demystifying cloud economics – think big: how to build an investment case for large scale...

© 2016, Amazon Web Services, Inc. or its Affiliates. All rights reserved.

Blair Layton – Business Development, APAC

April 2016

Demystifying Cloud Economics

How to build an investment case for scale migration to the cloud

Repositioning IT in the corporate landscape

Reduction in IT Cost Base

Increasing profitability of

existing products and services

Business Growth

Consumption Based Pricing & Automation

Elimination of upfront CAPEX requirements

Real-time access to declining prices

Increased Business Process Automation

Incremental Innovation

Reduction in Rework

Organic and Inorganic Growth

Reduced cost of entry

Global Reach

Reduction in time to market for

new products and services

Customer centricity

Valu

e

But how do I quantify this?

The migration approach is dependent on the specific

drivers and constraints of the organisation

Current State DC in AWS Right-sized on AWS Well Architected on AWS

Transformation Effort

Traditional

enterprises

Old world

enterprise in

the cloud

Exploring

the new

normal

Next-gen

operating

model

Benefits

Profile

Why the economics of cloud

are different

What are the key benefits categories?

Operational Costs

Workforce Productivity

Cost Avoidance

Operational Resilience

Business Agility

What are the key benefits categories

• Unit Price of Infrastructure

• Ability to match supply & demand

• Reinvention is continuous – a true efficiency dividend

• A pathway to optionality

• An elastic Cost Base

• Transparency drives a lean mindset

Operational Costs



• Automation drives maintenance efficiencies

• Reduced cost of planned and unplanned outages

• Increased Developer Productivity


Cost Avoidance• Elimination of hardware refresh programs

• Elimination of maintenance programs


Operational Resilience• Reduced Risk Profile/Reduced cost of Risk

Mitigation

• Revenue & margin improvements due to

reduced outages


Business Agility

• Reduced Time to Market

• Increased operational agility (new market

penetration, divestiture, acquisition)

• Reduced cost & increased Pace of

Experimentation

AWS TCO support to date

AWS TCO Calculator (https://awstcocalculator.com)

What’s missing?

Economic Criteria Category

Infrastructure Comparison

Capacity Planning benefits

Financial Benefits of Innovation

Cost Avoidance


Application centric TCO

Cost to Achieve (Migration, Platform, Training)

Legacy Constraints

Why do a Mass Migration?

If I were you, I wouldn’t start

from here…

Utility pricing model across entire technology stack

Reduced maintenance costs & ability to refocus your staff

Access to innovation platform

Low Risk Migration Pathway

Provide direct cost control to the lines of business

Remove the depreciation “hole” & eliminate capital commitments

Eliminate hosting technology debt.

ok, on a serious note…

Am I ready for a mass migration?

The Adoption Journey & the role of Mass Migration

Year 1 Year 2 Year 3 Year 4

• Early Discovery

• Learning

• POCs

• TCO/ROI Analysis

• Security & Risk Preparation

• Cloud Strategy

• Foundational Architecture

• New Application

Patterns (MSA, CI/CD)

• Dev/Test

• Production

Application Migration

• Operational Integration

• Billing Optimization

Va

lue

• Portfolio Mass

Migration

• DC Shutdown

• Horizontal Solutions

(VDI, Back-

up/Archive, Broad

storage)

• Advanced

Operational Patterns

(CI/CD)

• Optimization

• Infrastructure fully automated

• App/Dev owns full solution stack with

tools and service catalogs

Time

Year 5

Challenges of a mass migration

investment case

Lack of sufficient data re. legacy estate to plan or build a business case

Sunk costs associated with legacy contracts and/or existing DCs/Co-Los inhibit

short term saving potential

Uncertainty as to level of investment required to migrate and build future state

platform

Lack of clarity as to future state benefits profile (cost savings++)

Short term cost spike due to running old and new world in parallel

Cash constraints and shareholder pressure often means there are capital

constraints

good news - we can help!

• Data Discovery Support (Tooling + Competency)

• Full Benefits Assessment via AWS Value Engineering

• Migration Methodology + Transformation Cost Estimates

• Tailored AWS & Partner Investment Programs

Cost to Achieve - Application Transformation Patterns

Migration Pattern

Name & LabelPattern Description

Retain Client will keep host / application in their source environment

Retire* Application and host decommission on source

Re-Hosting*

Like for Like application migration to target cloud

Minimal effort to make the application work on the target cloud infrastructure

(Minimal appl layout change)

Re-Platform*

Up-Version of the OS and/or Database onto the target cloud

Storage migration will be needed (without conversion)

Application reinstallation on the target

Database to AWS RDS

Re-Factoring*

OS and/or Database porting

Middleware and application change to cloudify an application

Data conversion; Database transition to MySQl, Aurora, etc.

UAT required

Re-Architect**

Application architecture changes may also require Up-Version or Porting

Middleware, data modernization; application consolidation / stacking

UAT required; HPC Grid, No ITIL

R1

R2

R3

R4

R5

R6

Customer Case StudyBen Cabanas – CTO, General Electric, Transportation

GE Digital Industrial Portfolio

POWER

~$30B

66K EMPLOYEES

OIL & GAS

$18.7B

46K EMPLOYEES

AVIATION

$24B

45K EMPLOYEES

ENERGY

MANAGEMENT

~$11B

47K EMPLOYEES

RENEWABLE

ENERGY

~$9B

13K EMPLOYEES

APPLIANCES

& LIGHTING

$8.4B

25K EMPLOYEES

CAPITAL

VERTICALS

$1.5B*

*Net income

** Revenue by year end 2016

TRANSPORTATION

$5.7B

13K EMPLOYEES

HEALTHCARE

$18.3B

55K EMPLOYEES

GE DIGITAL

~$6B**

2014 REVENUES

32Data Centers

300KEmployees

90KServers

$149B2014

Revenue

170+

Countries

9K

Apps

10KIT

employees

500+

Cloud

Migrations

137Years Old

$3+BAnnual IT

Spend

GE scale @ 2015

Jeff Immelt, GE Chairman & CEO

“If you went to bed last night as an

industrial company, you’re going to

wake up this morning as a software

and analytics company.”

