CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF MOVING TO THE CLOUD Matt Johnson, Solutions Architect, Amazon Web Services 30 October 2017 2017, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Agenda 1. The AWS Difference 2. Total Cost of Ownership 3. Addressing TCO in AWS 4. Taking it further: Cost Optimisation 5. Cost-Conscious Design 6. What s next?
The AWS Difference
What sets AWS apart? Experience Building and managing cloud since 2006 Service Breadth & Depth 90+ services to support any cloud workload Global Footprint 16 Regions, 44 Availability Zones, 98+ edge locations Pricing Philosophy Community 62 proactive price reductions to date Tens of Thousands of partners; 4100+ Marketplace products
Why are organisations choosing AWS? Traditional Infrastructure AWS Cloud Equipment Resources and Administration No Up Front Expense Pay for what you Use Improve Time to Market & Agility Contracts Cost Scale Up and Down Self-Service Infrastructure
AWS Global Infrastructure 16 Regions 98 Edge Locations Region & No. of Availability Zones New Region (coming soon) 44 AZs Announced Regions France Sweden Hong Kong China Bahrain US GovCloud
Total Cost of Ownership
What is TCO? Comparative Total Cost of Ownership analysis (acquisition and operating costs) for running an infrastructure environment end-to-end on-premises vs. AWS.
Why Use TCO? 1. Comparing the costs of running an entire infrastructure environment or specific workload on-premises or in a co-location facility versus on AWS. 2. Budgeting and building the business case for moving to cloud 3. Paralleling an existing AWS workload with an on premises or co-location setup
Typical TCO considerations 1 Server Costs Hardware Server, Rack Chassis PDUs, ToR Switches (+Maintenance) Software - OS, Virtualization Licenses (+Maintenance) Facilities Cost Space Power Cooling 2 Storage Costs Hardware Storage Disks, SAN/FC Switches Software - Backup Facilities Cost Space Power Cooling Business Value: 3 Network Costs Network Hardware LAN Switches, Load Balancer Bandwidth costs Software Network Monitoring Facilities Cost Space Power Cooling Cost of delays Risk premium Competitive abilities Governance Etc. 4 IT Labor Costs Server Admin, Virtualization Admin, Storage Admin, Network Admin, Support Team 5 Extras Project planning, Advisors, Legal, Contractors, Managed Services, Training, Cost of capital 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.
TCO for On-premises v. AWS Traditional Data Centre & Co-Location Comparing TCO isn t easy
What s missing from a traditional TCO? Economic Criteria Infrastructure Comparison Capacity Planning Benefits Financial Benefits of Innovation Cost Avoidance Workforce Productivity Accelerated Time To Value/Market Cost to Achieve (Migration, Platform, Training) Legacy Constraints Category Included Partially Included Not Included
On-premises capacity planning Total 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Compute capacity Idle Capacity Used IT Capacity 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 0% www.uptimeinstitute.org On-Premises IT anthesisgroup.com/wp-content/uploads/2014/08/data-center-issue-paper-final826.pdf www.nytimes.com/2012/09/23/technology/data-centers-waste-vast-amounts-of-energy-belying-industry-image.html
Why is on-premises so underutilised? Part of this can be explained by buying for peak load requirements with inflexible infrastructure Fluctuating/ Spiky Part-time Cyclical Peak Peak Peak
Why is on-premises built for peak? Utilisation Unused Capacity = Wasted $ Initial Fixed Capacity Downtime, Lost Customers, Lost Revenue (Impossible to measure) Time More Wasted $
Initial questions to consider when exploring TCO 1 How do you plan for capacity? Capacity How many servers have you added in the past year? Anticipating next year? Planning Can you switch your hardware on and off and only pay for what is used? 2 Utilization What is your average server utilization? How much do you overprovision for peak load? 3 Will you run out of data center space some time in the future? Operations What was your last year power utility bill for the data center(s)? Have you budgeted for both average and peak power requirements? 4 Optimization Are you on AWS today? Are you cost-optimized (Auto Scaling, RIs, Spot, Instances turn on/off)?
Addressing TCO in AWS
How do customers lower their TCO with AWS? 1 2 3 4 Remove over provisioning and move to a pay for what you use model Economies of scale allow AWS to continually lower costs Pricing model choice to support variable & stable workloads Save more money as you grow bigger Customers will have spent 63.4% more on average on-prem or in co-location Source: IDC Whitepaper, sponsored by Amazon, The Business Value of Amazon Web Services Accelerates Over Time. December 2013
1. Lower over-provisioning via elasticity Traditional approaches to capacity management:
1. Lower over-provisioning via elasticity Auto Scaling allows you to: React dynamically to changes in load Schedule regular workloads Optimise your instance usage Reduce over-provisioning Complimentary service!
