Rotem YossefAWS Business Development Manager

Cloud Economics

June 15, 2016

From Genesis to ScaleVittaly TavorVP Product

Cloudyn

Amir AramaHead of SaaS Cloud Strategy

HPE

In the beginning . . .

…there was TCO

What is TCO?

Definition: Comparative total cost of ownership analysis (acquisition

and operating costs) for running an infrastructure environment end-to-end

on-premises vs. on AWS.

Used for:

1) Comparing the costs of running an entire infrastructure environment or

specific workload on-premises or in a co-location facility vs. on AWS

2) Budgeting and building the business case for moving to AWS

How do customers lower their TCO with AWS?

Over 50 to

date

1

“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

2

Pricing model choice to

support variable &

stable workloads

On-Demand

Reserved

Spot

Dedicated

Source: IDC Whitepaper, sponsored by Amazon, “The

Business Value of Amazon Web Services Accelerates

Over Time.” December 2013

Analysts have shown AWS reduces costs over long term

Source: IDC, Quantifying the Business Value of Amazon Web Services (May, 2015)

https://aws.amazon.com/resources/analyst-reports/IDC-business-value-aws/

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

≠

TCO The Way IT orgs Typically See it

Storage Costs

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

(+Maintenance)

Hardware – Storage Disks

Network Hardware – LAN Switches, Load Balancer

Bandwidth 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.

Network Costs

IT Labor Costs

1

2

3

illustrative

Real Life = Acquisition costs + operations costs

illustrative

Hardware – Server, Rack

Chassis PDUs, ToR Switches

(+Maintenance)

Software - OS,

Virtualization Licenses

(+Maintenance)

Facilities Cost

Hardware – Storage Disks,

SAN/FC SwitchesStorage 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

Server Costs

Storage Costs

Network Costs

IT Labor Costs

Storage Costs

Server Costs

4

Network Costs

IT Labor Costs

1

2

3

When Performing a TCO analysis

• Build the TCO comparison collaboratively with the customer in multiple iterations, take the “No surprises” approach

• Make sure you have the right stakeholders in the room to discuss TCO (Finance, Procurement, IT support, Engineering)

• Avoid Comparing a duplicate of customer’s on-premise environment– problematic apples-to-apples comparisons of machines

• Assign cost/value to non-tangibles such as agility, opportunity costs

Resources to get you started

AWS TCO Calculator

https://awstcocalculator.com

Case studies and research

http://aws.amazon.com/economics/

So you’re feeling pretty good.

Until your CFO shows up with the bill.

Cost optimization is…

going from…

to…

pay for what you use

pay for what you need

The four pillars of cost optimization

Right-sizing Reserved

Instances

Increase

elasticityMeasure,

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

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.

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

Use Spot to Increase Elasticity Savings

• Be Fault Tolerant

• Workloads should be Stateless

• Loosely Coupled workloads preferred

• If possible, deploy to Multiple AZs

• Instance Flexibility is king

• Take advantage of the 2 minutes warning

• There is always Spot capacity available

Save up to 90% compared to On-Demand

Novartis, Cycle Computing &

AWS Spot Instances

Goal: Screen 10 million compounds against a

common cancer target

Estimated on-prem costs: $40M

Estimated computational time: 39 Years

Solution: Use 10,600 AWS Spot Instances

Outcome: 3 promising compounds identified

Cost: $4,232

Time: 9 Hours

Novartis, Cycle Computing &

AWS Spot Instances

• Be Fault Tolerant

• Workloads should be Stateless

• Loosely Coupled workloads preferred

• If possible, deploy to Multiple AZs

• Instant Flexibility is king

• Take advantage of the 2 minutes warning

• There is always Spot capacity available

Use Spot to Increase Elasticity Savings

Save up to 90% compared to On-Demand

What could you do with a 10,000 core data center that

costs $100 per hour, with one click?

Cost optimization governance

(Remember the fourth pillar?)

AWS options

Partner Ecosystem

HPE Software Public Cloud Governance Process

Amir Arama – HPE SaaS Public Cloud Strategy & SolutionVittaly Tavor – Cloudyn co-founder & VP Product May 2016

Public Cloud Governance

Challenge

Solution

27

Public Cloud Governance AWS Accounts Structure

HPE Master Billing Account

BU 1

Prod

Non-prod

BU 2

Prod

Non-prod

BU 3

Prod

Non-prod

BU4

Prod

Non-prod

BU 5

Prod

Non-prod

BU 6

Prod

Non-prod

BU 7

Prod

Non-prod

HPE Public Cloud Team

Cross Charge BU’s

Cloudyn: Cloud Mgmt. Tool

• All AWS accounts will be linked to HPE SW Master Billing Account. • BU-level cross charges will be generated by HPE Public Cloud Team using Cloudyn.• RIs will be purchased centrally and allocated using Cloudyn.• Cross-charge will include the use of shared resources.• Cloudyn will be the billing source.

29

Cloudyn Manages Cloud Deployments

Allowing customers to fully realize their cloud potential

34

Cloudyn Governs Your Cloud

35

• Full visibility into your spend

• Accountability of your business units

• Compliance with your policies

• Reporting to your managers

Cloudyn Optimizes Your Cloud

36

Typical customer saves:

• 30-50% on EC2 Sizing

• 25-30% on Ris

• 5-10% on unused resource elimination

Cloudyn Ensures the Highest ROI

37

We let you assess the impact of your decisions:

• ROI on your Spot instances

• ROI on your RI purchases

rotem@amazon.com