cloud economics: how to quantify the benefits of … · how do customers lower their tco with aws?...

51
© 2017, Amazon Web Services, Inc. or its Affiliates. All rights reserved. CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF MOVING TO THE CLOUD Matt Johnson, Solutions Architect, Amazon Web Services 30 October 2017

Upload: others

Post on 25-Jun-2020

2 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

© 2017, Amazon Web Services, Inc. or its Affiliates. All rights reserved.

CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF MOVING TO THE CLOUD

Matt Johnson, Solutions Architect, Amazon Web Services30 October 2017

Page 2: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Agenda

Total Cost of Ownership2.

Addressing TCO in AWS3.

Taking it further: Cost Optimisation4.

The AWS Difference1.

Cost-Conscious Design5.

What’s next?6.

Page 3: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

The AWS Difference

Page 4: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

What sets AWS apart?

Building and managing cloud since 2006

90+ services to support any cloud workload

16 Regions, 44 Availability Zones, 98+ edge locations

62 proactive price reductions to date

Tens of Thousands of partners; 4100+ Marketplace products

Experience

Service Breadth & Depth

Global Footprint

Pricing Philosophy

Community

Page 5: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Equipment Resources and Administration

Contracts Cost

No Up Front ExpensePay for what you Use

Improve Time to Market & Agility

Scale Up and Down

Self-Service Infrastructure

Traditional Infrastructure

Why are organisations choosing AWS?

AWS Cloud

Page 6: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

AWS Global Infrastructure

16 R e g i o n s

44A Z s

98EdgeLocations

Region & No. of Availability Zones

New Region (coming soon)

FranceSweden

Hong KongChina

BahrainUS GovCloud

AnnouncedRegions

Page 7: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Total Cost of Ownership

Page 8: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

What is TCO?

Comparative Total Cost of Ownership analysis(acquisition and operating costs)

for running an infrastructure environmentend-to-end on-premises vs. AWS.

Page 9: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

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

Page 10: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Typical TCO considerations

Hardware – Server, Rack Chassis PDUs, ToR

Switches (+Maintenance)

Software - OS, Virtualization Licenses

(+Maintenance)

Facilities CostHardware – Storage Disks, SAN/FC Switches Software - Backup

Network Hardware – LAN Switches, Load Balancer

Bandwidth costs

Software – Network Monitoring

Server Admin, Virtualization Admin, Storage Admin, Network Admin, Support Team

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.

Space Power Cooling

Project planning, Advisors, Legal, Contractors, Managed Services, Training, Cost of capital

Business Value:

Cost of delaysRisk premium

Competitive abilitiesGovernance

Etc.

IT Labor Costs

Network Costs

Storage Costs

Server Costs

4

1

2

3

Extras5

Facilities Cost

Space Power Cooling

Facilities Cost

Space Power Cooling

Page 11: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

TCO for On-premises v. AWS

≠Comparing TCO isn’t easy

Traditional Data Centre& Co-Location

Page 12: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

What’s missing from a traditional TCO?

Economic Criteria Category

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

Included Partially Included Not Included

Page 13: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

On-premises capacity planning

Used IT Capacity

Idle Capacity

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

On-Premises IT

ComputecapacityTotal

Studies by Gartner, McKinsey and the Uptime Institute have stated that typical

data centers are on averageless than 50% utilized

www.uptimeinstitute.organthesisgroup.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

A typical on-premises compute environment is massively underutilized

Page 14: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Why is on-premises so underutilised?

Fluctuating/“Spiky” Part-time Cyclical

Peak

PeakPeak

Part of this can be explained by buying for“peak load” requirements with inflexible infrastructure

Page 15: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Why is on-premises built for peak?

InitialFixedCapacity

Utilisation

Unused Capacity = Wasted $

Downtime,Lost Customers,Lost Revenue(Impossible to measure)

More Wasted $Time

Page 16: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Initial questions to consider when exploring TCO

Capacity Planning

1 How do you plan for capacity? How many servers have you added in the past year? Anticipating next year? Can you switch your hardware on and off and only pay for what is used?

Utilization

2What is your average server utilization? How much do you overprovision for peak load?

Operations

3 Will you run out of data center space some time in the future? What was your last year power utility bill for the data center(s)? Have you budgeted for both average and peak power requirements?

Optimization

4Are you on AWS today? Are you cost-optimized (Auto Scaling, RIs, Spot, Instances turn on/off)?

