Enterprise Track

1. © 2015, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Allan Knudsen, AWS
Henrik Forsberg, MTG
May 2016
Value, TCO & Cost Optimization on AWS

2. We will be focusing on:
Framing the
value of AWS
AWS & Lower
Costs
Optimize to
drive Value

3. How to frame the value of moving to AWS?
Start with your goals
“We need to focus on moving our core
business forward — not building and
maintaining infrastructure…”
“Reducing our overall cost is a high priority.”
“We are looking to improve performance and
expand globally in a flexible way.”
Macro goals
to move

4. Analysts have shown AWS Creates Value
Source: IDC, Quantifying the Business Value of Amazon Web Services (May, 2015)

5. How do customers lower their TCO with AWS?
1
Source: IDC Whitepaper, “The
Business Value of Amazon Web
Services Accelerates Over Time.”
December 2013
“Average of 400
servers replaced per
customer”
Replace up-front
capital expense with
lower “pay for what
you use” variable
cost model
3
Periodic Price
Reductions
Economies of scale
allow AWS to
continually lower
costs
2
Pricing model choice
to support variable &
stable workloads
On-Demand
Reserved
Spot
Dedicated

6. AWS PRICING PHILOSOPHY
More AWS
Usage
More
Infrastructure
More
Customers
Lower
Infrastructure
Costs
Economies of
Scale
Reduced Prices
Ecosystem
Global Footprint
New Features
New Services
Infrastructure
Innovation
51PRICE
REDUCTIONS
We pass the savings along to our
customers in the form of low
prices and continuous reductions

7. Let’s Look Into Costs

8. Comparing TCO is not easy
≠

9. 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
• Multiple 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 and
net gear
• Direct purchasing of disk, memory, and CPU
• AWS controlled hypervisor and net protocol
layers
Diagram is not to scale
*For AWS, OPEX costs includes Reserved Instances one-time low, up-front payment, if Reserved Instances are used.
Cost savings from moving
to a public cloud provider

10. TCO The Way Clients Typically See it
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.
Hardware – Server, (+Maintenance)
Software - OS, Virtualization Licenses
(+Maintenance)
Hardware – Storage Disks
Network Hardware – LAN Switches, Load Balancer
Bandwidth costs
Server Admin Virtualization Admin
1
2
3
4
Server
Costs
Storage
Costs
Network
Costs
IT Labor
Costs

11. TCO The Way It Is = Acquisition + Operational Costs
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.
Hardware – Server, Rack
Chassis PDUs, ToR
Switches (+Maintenance)
Hardware – Storage Disks,
SAN/FC Switches
Network Hardware – LAN
Switches, Load Balancer
Bandwidth costs
Server Admin Virtualization Admin
1
2
3
4
Server
Costs
Storage
Costs
Network
Costs
IT Labor
Costs
Software - OS, Virtualization
Licenses
(+Maintenance)
Storage Admin costs
Network Admin Costs
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling

12. Tools for cost analysis
• TCO Calculator
• Total Cost of Ownership comparison tool
• Simple Monthly Calculator
• Calculate your monthly AWS costs

13. Traditional Capacity Planning
Limitations of traditional data centers:
Inflexible physical assets Costs are never in sync
Migration and expansion
costs are high
Cost of unexpected
inefficiencies

14. Benefits of elastic and Pay-Per-Use Infrastructure
Unable to
serve
customers
Infrastructure
Cost $
time
Large
Capital
Expenditure
Opportunity
Cost
Predicted
Demand
Traditional
Hardware
Actual
Demand
Automated
Virtualization

15. Even after initial deployment,
AWS continues to drive down
costs

16. The Value of Using AWS Accelerates Over Time
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.
$1 Investment in AWS
$8.40 in benefits
At 60 Months of using AWS
~8X
$3.50 in benefits
$1 Investment in AWS
At 36 Months of using AWS
~3X

17. Upgrades are your responsibility Upgrades happen automatically
On-premises infrastructure
VPC support
With AWS, Service Upgrades occur automatically

18. Managed services eliminate many operational tasks
Do-it-yourself MySQL replication
Potentially ~100+ manual steps
Set up primary and standby instances
Set up identical volumes
Create synchronous replication
Create and manage DNS entries
Detect instance failure conditions
Detect network failure conditions
Detect storage failure conditions
Decide when to fail over….
Re-establish primary secondary connections.
Amazon RDS Multi-AZ
HA with a mouse click

19. Extending from TCO to Cost
Optimization

20. The Four Pillars of Cost Optimization
Right Sizing Reserved
Instances
Increase
Elasticity
Measure,
Monitor, &
Improve

21. Right Sizing
Right Sizing
• Selecting the cheapest instance available
while meeting performance requirements
• Looks at CPU, RAM, storage, and network
utilization to identify potential instances that
can be downsized
• Leverage CloudWatch Metrics and set up
custom RAM metric
Rule of thumb: Right size, then reserve.

