bootstrapping - session 3 - costs & agility: achieving the it “x factor

Dan Roger, AWS Product Marketing

Agility & Cost Savings Achieving the ‘X-Factor’

AWS Customers Are Realizing Long Term Benefits

Saved $34M on SmartHub app

10’s of millions of $ saved with first 12

apps migrated to AWS

50%+ reduction in server costs

decreased IT operating costs

by 75%

In early 2012, AWS commissioned IDC to interview 11 organizations that deployed applications on AWS.

“We estimate that for every dollar spent on AWS, there is at least $3-4 NOT spent on traditional I/T” Baird Equity Research

Analysts have proven out the results

Pay For Infrastructure as you Need it, Not Up Front

On-Premises

Demand

Q1 Q2 Q3 Q4 Q1

wasted

capacity

lost customers,

ordered hardware

wasted

capacity

wasted

capacity

wasted

capacity

200k

300k

600k

Time

Capacity of resources

Actual demand

Traditional IT = Waste or Missed Opportunity

Demand

AWS

With AWS match resources to demand

Q1 Q2 Q3 Q4 Q1

200k

300k

600k

Demand

Time

AWS Gives you an Off Switch for IT

0

2

4

6

8

10

12

14

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Lo

ad

Hourly CPU Load

25% Savings

Day

Optimize by Time of Day

1 5 9 13 17 21 25 29 33 37 41 45 49

Web

Serv

ers

Weeks in a Year

50% Savings Weekly CPU Load

Optimize by Annual Business Cycles

The cost of innovation is high with Traditional IT

$250K budget

Start Over

Fund 1 Idea 6 Months Fail

Experiment Often & Adapt Quickly with AWS

• Cost of failure falls dramatically

• Return on (small incremental)

Investments is high

• More risk taking, more innovation

• More iteration, faster innovation

On-Demand

Pay for compute

capacity by the hour

with no long-term

commitments

For spiky workloads,

or to define needs

Reserved

Make a low, one-time

payment and receive

a significant discount

on the hourly charge

For committed

utilization

Spot

Bid for unused

capacity, charged at a

Spot Price which

fluctuates based on

supply and demand

For time-insensitive or

transient workloads

Free Tier

Get Started on AWS

with free usage & no

commitment

For POCs and getting

started

AWS offers Many Pricing Options To Fit Workloads

Types of Reserved Instances

Reserve to save

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

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

On-Demand

Light

Medium

Heavy

1 Year Cost:

High Memory

Extra Large

Instance

Months

On-Demand vs. 1 Year RIs

1 Month

Breakeven

2 Months

Breakeven

51%-61%

savings

Save Even More

with 3 Year RIs

Upto 76%

Leverage a Portfolio of Reserved Instances

What are Spot Instances?

• Value to the customer

Pricing

• Up to 92% discount off of On-

Demand Instance

Elastic

• Potential to get capacity not

otherwise available

Minimum Commitment

• Only need to commit to 1 hour

• Tradeoff

Potential for interruption

Our Scale and Low-Margin Approach is Unique

We build IT at higher scale

than most any operator of

data centers in the world

We are comfortable running a high

volume, low margin business

We pass the savings along to

our customers in the form of

low prices and continuous

reductions

Comparing IT costs on-premises vs. cloud isn’t easy

AWS Includes Everything in the Price

Hardware

Vendor

Offering

Fixed Cost Factors One-time Upfront Monthly

AWS Co-lo On-Site AWS Co-lo On-Site

Server Hardware 0 $$$ $$ $$ 0 0

Network Hardware 0 $$ $$ 0 0 0

Hardware Maintenance 0 $$ $$ 0 0 0

Software OS 0 $$ $$ $ 0 0

Power and Cooling and Data Center Efficiency

0 0 $$ 0 0 $

Data Center/co-lo Space 0 $$ $$ 0 0 0

Personnel (Administration) 0 $$ $$ $ $$ $$$

Storage and Redundancy 0 $$ $$ $ 0 0

Bandwidth $ $$ $ $$ $ $

Resource Management Software 0 0 0 $$ $ 0

Total

Take all the fixed costs into consideration

Use our TCO Calculator to Compare Costs

Servers Think 3-5 year time frame

Use Heavy Utilization Reserved Instances

for apples to apples comparisons

HW maintenance starts at 10%

Don’t forget your VM maintenance costs

Storage

Network

Environment

Administration

Utilization rarely exceeds 60%

Three copies of your data in three datacenters

with Amazon S3

Less expensive at every tier

Servers

Storage

Network

Environment

Administration

Buying fixed ISP bandwidth means waste

Administration costs and hardware costs for your network

More bandwidth gets less expensive in AWS

Redundancy for free: AWS aggregates bandwidth from multiple Telco providers

Servers

Storage

Network

Environment

Administration

Rent, power, cooling, cabling – all that stuff

With colocation providers – you are buying

less than a full rack

Datacenters were built for last decade’s

equipment – prepare for upcharges

Servers

Storage

Network

Environment

Administration

Hardware requires specialty skillsets at premium rates

Lack of automation options = focus on provisioning resources rather than innovating

4X improvement in server to admin ratio going to AWS

Servers

Storage

Network

Environment

Administration

#1 Start with a use case or an application – compare apples to apples, capacity

utilization, networking, availability, peak to average, etc.

#2 Take all the costs into consideration

(Don’t forget administration, maintenance and redundancy costs)

#3 Use Updated Pricing (compute, storage and bandwidth)

Price cuts, Tiered Pricing and Volume Discounts

#4 Use variable capacity & reserved instances where they fit the business needs

#5 Intangible Costs – Take a closer look at what is built in with AWS – security,

elasticity, innovation, flexibility

When calculating TCO…

Cost Optimization Tips

Tip 1: Pay for what you use

© 2012 Amazon.com, Inc. and its affiliates. All rights reserved. May not be copied, modified or distributed in whole or in part without the express consent of Amazon.com, Inc.

Auto Scaling scales on demand or a schedule


• Review the amount of memory and CPU

• Select an instance that provides enough buffer to meet your requirements

• Only scale to a larger instance when needed


Tip 3:


Free Offering

– Goals

• Optimize for reducing cost

• Acceptable Delay Limits

– Implementation

• Use Spot, if delay then use On-Demand

• Maximum Spot Bid Price is less than On-Demand price

Premium Offering


Proactive Cost Optimization with Trusted Advisor

Getting the X Factor Matt Millar CEO

Online tap to clap in sync with show

Embeddable into broadcaster show website & twitter

Viral distribution via facebook and twitter

• 20 Million viewers

• Design goal 1,000,000 active viewers

– Over a 60 minute show. With acts on stage for 5

minute segments.

– Equivalent to 260bn requests/month

• But just on Saturday and Sunday nights

Source: http://www.google.com/adplanner/static/top1000/#

Where does

260 Billion

requests fit?

http://www.google.com/adplanner/static/top1000/

• Large numbers of servers for short periods of time

• Scale in seconds not hours

• Flexibility in choice

• Low cost

TV Traffic arrives fast

• Amazon Elastic Compute Cloud (Amazon EC2) instances for proxy, cache, web, write DB

• Amazon Relational Database Service (Amazon RDS) for our MySQL servers

• Amazon CloudFront for CDN distribution

• Amazon CloudWatch metrics (along with our own monitoring solution)

Summary: Achieving the IT X Factor

• Do a TCO comparison

• Don’t pay us more than you need to (RI, Autoscale)

• Optimize with Trusted Advisor

Thank you!

bootstrapping - session 3 - costs & agility: achieving the it “x factor

Technology