Most likely, your organization is not in the business of running data centers, yet a significant amount of time & money is spent doing just that.
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1 AWS Cloud Economics
2 Most likely, your organization is not in the business of running data centers, yet a significant amount of time & money is spent doing just that. What if you could: Eliminate the undifferentiated heavy lifting? Reduce costs? Have access to unlimited IT resources? Have complete control over your costs? Amazon Web Services provides a way to acquire and use infrastructure on-demand, so that you pay only for what you consume. This puts more money back into the business, so that you can innovate more, expand faster, and be better positioned to take advantage of new opportunities. Can you imagine the Possibilities? Foster a culture of innovation Re-invest in your business Spin up 100,000 core super computer for US$100 per hour Align your costs to business needs Benefits of Cloud Computing Business Agility Reduced Time to Market Increased operational agility (new market penetration, divestiture, acquisition) Reduced cost & increased Pace of Experimentation Cost Avoidance Elimination of hardware refresh programs Elimination of maintenance programs Operational Costs Unit Price of Infrastructure Ability to match supply & demand Reinvention is continuous a true efficiency dividend A pathway to optionality An elastic Cost Base Transparency drives a lean mindset Operational Resilience Reduced Risk Profile/Reduced cost of Risk Mitigation Revenue & margin improvements due to reduced outages Workforce Productivity Automation drives maintenance efficiencies Reduced cost of planned & unplanned outages Increased Developer Productivity
3 A report from IDC indicates that AWS customers achieve important financial benefits that help increase growth, drive efficiencies, and realize important long-term cost reductions. 560% 5 Year ROI $1.54 M Average 5 year discounted business benefits per app. 5.5 Months Payback period Other Findings of the study: IT Staff Productivity: Surveyed organizations are managing applications in their AWS environments an average of 68.1% more efficiently compared with maintaining the same environment on-premises or in a hosted environment. $181,699 Business productivity & Risk Mitigation $133,389 IT Staff productivity gains App Development KPIs: Resulting in application development teams delivering an average of 118.4% more applications (new applications, application releases, application upgrades) while releasing these applications in 36.7% less time. source:
4 What is Total Cost of Ownership (TCO)? Comparative total cost of ownership analysis (acquisition & operating costs) for running an infrastructure environment end-to-end on-premises vs. AWS. TCO analysis is used by our customers in Comparing the costs of running an entire infrastructure environment or specific workload on premises or in a co-location facility versus on AWS and in Paralleling an existing AWS workload with an on premises or co-location setup. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Compute capacity Idle Capacity Used IT Capacity On-Premises IT A typical on-premises compute environment is massively underutilized Studies by Gartner, McKinsey and the Uptime Institute have stated that typical data centers are on average less than 50% utilized Why comparing TCO is not easy! Server Costs Hardware Server, Rack Chassis PDUs, ToR Switches (+Maintenance) Software - OS, Virtualization Licenses (+Maintenance) Facilities Cost Space Power Cooling Business Value: Storage Costs Network Costs Hardware Storage Disks, SAN/FC Switches Network Hardware LAN Switches, Load Balancer Bandwidth costs Software - Backup Software Network Monitoring Facilities Cost Space Power Cooling Facilities Cost Space Power Cooling Cost of delays Risk premium Competitive abilities Governance Etc. IT Labor Costs Server Admin, Virtualization Admin, Storage Admin, Network Admin, Support Team Extras Project planning, Advisors, Legal, Contractors, Managed Services, Training, Cost of capital
5 How should you calculate your TCO? What levers are available to drive down costs? Matching Supply & Demand Right-Sizing Matching Supply & Demand Elasticity Lowering unit price Reserved & Spot Instance AWS TCO Methodology Factoring On-premises / Co-location cost that would include: On-premises / Co-location AWS Server / Compute Purchase cost + Annual Maintenance Fee EC2 Storage Purchase Software & Hardware + Annual Maintenance Fee EBS/S3/Glacier Networking Purchase + Annual Maintenance Direct Connect + Data Transfer Software OS + Virtualization Solution - Licensing + Support Not required / included in EC2 Application Application Licensing & Support Application Licensing & Support Management Manpower + Managed Services Manpower + Managed Services
6 AWS customers who lowered their TCO We ve been able to seamlessly scale our infrastructure, better serve our customers across the globe, & reduce our fixed costs by 75% & operational costs by 83%. - Valentino Volonghi, CTO, AdRoll Read More: Three years on, we ve saved over $100 million in avoided capital and are about 65% in the cloud. - Dominic Shine, CIO News Corp Read more: We ve realized a 52 percent reduction in TCO. That stems from a number of factors... [a push for selfservice, dynamic storage, using lower cost VMs] Ultimately these savings are a byproduct of doing the right thing. Ben Cabanas, CTO, GE Transportation3 Read more: Continually lowering prices for customers is in our DNA Infrastructure Innovation Lower Infrastructure Costs Reduced Prices More Customers Ecosystem Global Footprint New Features - New Services We pass the savings along to our customers in the form of low prices and continuous reductions Economies of Scale More Infrastructure More AWS Usage
7 Cost Per Unit Usage Over Time Cost Optimization Moving from Pay for what you Use to Pay for What you need We re operating in a new IT consumption model, where IT can be consumed on demand. With this utility pricing model, everyone pays for what is used. It s like your water bill. If your faucet is running - you re paying your water bill at the end of the month based on what you used. But what happens if you leave that faucet running? Or have a teenager that likes long showers? Or have a leaky pipe? Cost optimization is about focusing on what is needed & identifying ways that we can turn the corner between usage and need to ensure we re as lean and efficient as possible. How do you ensure your costs stay optimized on AWS? 5 Pillars of Cost Optimization Right-Sizing Your Instances Increase Elasticity Pick the Right Pricing Model Measuring & Monitoring Match usage to storage class
8 Try AWS Total Cost of Ownership (TCO) Calculator Use AWS Total Cost of Ownership (TCO) Calculator to compare the cost of running your applications in an on-premises or colocation environment to AWS. Describe your on-premises or colocation configuration to produce a detailed cost comparison with AWS.You can switch between the basic and advanced views to provide additional configuration details. Visit: Other Useful Resources Getting Started: Lowering Total Cost of Ownership with AWS Building and Realizing the Economic case for the AWS cloud Understanding Total Cost of Ownership on AWS Cost Optimization at Scale Cost Optimizing Your Architecture High-Velocity Cost Management For more details, please visit: or write to: TCOSupport@amazon.com
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