You have attended AWS training. Gathered all the relevant information about AWS services but how do you now show the value of the AWS Cloud to your business. This session will run through how you would build a business case for the cloud including TCO and cost comparisons.

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Moving to the cloud. What does it
mean for your business?
Karl Durrance
Amazon Web Services

2. Agenda
What are the business
benefits for AWS?
What would it cost to
run on AWS?
Business Case Total Cost of Ownership
&
Cost Optimisation

3. Agenda
What are the business
benefits for AWS?
What would it cost to
run on AWS?
Business Case Total Cost of Ownership
&
Cost Optimisation

4. Business Benefits of Cloud
No Upfront Expense
Lower TCO
Don’t Guess Capacity
Increase Speed & Agility
Focus on Core Business
Go Global in Minutes

5. Benefits delivered by AWS
Replace
CapEx with
OpEx
Lower
Overall
Costs
No More
Guessing
Capacity
Agility /
Speed /
Innovation
✔ ✔ ✔ ✔ ✔
Shift Focus to
Differentiation
Go
Global in
Minutes
✔

6. The Benefits 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
✔

7. Agenda
What are the business
benefits for AWS?
What would it cost to
run on AWS?
Business Case Total Cost of Ownership
&
Cost Optimisation

8. Lower Costs with AWS
1
“Average of 400 servers
replaced per customer”
Replace up-front
capital expense with
low variable cost
2
42 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
Custom Pricing
Dedicated
Source: IDC Whitepaper, sponsored by
Amazon, “The Business Value of Amazon
Web Services Accelerates Over Time.”
December 2013

9. AWS Pricing Philosophy
More AWS
Usage
More
Infrastructure
Economies
of Scale
Lower
Infrastructure
Costs
Reduced
Prices
More
Customers 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
42PRICEREDUCTIONS

10. Lower Costs than on-premises
On-Premises
Traditional
Data Center
On-Premises
Virtualized
Data Center
CAPEX
OPEX
OPEX
AWS
CAPEX
OPEX*
Cost savings from running
internal IT more efficiently
AWS Scale
• New data centers built each year
• Volume purchasing, highly automated,
supply chain optimization
Utilization fundamentally higher in
AWS cloud
• Aggregating non-correlated workloads,
scale, spot market
Amazon specific hardware
designs
• OEM acquisition of custom servers & net
gear
• Direct purchasing of disk, memory, & CPU
• AWS controlled hypervisor & net protocol
layers
Diagram is not to scale
*For AWS, OPEX costs includes Reserved Instances one-time low, upfront payment, if Reserved Instances are used.
Cost savings from moving
to a public cloud provider

11. AWS TCO benefits increase over time…
$3.50 in benefits
$1 Investment in AWS $1 Investment in AWS
$8.40 in benefits
At 36 Months of using AWS… At 60 Months of using AWS…
~3X ~8X
Source: IDC Business Value of AWS Accelerates over time
According to IDC, this relationship between length of time using AWS and return is due to customers leveraging the more
optimized environment to generate more applications along a learning curve.

12. Comparing TCO is not easy
≠

13. Typical cost drivers for on-premises deployments,
including overhead costs
Network
Costs
Storage
Costs
Server
Costs
Hardware – Server, Rack
Chassis PDUs, ToR
Switches
(+Maintenance)
Software - OS,
Virtualization Licenses
(+Maintenance)
Facilities Cost
Space Power Cooling
Hardware – Storage
Disks, SAN/FC Switches
Facilities Cost
Storage Admin costs
Network Hardware – LAN
Switches, Load Balancer
Bandwidth costs
Network Admin costs
Facilities Cost
IT Labor
Costs
Server Admin
Virtualization Admin
1
2
3
4
Space Power Cooling
Space Power Cooling
illustrative
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.
Often missing in customer estimates

14. AWS offers services that include overhead costs in the
price
Hardware
Vendor
Offering
✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔
✔
Server
Network
Hardware
Software
OS +
VMs
DC/Co-lo
Floor
Space
Powering
Cooling
Software
Defined
Networking
Personnel
Admins
HW
Maint.
Storage
Redundancy
Resource
Mgmt. /SW
Automation
× × × × ××× ×

15. TCO Example : 100 VMs in Co-lo vs. AWS
# of VMs Avg.
vCPU
Avg.
vRAM
Optimize by? Usage
25 1 2 RAM 5%
35 4 14 RAM 80%
30 8 32 RAM 60%
5 8 68 RAM 40%
5 16 128 Storage IO 8%
# of
Instances
Instance vCPU RAM Instance Type
25 m1.small 1 1.7 On Demand
35 m3.xlarge 4 15 3 Yr. Heavy RI
30 m3.2xlarge 8 30 3 Yr. Med. RI
5 m2.4xlarge 8 68.4 3 Yr. Med. RI
5 i2.4xlarge 16 122 3 Yr. Light RI
Avg.
vCPU
Avg.
vRAM
Optimize by?
1 2 CPU
4 14 CPU
8 32 CPU
8 68 CPU
16 128 Storage IO
Instance vCPU RAM
m1.small 1 1.7
c3.xlarge 4 7
c3.2xlarge 8 15
c3.2xlarge 8 15
i2.4xlarge 16 122

