In this session we will explore how customers are saving money and enabling new kinds of work with AWS today. The topics we will cover in this session will include; how the cost model changes with cloud computing, how to do detailed IT cost comparisons (TCO) for on-premise versus AWS.

1. Agility & Cost Savings
Achieving the ‘X-Factor’
Yuri Misnik
Head of Solutions Architecture UK and IR
ymisnik@amazon.co.uk

2. 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%

3. Analysts have proven out the results
“We estimate that for
every dollar spent on
AWS, there is at least $34 NOT spent on
traditional I/T”
Baird Equity Research
In early 2012, AWS commissioned IDC to interview 11 organizations that deployed applications on AWS.

4. Pay For Infrastructure as you Need it, Not Up Front
On-Premises

5. Traditional IT = Waste or Missed Opportunity
wasted
capacity
Demand
wasted
capacity
600k
wasted
capacity
300k
wasted
capacity
lost customers,
ordered hardware
200k
Capacity of resources
Actual demand
Q1
Q2
Q3
Time
Q4
Q1

6. With AWS match resources to demand
Demand
600k
300k
AWS
Demand
200k
Q1
Q2
Q3
Q4
Time
Q1

7. AWS Gives you an Off Switch for IT

8. Optimize by Time of Day
Load
Hourly CPU Load
14
12
10
8
6
4
2
0
25% Savings
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Day

9. Optimize by Annual Business Cycles
Savings
Weekly CPU Load
Web Servers
50%
1
5
9
13
17
21 25 29 33
Weeks in a Year
37
41
45
49

10. The cost of innovation is high with Traditional IT
Fund 1 Idea
6 Months
Fail
$250K budget
Start Over

11. 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

12. AWS offers Many Pricing Options To Fit Workloads
Free Tier
Get Started on AWS
with free usage & no
commitment
For POCs and getting
started
On-Demand
Pay for compute
capacity by the hour
with no long-term
commitments
For spiky workloads,
or to define needs
Reserved
Spot
Make a low, one-time
payment and receive
a significant discount
on the hourly charge
Bid for unused
capacity, charged at a
Spot Price which
fluctuates based on
supply and demand
For committed
utilization
For time-insensitive or
transient workloads

13. Types of Reserved Instances

14. Reserve to save
$4,000
On-Demand vs. 1 Year RIs
$3,500
$3,000
1 Year Cost:
High Memory
Extra Large
Instance
51%-61%
savings
$2,500
$2,000
On-Demand
SaveLight More
Even
with 3 Year RIs
UptoMedium
76%
2 Months
Breakeven
$1,500
Heavy
$1,000
$500
1 Month
Breakeven
$1
2
3
4
5
6
Months
7
8
9
10
11
12

15. Leverage a Portfolio of Reserved Instances

16. What are Spot Instances?
•
Value to the customer
 Pricing
• Up to 92% discount off of OnDemand Instance
 Elastic
• Potential to get capacity not
otherwise available
 Minimum Commitment
• Only need to commit to 1 hour
•
Tradeoff
 Potential for interruption

17. 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

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

19. AWS Includes Everything in the Price
Hardware
Vendor
Offering

20. Take all the fixed costs into consideration
Fixed Cost Factors
One-time Upfront
AWS
Co-lo
Monthly
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

21. Use our TCO Calculator to Compare Costs

22. Cost estimation for Customer IT estate
Current Estimated Cost
Customer IT Estate
AWS Equivalent Costs
Cost
Savings
Estimated 3 year cost
$97m
AWS Enhanced Enterprise Support
4,311 “Stacks” + 1500
AWS On-Demand
Instances
3PB Storage
4,311 Stack Equivalent + 1500
AWS Instances 3Yr RI
AWS 3 year
cost $54m

23. Servers
Storage
Network
Environment
Think 3-5 year time frame
Use Heavy Utilization Reserved Instances
for apples to apples comparisons
HW maintenance starts at 10%
Administration
Don’t forget your VM maintenance costs

24. Servers
Storage
Network
Utilization rarely exceeds 60%
Three copies of your data in three datacenters
with Amazon S3
Environment
Administration
Less expensive at every tier

25. Servers
Buying fixed ISP bandwidth means waste
Storage
Network
Administration costs and hardware costs for your
network
Environment
More bandwidth gets less expensive in AWS
Administration
Redundancy for free: AWS aggregates bandwidth
from multiple Telco providers

26. 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

27. 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

28. When calculating TCO…
#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

29. Cost Optimization Tips

30. 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.

31. Auto Scaling scales on demand or a schedule
© 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.

32. •
•
•
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
© 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.

33. Tip 3:
© 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.

34. Lever 3:
© 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.

35. Free Offering
Premium 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
© 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.

36. Proactive Cost Optimization with Trusted Advisor

37. Getting the X Factor
Matt Millar CEO

40. 40

41. Online tap to clap in sync with show
Embeddable into broadcaster show website & twitter
Viral distribution via facebook and twitter

42. • 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

43. Where does
260 Billion
requests fit?
Source: http://www.google.com/adplanner/static/top1000/#

44. •
•
•
•
Large numbers of servers for short periods of time
Scale in seconds not hours
Flexibility in choice
Low cost

45. TV Traffic arrives fast

46. •
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)

47. 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

48. Thank you!