22. Reserved Instances
Commitment Level
1 Year
3 Year
AWS Services Offering RIs
Amazon EC2
Amazon RDS
Amazon DynamoDB
Amazon Redshift
Amazon ElastiCache
* Dependent on specific AWS Service, size/type and Region

23. Increase Elasticity
Turn off non-production instances
• Look for dev/test, non-prod instances that are
running always-on and turn off
Autoscale Production
• Use Autoscaling to scale up and down based
on demand and usage (e.g. spikes)
Rule of thumb: Shoot for 20-30% of EC2
instances running on demand to be able to
handle elasticity needs.

24. Using Right Sizing and Elasticity to Lower Cost
More smaller instances vs. less larger instances
29 m4.large @ $0.126/hr.
$2,630.88 / mo*
59 t2.medium @ $0.052/hr.
$2,203.20 / mo*
*Assumes Linux instances in US-East at 720 hours per month

25. AWS Trusted Advisor: Automated Cost Optimization and Advice
2,600,000+
recommendations
$350M+
in cost reductions
To: AWS Customer
From: Amazon Web
Services
Subject: Potential Cost
Savings
Dear Customer,
We have identified $49,000 of
potential savings in your current
To: AWS Customer
From: Amazon Web
Services
Subject: Potential Cost
Savings
Dear Customer,
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
“AWS rang me up and said they were cutting my costs by $30,000 a month. In
all my years in IT I have never had a supplier ring me up and say that. It never
happens. Now we can invest that cash into new product development and turn
it into revenue.”
- News UK IT Director, Chris Birch

26. The Value of Innovation

27. Innovate by increasing the ability to “Fail Fast”
20 new projects
10
2
IT Project funnel
Increase the # of new projects in
the funnel
Increase the speed by which
projects move through the funnel
Decrease the downside impacts of
project “failures” (shut ‘em down quick)
Keep costs low for the successes

28. Web links for more information
AWS Economics Center:
• aws.amazon.com/economics
• Includes link to TCO Calculator
• Link to the IDC report
Case Studies & References:
• aws.amazon.com/solutions/case-studies

29. Henrik Forsberg
Head of MTGIQ – Group Data, BI & Analytics
2016-05-04
Breaking Down the Economics
and TCO of Migrating to AWS

30. • Launched TV3 in 1987 as the first commercial TV
channel in Scandinavia and the first privately owned
channel
• Satellite broadcasting covering Scandinavia,
Eastern Europe and Russia
• Free-TV channels in 11 countries and Pay-TV
platforms and packages in 8 countries
• More than 25 productions companies
• + 100 TV channels
• Net sales 16.218 MSEK (2016)
• EBIT 1.268 MSEK (2016)
MTG

32. CHANGE!

33. HOW WE DEAL WITH IT

34. DEEPER UNDERSTANDING OF
CUSTOMERS & CONTENT
• Align data across business areas
• Accelerate data driven decision
making
• Support the change of business
behavior
• Build for various types of insights
from the very beginning
• Feeding data back to consumer
products

35. HOWTOGETSTARTED?
1. Applications
2. Hardware
3. Installation & configuration
4. Development
5. Operations & maintenance
Resources?
Costs & structure?
Organization?
Time & Deliveries?
Priorities?
Long-term ambition?
Data volumes?
Flexibility?

36. CURRENTSETTING
EMR
RedshiftS3 EC2
EC2
S3
”Data In” ”Data Out”
EC2
SQS

37. • 80% of annual budget on new
development
• 10% of annual budget spent on
hardware, infrastructure, config.
• No capital investments
• Affordable to make adjustments
• No performance issues
HIGHLIGHTS

38. Thank you!henrik.forsberg@mtg.com
www.mtg.com/jobs

39. Henrik & Allan