This webinar discussed strategies to help save money in the AWS Cloud. From turning systems off at night, to implementing bidding strategies on the spot market, there are many ways in which you can manage and your reduce costs with AWS. This webinar dived into the differences between instance types; explain how you can reduce costs with Reserved Instances, the spot market and by architecting to reduce costs. It also discussed how to combine on-demand pricing with spot pricing to perform cost effective big data analysis, and introduce customer examples to illustrate how AWS customers gain the most from AWS whilst at the same time managing their spend.

1. Journey through the Cloud:
Cost Optimisation
Ian Massingham – Technical Evangelist
@IanMmmm

2. Common use cases & stepping stones into the AWS cloud
Learning from customer journeys
Best practices to bootstrap your projects
Journey through the cloud

3. Replace up-front capital expense with low variable cost
Economies of scale allow AWS to continually lower costs
Pricing model choice to support variable & stable workloads
Save more money as you grow bigger
Cost Optimisation

4. AWS Pricing Philosophy
Considerations for TCO comparison
AWS TCO Calculator
Cost Optimisation Techniques
Agenda

5. AWS Pricing Philosophy

6. AWS Pricing Philosophy
More AWS
Usage
More
Infrastructure
Economies
of Scale
Lower
Infrastructure
Costs
Reduced
Prices
More
Customers Ecosystem
Global Footprint
New Features
New Services
Infrastructure
Innovation
We pass the savings along to our
customers in the form of low
prices and continuous reductions
45

7. Lower costs with AWS
1
“Average of 400 servers
replaced per customer”
Replace up-front
capital expense with
low variable cost
2
45 Price
Reductions
Economies of scale
allow AWS to continually
lower costs
3
Pricing model choice
to support variable &
stable workloads
4
Save more money as
you grow bigger
Tiered Pricing
Volume Discounts
Custom Pricing
On-Demand
Reserved
Spot
Dedicated
Source: IDC Whitepaper, sponsored by
Amazon, “The Business Value of
Amazon Web Services Accelerates Over
Time.” December 2013

8. Lower costs than on-premises
On-Premises
Traditional
Data Center
On-Premises
Virtualized
Data Center
CAPEX
OPEX
OPEX
AWS
CAPEX
OPEX*
Cost savings from running
internal IT more efficiently AWS Scale
• Multiple new data centers built each year
• Volume purchasing, highly automated, supply
chain optimisation
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
Diagram is not to scale
*For AWS, OPEX costs includes Reserved Instances one-time low, upfront payment, if Reserved Instances are used.
Cost savings from moving
to a cloud provider

9. Analysts have shown AWS reduces costs
In early 2012, AWS commissioned IDC to interview 11 organizations that deployed applications on AWS. Since this study was conducted in early
2012, AWS has introduced price reductions nearly 20 times across Amazon EC2 and Amazon S3. IDC estimated what the impact of AWS's fee
restructuring would be on the organizations that participated in the 2012 study and determined that the overall fees would drop by 21% lowering the
five year TCO from $909,000 to $846,000. Source: IDC Business Value of AWS Accelerates over time
IT
PRODUCTIVITY
INCREASE:
52%
5 YEAR TCO
SAVINGS:
72%

10. AWS TCO benefits increase over time…
$3.50 in benefits
$1 Investment in AWS $1 Investment in AWS
$8.40 in benefits
At 36 Months of using AWS… At 60 Months of using AWS…
~3X ~8X
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.

11. Flipboard Example: Handling objection AWS gets expensive as you grow big…

12. Considerations for
TCO Comparison

13. Comparing TCO is not easy
≠

14. Typical cost drivers for on-premises deployments,
including overhead costs
Network
Costs
Storage
Costs
Server
Costs
Hardware – Server, Rack
Chassis PDUs, ToR
Switches
(+Maintenance)
Software - OS,
Virtualization Licenses
(+Maintenance)
Overhead Cost
Space Power Cooling
Hardware – Storage
Disks, SAN/FC Switches
Overhead Cost
Storage Admin costs
Network Hardware – LAN
Switches, Load Balancer
Bandwidth costs
Network Admin costs
Overhead Cost
IT Labor
Costs
Server Admin
Virtualization Admin
1
2
3
4
Space Power Cooling
Space Power Cooling
illustrative
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.