Page 17: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Addressing TCO in AWS

Page 18: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

How do customers lower their TCO with AWS?

Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web Services Accelerates Over Time.” December 2013

“Customers will have spent 63.4% more on average on-prem or in co-location”

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

1 2 3 4

Page 19: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

1. Lower over-provisioning via “elasticity”

Traditional approaches to capacity management:

Page 20: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

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!

Page 21: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

2: AWS Economies of Scale

Reduced Prices

More Customers

More AWS Usage

MoreKit

Economies of Scale

Lower Costs

EcosystemGlobal Footprint

New Features & Services

Infrastructure Innovation

We pass the savings along to our customers in the form of low

prices and continuous reductions

(62 reductions to-date)

Continually lowering prices for customers is in our DNA

Page 22: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

3. Pricing models

On-demand Reserved Spot

Page 23: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

When to use Reserved Instances?

Page 24: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Reserved Instances

Commitment level1 year3 year

AWS services offering RIsAmazon EC2 Amazon RDSAmazon DynamoDBAmazon RedshiftAmazon ElastiCache

* Dependent on specific AWS service, size/type, and region

Page 25: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Reserved Instances

Page 26: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

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

Page 27: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

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

Page 28: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

4. Save money as you grow

0.024 GB/month 0.023 GB/month 0.022 GB/month

First 50 TB per month

Next 450 TB per month

Over 500 TB per month

Page 29: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Cost Optimisation

Page 30: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

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

Modelling Cost Optimisation

Page 31: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

The Five Pillars of Cost Optimization

Right-Sizing Your Instances

Pick the Right Pricing Model

Increase Elasticity

Measuring & Monitoring

Match usage to storage class

Page 32: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

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.)

Page 33: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

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

Page 34: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Match usage to storage classes

Amazon S3Designed to store and access any type of data over the Internet

Amazon Elastic File SystemSimple, scalable file storage for use with Amazon EC2 instances in the AWS Cloud

Amazon Elastic Block StorageBlock-level storage that serves as a virtual hard drive for your Amazon EC2 instance

Amazon GlacierLow-cost and highly durable storage service for long-term backup and archive of any type of data

AWS Storage GatewaySeamlessly links your on-premises environment to Amazon cloud storage

Amazon CloudFrontAmazon CloudFront is a global content delivery network (CDN) service

Page 35: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Serverless architectures

No Server Management

Flexible Scaling

High Availability

No Idle Capacity

Page 36: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Measure, monitor and improve

Page 37: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Amazon CloudWatch

Monitor AWS resources Monitor Custom MetricsSet Alarms

View Graphs and Statistics

Monitor and React to Resource Changes

Page 38: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Metrics & Targets

% Instances turned off daily% of Instances right-sized% Always-on Resources covered by RIs% RI utilization

✔✔✔✔✘

Set up metrics to define success and track progress

What KPI makes sense for this workload?

Page 39: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

AWS Trusted Advisor

Page 40: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

AWS Cost Explorer

Page 41: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Cost-conscious design

Page 42: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

https://calculator.s3.amazonaws.com/index.html

Cost-Conscious Design

Example: Should I use Amazon S3 or Amazon DynamoDB?

AWS SimpleMonthly

Calculator

Request rate (Writes/sec)

Object size(Bytes)

Total size(GB/month)

Objects per month

300 2,048 1,483 777,600,000

Page 43: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Request rate (Writes/sec)

Object size(Bytes)

Total size(GB/month)

Objects per month

300 2,048 1,483 777,600,000

CCD: Amazon S3 or DynamoDB?

Page 44: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

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

Page 45: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

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

Cost-Conscious Design

Page 46: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

What Next?

Page 47: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

What benefits do I get by moving to AWS?

Page 48: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

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 auto-scaling?

Page 49: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

Useful Resources

AWS Pricing§ https://aws.amazon.com/pricing/Online TCO Calculator:§ https://awstcocalculator.comAWS Cloud Economics Centre:§ https://aws.amazon.com/economics/

Page 50: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

© 2017, Amazon Web Services, Inc. or its Affiliates. All rights reserved.

THANK YOU!

Page 51: CLOUD ECONOMICS: HOW TO QUANTIFY THE BENEFITS OF … · How do customers lower their TCO with AWS? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web

© 2017, Amazon Web Services, Inc. or its Affiliates. All rights reserved.

U P N E X T

3 0 M I N U T E B R E A K