aws selling motionselling+motion.pdf · 2016-09-27 · aws upfront costs upfront costs variable...

AWS Selling Motion

AWS Pricing Philosophy

Reduced Prices

More Customers

More AWS Usage

More Infrastructure

Economies of Scale

Lower Infrastructure

Costs EcosystemGlobal FootprintNew FeaturesNew Services

Infrastructure Innovation

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

prices and continuous reductions

AWS Pricing Principles

Pay as you go

Pay less by using more

Pay less when you reserve

Pay less when AWS grows

No up-­front investment

Pay per use

How do customers lower their TCO with AWS?

1

Source: IDC Whitepaper, sponsored by Amazon, “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

2Pricing model choice to support variable & stable workloads

On-DemandReserved

SpotDedicated

…and that these benefits increase 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

AWS enables lower TCO than on-­premises environments

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

AWS Immense scale• New data centers built each year• Volume purchasing, highly automated, supply chain optimization

Non Virtualized Environment

VirtualizedEnvironment

UPFRONT COSTS

VARIABLECOSTS

VARIABLE COSTS

AWS

UPFRONTCOSTS

UPFRONTCOSTS

VARIABLE COST

Cost savings from running internal IT more efficiently

Cost savings from moving to AWS

Diagram is not to scale;; for AWS, upfront costs refer to Reserved Instances one-­time payment. For customers not using RIs, the entire AWS cost is variable cost. For on-­premises data centers, upfront costs refer to capital expense costs

Comparing TCO is not easy(But We’re Going to Try)

≠

TCO The Way IT orgs Typically See it illustrative

Hardware – Server, (+Maintenance) Software -­ OS, Virtualization Licenses(+Maintenance)

Hardware – Storage Disks

Network Hardware – LAN Switches, Load BalancerBandwidth costs

Server Admin Virtualization Admin4

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.

Server Costs

Storage Costs

Network Costs

IT Labor Costs

1

2

3

TCO The Way It Really Is illustrative

Hardware – Server, Rack Chassis PDUs, ToR Switches

(+Maintenance)

Software -­ OS, Virtualization Licenses

(+Maintenance)

Facilities Cost

Hardware – Storage Disks, SAN/FC Switches Storage Admin costs

Network Hardware – LAN Switches, Load Balancer

Bandwidth costsNetwork Admin costs

Server Admin Virtualization Admin

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

Facilities Cost

Space Power Cooling

Facilities Cost

Space Power Cooling

4

Server Costs

Storage Costs

Network Costs

IT Labor Costs

1

2

3

Cost optimization is…

going from…

to…

pay for what you use

pay for what you need

So how do we do it?

≠

The four pillars of cost optimization

Right-­sizing Reserved Instances

Increase elasticity

Measure, monitor, and improve

Right-­sizing

Right-­sizing• Selecting the cheapest instance available while meeting performance requirements

• Looking at CPU, RAM, storage, and network utilization 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.)

Reserved Instances

Commitment level1 year (No / Partial / All upfront payment)3 year (No / Partial / All upfront payment)RI Marketplace (for variable time durations)

AWS services offering RIsAmazon EC2 Amazon RDSAmazon DynamoDBAmazon RedshiftAmazon ElastiCache

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

Reserved Instances

Step 1: RI Coverage• Cover always-­on resources.

Step 2: RI Utilization• Leverage RI flexibility to increase utilization.• Merge and split RIs as needed.

Rule of thumb: Target 70–80% always-­on coverage and 95% RI utilization rate.

Users with urgent computing needs or

large amounts of additional capacity

Time or instance flexible

Experiment and/or build cost sensitive

businesses

EC2 Spot Pricing

Options• Spot fleet to maintain Instance Availability

• Spot block durations (1-­‐6 hours) for workloads that must run continuously

Commitment level• None

* Compared to On Demand price based on specific EC2 instance type, region and availability zone

EC2 Spot Instance Details

Markets where the price of compute changes based on supply and demand

You’ll never pay more than your bid.

50% Bidof OD

75% Bid of OD

25% Bidof OD

¢You pay the market price87% discount!

Spot Rules

Increase elasticity

Turn off nonproduction instances• Look for dev/test, nonproduction instances that are running always-­on and turn them off.

