12. 12. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Staff Productivity: Example Server Administrator Task Typical Reduction Server budgeting and planning 90% Server purchasing process 75% Long-term capacity planning 75% Project budgeting and planning 75% Prepare detailed implementation plans 75% Arrange repair for hardware in occasion of hardware failure 100% Installing, upgrading, and removing software 50% x 75% reduction w/AWS 18.8% efficiency gain 25% of time
  13. 13. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Staff Productivity: Case Studies Pharma Services Provider “[Our staff] spends 60% of work on things like data proliferation, lack of standards, security hardening ... AWS is addressing these needs.” — Raji Arasu, SVP of Platform and Services $3M staffing cost savings; reduced operational costs by 83% 51% efficiency improvements in compute-related functions; 20% improvement in application development functions Telco Provider 60% reduction in application support FTEs 50% reduction in administrative overhead, including server management and backup operations
  14. 14. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Operational Resilience: Downtime Costs Annual Fortune 1000 application downtime costs (IDC) $1.25 to $2.5B Cost/hr. of a critical application failure (IDC) $500K to $1M Average cost of a data breach (Ponemon Institute) $3.6M Average cost per lost or stolen record (Ponemon) $141 Average cost/hr. of downtime (Ponemon Institute) $474K
  15. 15. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Operational Resilience: Quantifying Cost Cost Category % of Total Definition Third Parties 1.3% The cost of contractors, consultants, auditors and other specialists engaged to help resolve unplanned outages Equipment 1.3% The cost of new equipment purchases and repairs, including refurbishments Ex-post Activities 1.1% All after-the-fact incidental costs associated with business disruption and recovery Recovery 2.9% Activities and associated costs that relate to bringing the organization’s networks and core systems back to a state of readiness Detection 3.6% Activities associated with the initial discovery and subsequent investigation of the partial or complete outage incident IT Productivity 8.4% The lost time and related expenses associated with IT personnel downtime End-user Productivity 18.7% The lost time and related expenses associated with end-user downtime Lost Revenue 28.2% The Total revenue loss from customers and potential customers because their inability to access core systems during the outage period Business Disruption 34.6% Additional economic loss of the outage, including reputation damages customer churn and lost business opportunities Total 100.0%
  16. 16. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Operational Resilience: Example illustrative FTE cost = $1,500/minute 1. Business user productivity # of users = 1,500 FTE ($) = $125K FTE cost = $750/minute 2. Other categories ~50% of cost 0.1% improvement = 525.6 minutes X $2,250 $1.2M Calculate cost-per-minute of unplanned downtime
  17. 17. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Operational Resilience: Case Studies Using AWS, Travelstart has seized opportunities in emerging markets and has cut operational costs by 43% and downtime by 25% “SAP applications have improved from 90% to almost 100% since moving to AWS.” With its on-premises setup, the availability of its system ran to 98%, but on its cloud infrastructure, this has risen to 99.965% Migrated all workloads to AWS to reduce downtime by 60% with an annual savings of £1.2M Rebuilt patient engagement portal on AWS and reduced downtime from 120 to <5 min/month Migrated to AWS in 6 weeks with no downtime and improved availability to 99.99%+
  18. 18. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Business Agility: Track & Measure KPIs KPI New applications launched per year Mean time to resolution Time to market for new applications Response time to defects (hrs) % of new applications launched on-time % of failed deployments Time to provision new environments (days) Customer retention (%) Deployment frequency (revs/yr) Adoption of new features (%) Time to deploy to production (weeks) “Value” per release ($ revenue potential) Time to deploy to test (days) Employee retention (%) Features per release Employee absenteeism (%) Total # of incidents/defects Employee NPS/satisfaction % of total defects found in test Customer NPS/satisfaction
  19. 19. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Business Agility: Example Customer-facing application for a subscriber-based company 1. Time to market (TTM) 2. Conversion rates 3. Customer LTV 4. Clicks per month 6 months  1 month 80%  90% $1K 10K 10K clicks/month x 10% conversion rate uplift x $1K LTV x 5 months = $5M TTM benefit
  20. 20. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Business Agility: Case Studies “More than 80% of IT expenditure at AFG was consumed by IT operational costs… Today, 60 percent of our IT expenditure is dedicated to innovation.” “Our projects no longer last years— they last months. Which means that we can deliver new features to our customers much faster than we had before." “We are able to use AWS to reduce the time required to deploy infrastructure from weeks to days or hours.” Increased product development rate by 30% Deploy instances 90% faster Provisioning time reduced from four weeks to two days
  21. 21. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Live Nation: Realized Value with AWS • 18% initial TCO savings • 40% reduction in TCO through Cost Optimization after 1st year • 58% reduction in TCO to date • 99.9% vs 99.999% availability • Improved security posture • Near zero performance complaints • 10x increase in innovation pipeline • Rapid experimentation • 90%+ business user satisfaction with Cloud Services • 50% reduction in traditional IT tasks • 10x improvement in # new of projects • Improved automation and backup processes with managed services Internal Migration Focus 17 Months 118 Apps in Cloud & 58% TCO Savings Cost Savings (TCO/CO) Staff Productivity Business AgilityOperational Resilience Progress
  22. 22. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Process to Build a Business Case Kick off Project overview Executive alignment Define timeline, scope, & roles Review data Initial analysis ID open questions, assumptions Initial Assessment Full assessment Data Collection (1–2 weeks) Q&A (~1 week) Iterate & finalize (~1 week) Customer Report Out Full analysis Incorporate new data Repeat as needed
  23. 23. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. About Contino We work with the world’s leading brands to help them with measurable transformation, through building their own innovation engine which allows them to deliver better software faster and more efficiently. We do this through our five core pillars: Cloud Platform Build & Migration Cloud Native Software Development Data Platforms & Analytics Enterprise DevOps Transformation DevSecOps & Cloud Security 270+ People 5 Global Offices 200+ Engagements $70m USD Funding
  24. 24. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Cloud Economic Accelerator How do you develop a business case for AWS Adoption? Contino provides a proven approach to demonstrate the business value for moving to public cloud. This includes: ● Application & Infrastructure Portfolio ● The Application Migration Strategy ● Opportunities for Improvement ● Current State Analysis & Review ● Future state Analysis ● Business Case Development ● Business Technology Stakeholder Alignment
  25. 25. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Business Value Driven Transformation Framework Based on our work with regulated services organisations looking to move to DevOps in the Cloud operating models, Contino have developed Momentum, an opinionated framework for accelerating delivery in a controlled, compliant way at scale. NURTURE IT Problem Alignment PLAN IT PROVE IT SCALE IT IMPROVE IT Cloud ROI Business Case Development Lighthouse Projects Business Case Validation Continuous Improvement Benefits Realisation and Scaled Migration to Cloud
  26. 26. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Real World Use Cases Accessed £300M pet insurance industry 400% quicker, reducing significant cost from existing delivery model. Quote to conversion uplift. Migrated 25 applications from on-premise to AWS in 50 days without compromising compliance or security.
  27. 27. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Best Practices 1. Present the overall value of the cloud, not just TCO 2. Build the business case collaboratively with your stakeholders in multiple iterations 3. Involve the right stakeholders (Finance, Procurement, IT, Engineering, Business) 4. Assign value to hard areas to quantify, like business agility 5. Start the business case process early in the decision-making process
  28. 28. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved.© 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Resources to Get You Started AWS TCO Calculator https://awstcocalculator.com AWS Economics Center aws.amazon.com/economics/ Case Studies and Research aws.amazon.com/solutions/case-studies Value Realization Studies Available Now
  29. 29. © 2018, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Thank you!

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