16. TCO Example : 100 VMs in Co-lo vs. AWS
aws.amazon.com/tco-calculator/‎

17. In Your TCO Analysis
Power/Cooling (compute, storage, shared network)
Data Center Administration (procurement, design, build, operate,
network, security personnel)
Rent/Real Estate (building deprecation, taxes)
Software (OS, Virtualization Licensing & Maintenance)
RAW vs. USABLE storage capacity
Storage Redundancy (RAID penalty, OS penalty)
Storage Backup costs (Tape, backup software)
Bandwidth, Network Gear & Redundancy (Routers, VPN, WAN..)
DON’T
FORGET
THINK
BENEFITS
Procurement Time, Resource sitting on self
Cost of lost customers
Less down time, increased productivity

18. Agenda
What are the business
benefits for AWS?
What would it cost to
run on AWS?
Business Case Total Cost of Ownership
&
Cost Optimisation

19. 1. Choose the right Instance types
Start
Choose an instance
that best meets your
basic requirements
Start with memory & then
choose closest virtual
cores
Look for peak IOPS
storage requirements
Tune
Change instance size up
or down based upon
monitoring
Use CloudWatch &
Trusted Advisor to assess
Roll-Out
Run multiple instances
in multiple Availability
Zones

20. Automatic resizing of compute clusters
based on demand
Trigger autoscaling policy
Feature
Details
Control
Define
minimum
and
maximum
instance
pool
sizes
and
when
scaling
and
cool
down
occurs.
Integrated
to
Amazon
CloudWatch
Use
metrics
gathered
by
CloudWatch
to
drive
scaling.
Instance
types
Run
Auto
Scaling
for
On-­‐Demand
and
Spot
Instances.
CompaEble
with
VPC.
AWS autoscaling create-autoscaling-group
— Auto Scaling-group-name MyGroup
— Launch-configuration-name MyConfig
— Min size 4
— Max size 200
— Availability Zones us-west-2c
2. Use Auto Scaling
Amazon
CloudWatch

21. Utilization and Auto-Scaling: Granularity
more small instances vs. less large instances
29 Large @ $0.233/hr
= $6.76/hr
59 Small @ $0.058/hr
= $3.42/hr
On Demand Prices shown (Sydney region) – M1 instance family

22. 3. Turn Off un-used Instances
• Dev./test/training instances
• Use simple instance start/stop, or
• Tear down/build up altogether
• Instances are disposable

23. 0
2
4
6
8
10
12
14
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
On Demand
Light Utilization RI
Medium Utilization RI
Heavy utilization RI
/Spot Instances
4. Use Reserved Instances
Reserved Instances enable you to reserve capacity for one or three years by paying a low,
one-time fee for the capacity reservation and receiving a significant discount on the hourly
charge for your instances
Amazon EC2
Amazon RDS
Amazon DynamoDB
Amazon Redshift
Amazon ElastiCache
AWS Services offering Reservations

24. 5. Use Spot Instances
• Pricing
• Up to 92% discount
• Elastic
• Capacity not otherwise
available
• Minimum Commitment
• Commit to 1 hour
• Tradeoff
• Potential for interruption
Picking the right Spot Bid Price - Tolerance for interruptions, % likelihood of
termination

25. 6. Leverage Storage Classes
AWS Cloud
Amazon
Glacier
Gateway Appliance/
AWS Storage Gateway
Amazon
S3
Block File
On-premises Data Center
Archive Backup Disaster
Recovery
Amazon
EBS
• Amazon S3 Reduced Redundancy
• 99.99% durability vs.
99.999999999%
• Up to 20% savings
• Great for everything that is easy to
reproduce
• Amazon Glacier
• Same durability as S3
• 3 to 5 hours restore time
• Up to 89% savings
• Great for archiving, long-term
backups and old data

26. 7. Offload your Architecture
+
Standard Setup
• 4 x Medium Instances
$485
• AWS Data Transfer 1 TB
$194
• Total = $679
Optimized
• 1 x Medium Instance
$121
• CloudFront Data 1 TB
$168
• CloudFront Requests
$1.89
• Total = $291
57%
6X
Cheaper
Faster

27. 8. Leverage Application Services
Elastic Load
Balancing
Amazon Relational
Database Service
(RDS)
Amazon Simple
Queue Service
(SQS)
Amazon Simple
Email Service
(SES)
Amazon Elastic
MapReduce
Amazon
ElastiCache
Amazon Simple
Notification Service
(SNS)

28. 9. Consolidated Billing
• Receive a single bill for all charges incurred across all linked accounts
• Share RI discounts
• Combine tiering benefits
• View & manage linked accounts
• Add additional accounts

29. 10. Leverage AWS Tools
AWS Trusted Advisor
AWS EC2 Usage Reports

30. The Business Benefits alone are compelling
– No upfront Capex
– Lower TCO
– No Guessing Capacity
– Improved Agility & Speed
– Focus on Core Business
– Go Global in Minutes
TCO
– When comparing make sure you capture all costs (Power, cooling, facilities)
– Leverage all purchasing options available (On-Demand, Reserved, Spot)
– Turn off instances and use Auto Scaling to further optimize
– Application services (RDS, SQS, ELB etc.) reduce cost even further
Summary