15. AWS services pricing includes overhead costs
Hardware
Vendor
Offering
✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔
✔
Server
Network
Hardware
Software
OS +
VMs
DC/Co-lo
Floor
Space
Powering
Cooling
Software
Defined
Networking
Data Center
Personnel
Storage
Redundancy
Resource
Mgmt. /SW
Automation
× × × ××× ×

16. In Your TCO Analysis
Power/Cooling (compute, storage, shared network)
Data Center Administration (procurement, design, build, operate, network,
security personnel)
Rent/Real Estate (co-lo charges, building deprecation, taxes)
Software Licensing/Maintenance (OS, Virtualization, DCIM, Automation..)
RAW vs. USABLE storage capacity (Usable = ~50% Raw)
Storage Redundancy (RAID penalty, OS penalty)
Storage Backup costs (Tape, backup software)
Bandwidth, Network Gear & Redundancy (Routers, VPN, WAN..)
DON’T
FORGET
THINK
BENEFITS
Additional investment into new initiatives
Reduced Procurement Time, Resource sitting on shelf
Cost of lost customers
Lower down time, increased productivity

17. AWS TCO Calculator

23. aws.amazon.com/tco-calculator/

24. • From over 40 data centers down to 6
• Planning to migrate 3000 apps by Jan 2015
• Saving $100M over 3 Years
VS
1. Evaluate infrastructure
costs & architecture
2. Make business case 3. Enable decision to move
to the cloud
Customer Spotlight: Dow Jones Intl.
Find out more here: http://youtu.be/xS8Ha0Q6_CY

25. Cost Optimisation
Techniques

26. 1. Choose the right instance types
Start
Choose an instance
that best meets your
basic requirements
Start with memory & then
choose closest virtual
cores
Look for peak IOPS
storage requirements
Tune
Change instance size up
or down based upon
monitoring
Use CloudWatch &
Trusted Advisor to assess
Roll-Out
Run multiple instances
in multiple Availability
Zones

27. 2. Use Auto Scaling
Describes what Auto Scaling will
create when adding Instances
Only one active launch configuration
at a time
Launch
Configuration
as-create-launch-config
--image-id ami-54cf5c3d
--instance-type m1.small
--key mykey
--group webservers
--launch-config 101-launch-config
Auto Scaling managed grouping of EC2
instances
Automatically scale the number of
instances by policy – Min, Max, Desired
Auto Scaling
Group
as-create-auto-scaling-group 101-as-group
--availability-zones us-east-1a us-east-1b
--launch-configuration 101-launch-config
--load-balancers myELB
--max-size 5
--min-size 1
Parameters for performing an Auto
Scaling action
Scale Up/Down and by how much
Auto Scaling
Policy
as-put-scaling-policy 101ScaleUpPolicy
--auto-scaling-group 101-as-group
--adjustment=1
--type ChangeInCapacity
--cooldown 300

28. Utilization and Auto Scaling: Granularity
more small instances vs. less large instances
29 m1.large @ $0.240/hr.
= $6.96
59 m1.small @ $0.06/hr.
= $3.54

29. Utilization and Auto Scaling: Granularity
more small instances vs. less large instances
29 m1.large @ $0.240/hr.
= $6.96
59 m1.small @ $0.06/hr.
= $3.54

30. 3. Turn off un-used instances
• Dev./test instances
• Simple instance start/stop
• Tear down/build up altogether
• Instances are disposable

31. 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
On Demand
Light Utilization RI
Medium Utilization RI
Heavy utilization RI
4. Use Reserved Instances
Reserved Instances enable you to maximize savings by paying a low, one-time fee for a
capacity reservation of 1-3 years in exchange for a significant discount on the hourly rate.
Amazon EC2
up to 65% savings
Amazon RDS
up to 76% savings
Amazon DynamoDB
up to 76% savings
Amazon Redshift
up to 73% savings
Amazon ElastiCache
up to 70% savings
AWS services offering reservations

32. 5. Use Spot Instances
• Pricing
• Up to 92% discount
• Elastic
• Capacity not otherwise
available
• Tradeoff
• Potential for interruption
Picking the right Bid Price - Tolerance for interruptions, % likelihood of termination