2: AWS Economies of Scale Reduced Prices Continually lowering prices for customers is in our DNA Lower Costs More Customers Infrastructure Innovation Ecosystem Global Footprint New Features & Services Economies of Scale More Kit More AWS Usage We pass the savings along to our customers in the form of low prices and continuous reductions (62 reductions to-date)
3. Pricing models On-demand Reserved Spot
When to use Reserved Instances?
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
Reserved Instances
Amazon EC2 Spot Instances Allow you to bid on spare Amazon EC2 computing capacity for up to 90% off the normal on-demand price. Applications that have flexible start and end times Applications that are only feasible at very low compute prices Users with urgent computing needs for large amounts of additional capacity
With Spot the rules are simple Markets where the price of compute changes based on supply and demand You ll never pay more than your bid. When the market exceeds your bid you get 2 minutes to wrap up your work
4. Save money as you grow First 50 TB per month Next 450 TB per month Over 500 TB per month 0.024 GB/month 0.023 GB/month 0.022 GB/month
Cost Optimisation
Modelling Cost Optimisation On- Premises Lift & Shift Instance Right-Sizing Improved Elasticity Storage Optimization Optimized Lift and Shift Measure Monitor and Improve Serverless Architecture Managed Services Replatformed, AWS Optimized Traditional TCO Comparisons
The Five Pillars of Cost Optimization Right-Sizing Your Instances Increase Elasticity Pick the Right Pricing Model Match usage to storage class Measuring & Monitoring
Right-sizing instances Selecting the cheapest instance available while meeting performance requirements Look at CPU, RAM, storage, and network utilisation to identify potential instances that can be downsized Leveraging Amazon CloudWatch metrics and setting up custom RAM metrics Rule of thumb: Right size, then reserve. (But if you re in a pinch, reserve first.)
Using right-sizing and elasticity to lower cost More smaller instances vs. fewer larger instances 29 m4.large @ $0.12 /hr $2,505.60 / mo* 59 t2.medium @ $0.052/hr $2,208.96 / mo* *Assumes Linux instances in the US-East (N. Virginia) Region at 720 hours per month
Match usage to storage classes Amazon S3 Designed to store and access any type of data over the Internet Amazon Elastic File System Simple, scalable file storage for use with Amazon EC2 instances in the AWS Cloud Amazon Elastic Block Storage Block-level storage that serves as a virtual hard drive for your Amazon EC2 instance AWS Storage Gateway Seamlessly links your on-premises environment to Amazon cloud storage Amazon Glacier Low-cost and highly durable storage service for long-term backup and archive of any type of data Amazon CloudFront Amazon CloudFront is a global content delivery network (CDN) service
Serverless architectures No Server Management Flexible Scaling High Availability No Idle Capacity
Measure, monitor and improve
Amazon CloudWatch Monitor AWS resources Set Alarms Monitor Custom Metrics View Graphs and Statistics Monitor and React to Resource Changes
Metrics & Targets Set up metrics to define success and track progress % Instances turned off daily % of Instances right-sized % Always-on Resources covered by RIs % RI utilization What KPI makes sense for this workload?
AWS Trusted Advisor
AWS Cost Explorer
Cost-conscious design
Cost-Conscious Design Example: Should I use Amazon S3 or Amazon DynamoDB? Request rate (Writes/sec) Object size (Bytes) Total size (GB/month) Objects per month 300 2,048 1,483 777,600,000 AWS Simple Monthly Calculator https://calculator.s3.amazonaws.com/index.html
CCD: Amazon S3 or DynamoDB? Request rate (Writes/sec) Object size (Bytes) Total size (GB/month) Objects per month 300 2,048 1,483 777,600,000
Cost-Conscious Design but what happens if I change the object size to 32 KB? Request rate (Writes/sec) Object size (Bytes) Total size (GB/month) Objects per month 300 32,768 23,730 777,600,000
Cost-Conscious Design Request rate (Writes/sec) Object size (Bytes) Total size (GB/month) Objects per month Scenario 1 300 2,048 1,483 777,600,000 Scenario 2 300 32,768 23,730 777,600,000 use use
What Next?
What benefits do I get by moving to AWS?
And for existing customers: a call to action! How many instances could I right-size? What benefits could I get from using reserved instances? How many of my instances need to be running 24x7? How many instances are configured for autoscaling?
Useful Resources AWS Pricing https://aws.amazon.com/pricing/ Online TCO Calculator: https://awstcocalculator.com AWS Cloud Economics Centre: https://aws.amazon.com/economics/
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