Autoscale production• Use Auto Scaling to scale up and down based on demand and usage (for example, spikes).

Rule of thumb: Shoot for 20–30% of Amazon EC2 instances running on demand to be able to handle elasticity needs.

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 US-­East at 720 hours per month

Putting it all together: Case Study 1

Challenge: Minimizing unit costs under period of massive growth.

A consistent measure of CPU processing power

Elastic compute unit (ECU)

The growth challenge

584 ECU

1,192 ECU2x YoY Compute Growth

33% decrease in monthly

EC2 costs!

Step 1: Right-­size and update instancesm1 on demand$0.07 per ECU

c4 on demand$0.02 per ECU

The impact of right-­sizing

70% reductionin unit cost

Step 2: Reserve

The impact of reservations

30% reductionIn unit cost

Putting it together

85% reductionin unit cost!

AWS options

Putting it all together: Examples

3 Tier Web App

Stateless

Scale based on demand

Web Tier

0

5

10

15

20

25

30

35

40

0 2 4 6 8 10 12 2 4 6 8 10

Web Servers

Reserved Spot On-­‐Demand0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0 0 0 0 0 0 0 0 0 0 0 0 0

Web Traffic

0

50

100

150

200

250

300

350

400

450

500

0 2 4 6 8 10 12 2 4 6 8 10

App Requests

0

5

10

15

20

25

30

35

40

45

50

0 2 4 6 8 10 12 2 4 6 8 10

App Servers

Reserved On-­‐Demand Spot block

Stateful

Scale based on demand

App Tier

0

100

200

300

400

500

600

700

800

900

0 2 4 6 8 10 12 2 4 6 8 10

Database Requests

0

0.5

1

1.5

2

2.5

3

3.5

0 2 4 6 8 10 12 2 4 6 8 10

Database Servers

Reserved On-­‐Demand Spot

Highly Stateful

Static at peak load

Database Tier

Summary: 3 Tier Web App

0

10

20

30

40

50

60

70

80

90

0 2 4 6 8 10 12 2 4 6 8 10

3 Tier Application Servers

Reserved On-­‐Demand Spot

Summary

Have a balance! Across the three tiers our cost shaping consist of

• Spot 13%• On-­‐Demand 11%• Reserved 76%

Remember!

“No server is easier to manage than no server” -­‐Werner Vogels, CTO, Amazon.com.

Grid Processing

The World as Seen by Central ITHigher utilization can reduce IT spending…

The World as Seen by the BusinessBut higher utilization also creates IT constraints…

The New Way: In the Cloud!

0

100

200

300

400

500

600

1 2 3 4 5 6 7 8 9 10 11 12

Optimizing for cost and business results

3 year Reserved Instances On-­‐Demand Spot

0

100

200

300

400

500

600

1 2 3 4 5 6 7 8 9 10 11 12

Going a step further with Spot blocks!

3 year Reserved Instances On-­‐Demand Spot block Spot

The New Way: In the Cloud!

Purchasing Options by Industry

Web scale (e.g. Adtech)

Company

Enterprise SaaS Company

On Demand

Spot

Reserved Instances

On Demand

Spot

Reserved Instances

Onboarding Enterprise Gaming Company

Technology CompanyScientific Research

On Demand

Spot

Reserved Instances

Data Science

New app development Test and Development

Internal IT

Different Purchasing Options in a single company

Putting it all together

Cycle of cost optimization

$$$$$

Enterprise Discount ProgramCustomers who can make a commitment to at least $1M in AWS and have 20% growth of their current run rate may be eligible for the Enterprise Discount Program.

Program Construct

§ Customer commits to a minimum of $1M of AWS services

§ Customer selects one of three payment options, to receive the corresponding discount price

§ They should be willing to commit to a 20% growth from the most recent 3 month run rate.

Payment Options

§ 100% Prepay

§ Partial Prepay (30% of commitment)

§ No Prepay

Summary

Freedom to build unfettered

Freedom to get real value from data

Freedom to say Yes

AWS is more cost-­effective than on-­premises environments in both short-­term and long-­term. By leveraging the consumptions models you gain the…

Q & A

Thank you