33. 1.21 PFLOPS
264 years of compute in < 18 hours
16,788 instances in 8 regions
Customer Spotlight: Cycle Computing
On-Premises Spot
$68 Million
$33K
C
ase
StudyBuilding a Top500 HPC Cluster on AWS

34. 6. Leverage Storage Classes
AWS Cloud
Amazon
Glacier
Gateway Appliance/
AWS Storage Gateway
Amazon
S3
Block File
On-premises Data Center
Archive Backup Disaster
Recovery
Amazon
EBS
Amazon S3 Reduced Redundancy
• 99.99% durability vs. 99.999999999%
• Up to 20% savings
• Great for everything that is easy to
reproduce
Amazon Glacier
• Same durability as S3
• 3 to 5 hours restore time
• Up to 67% savings
• Great for archiving, long-term backups
and old data

35. 7. Offload your architecture
The more you can offload, the less infrastructure you need to maintain, scale, and pay for
• Offload popular traffic to Amazon CloudFront and S3
• Introduce Caching
ResponseTime
ServerLoad
ResponseTime
Server
Load
ResponseTime
Server
Load
No CDN CDN for
Static
Content
CDN for
Static &
Dynamic
Content
90% of calls

36. 8. Use Application Services
Elastic
Load
Balancing
Amazon
Relational
Database
Service (RDS)
Amazon Simple
Queue Service
(SQS)
Amazon Simple
Email Service
(SES)
Amazon
Elastic
MapReduce
Amazon
ElastiCache
Amazon Simple
Notification
Service (SNS)

37. Web Servers
Availability Zone
$0.025 per Elastic Load Balancer-
hour (or partial hour)
$0.008 per GB of data processed
by an Elastic Load Balancer
100 GB Data processed, 1 ELB
$18 (.025*24*30) + $.008*100
$18.80
Web Servers
Availability Zone
EC2 instance
+ software LB
Elastic Load
Balancer
DNS
DNS
VS
Leverage Application Services
$0.060 per hour, m1.small
Separate for Software Load
Balancer
$.060*24*30 = $43.2 (m1.small)
+ Software LB Cost
On Demand Prices shown (N.Virginia region)

38. 9. Use Consolidated Billing
• Receive a single bill for all charges incurred across all linked accounts
• Share RI discounts
• Combine tiering benefits
• View & manage linked accounts
• Add additional accounts

39. 10. Leverage AWS tools
AWS Trusted Advisor AWS EC2 Usage Reports

40. Cost Optimisation Techniques Recap
Choose the right Instance type
Use Auto Scaling
Turn off un-used Instances
Use Reserved Instances
Use Spot Instances
Leverage Storage Classes
Offload your architecture
Use Application Services
Use Consolidated Billing
Leverage AWS Tools – Trusted Advisor, EC2 Usage Reports
Others…

41. Resources
AWS Economics Center: aws.amazon.com/economics
TCO Calculator: aws.amazon.com/tco-calculator
Flipboard Grows its Reader Base while Reducing IT Expenditure
http://youtu.be/_Ly3uPKLxS8
News Corp Discusses Plans for Migrating Data Centers to AWS:
http://youtu.be/xS8Ha0Q6_CY

42. Summary
TCO
• Make reasonable assumptions and leverage industry benchmarks
• Know the on-premises hidden costs
• Use our new TCO Calculator
Cost Optimisation
• Create cost-aware architectures and leverage best practices
• Re-evaluate and revisit your architecture often
• Leverage Application Services, CloudWatch
• Stay up to date – RI modifications, Trusted Advisor

43. AWS Training & Certification
Certification
aws.amazon.com/certification
Demonstrate your skills,
knowledge, and expertise
with the AWS platform
Self-Paced Labs
aws.amazon.com/training/
self-paced-labs
Try products, gain new
skills, and get hands-on
practice working with
AWS technologies
aws.amazon.com/training
Training
Skill up and gain
confidence to design,
develop, deploy and
manage your applications
on AWS

44. Ian Massingham – Technical Evangelist
@IanMmmm
@AWS_UKI for local AWS events & news
@AWScloud for Global AWS News and Announcements
©Amazon.com, Inc. and its affiliates. All rights reserved.

45. We typically see customers start by trying our services
Get started now at : aws.amazon.com/getting-started

46. Design your application for the AWS Cloud
More details on the AWS Architecture Center at : aws.amazon.com/architecture