A Year of Transformation

1 GE Digital

2 GE Capital Divestiture

3 Alstom Acquisition

4 IT/OT Convergence

5 Cybersecurity

6 Cloud

A Re-focused IT Strategy

Brilliant Factory

Model-Based Enterprise

Predix

GE for GE GE for Customer GE for the World

Productivity Apps PlatformGE Software

Customer Outcomes

Predix

Predix

Cloud For Industry

Secure

Weaving a Digital Thread with the GE Store

• Plant automation

• 3D with PMI

• CAD-CAM-CMM

• Industrial analytics

• Rapid Time to Value

• Monetize the platform

• Predix Machine

• Partner/ISV ecosystem

$15B software business by 2020

™

™™

Our Cloud Journey

2014 2016+

Experiment Execute Iterate & Win

Business Case Measure & Pivot

Demonstrated Results

Dec ‘14

128

O&G – Cloud Aware

Apr ‘15

206

Mar ‘15

177

Feb ‘15

163

Jan ‘15

131

Nov

‘14

115

Month with Migration Party

Q2 ‘14

24

Q3 ‘15Jun ‘15

229

Built Core Services & Automation

May

‘15

221

Q3 ‘14

63

Oct ‘14

82

Jul ‘15

245

325

Q4

‘15

311

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

Q2 '14 Q3 '14 Oct '14 Nov '14 Dec '14 Jan '15 Feb '15 Mar '15 Apr '15 May '15 Jun '15 Jul '15 Aug '15 Sep '15 Oct '15 Nov '15 Dec '15

Cloud-enabled Simplification

Operational CostsWorkforce ProductivityCost AvoidanceOperational ResilienceBusiness Agility

• 98% reduction in

P1/P0’s

• 77% faster to deliver

business applications

• 52% average TCO

savings

• 35% reduction in

compute assets (792)

• 15 automated bots

developed

• 80% cloud first

adoption

• 15 cloud services

created

• 50 applications

decommissioned• 8 cloud migration

parties• Improved security

posture

• Shift to self-service

culture

• Rapid

experimentation

• Reduced technical

debt• 14M YOY Savings

• Improved

Performance

• Streamlined M&A

Activity• DevOps in Practice

Progress14.2M Investment

Focus18Months

325 Appsin Cloud & 14M YOY

Savings

Lessons LearnedAutomate, then Automate More

Everything we do is with automation in

mind, from deployment to operations. This

is the only way to survive at scale.

Security at Every LayerFully utilizing the security provided in

the public cloud allows us to have

confidence in a multi-tenant world.

Embrace AgileFrom organization structure to project

management, everything we do is with

agile principles in mind.

Bias toward actionEveryone has a reason not to move to

cloud. Our mission is to find more

reasons why we should.

Work Instead of WorkflowEmbracing automation has allowed our

employees to concentrate on doing work,

instead of filling out workflows.

Encourage (calculated) RisksCelebrate failure. Talk about pivots.

Continuously examine new tools. This

leads to rapid innovation resulting in

progress.

Transformation – Rebuild technology skill

sets, encourage diversity and embrace “hands-on”

Pipeline – A pipeline of 50+ will ensure

consistent velocity

Collaboration - Embed Security & Risk

teams, CIO + CTO + Corp partnership

Cloud Aware – Rehosting is OK if it

maximizes margin, agility, resilience & performance

Enablers

So what can we learn from GE’s story to date?

….Organisations all over the world are using AWS

to retire their legacy technology debt

Kaplan Closes 8 Data Centers.

By Migrating Data Centers, Wilmar Saves 50% in CAPEX.

Delaware North Moves Data Center to Save $3.5M Over Five Years.

Hess Uses AWS to Streamline Data Center Migration in 6 Months.

News UK Shortens Time to Market by 6 Months by Migrating 60% of its Data Centers.

….and learnings are leading to an

accelerated migration pace

In just three months, Condé Nast was able to migrate over

500 servers, one petabyte of storage, various mission

critical applications (such as HR, Legal, and Sales), and

over 100 database servers into the AWS Cloud.

So What’s Next?

Migration

Planning

Workshop

• Select a

Migration Partner

• Define Scope

• Establish Team

Structure

• Plan for

Assessment

• Desired

Outcomes

Joint Assessment &

Planning

Plan Go-No-

GoProject

Launch

1-2 Days 4 Weeks*

• Cross Group

Dedicated Effort

• Define High Level

Scopes

• Patterns for

Migrations

• High Level Estimates

for Migration and

Value

Decision

Meeting

• Review

Outcomes

• Determine

Next Steps to

Go Forward

*Depends on Scope

• Typically

Phased

Approach

Are you ready?

Existing production AWS workloads, trained teams, and Enterprise Support.

A focused objective that includes 500+ applications and a clear timeline.

Strong Executive sponsorship, a clear value proposition, and commercial terms in place.

Willing and able to invest resources and make financial commitment.

Clear security and compliance plans that support this change in their business.

Customers who are ready have established a foundation of experience and

have both the “Will” and “Skill” to succeed.

demystifying cloud economics – think big: how to build an investment case for large scale...

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