© 2014 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.

Optimizing Total Cost of Ownership for AWS Jean-Pierre LeGoaller Principal Solutions Architect Amazon Web Services

Agenda

•  Total Cost of Ownership •  Cost Optimization on AWS

Lower costs with AWS

1

“Average of 400 servers replaced per customer”

Replace up-front capital expense with

low variable cost

2

42 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

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 optimization

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 public cloud provider

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

42

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%

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.

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

≠

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.

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

× × × × × × ×

TCO Example : 100 VMs On-Premises vs. AWS

# of VMs Avg. vCPU

Avg. vRAM

Optimize by? Usage

25 1 2 RAM 5%

35 4 14 RAM 80%

30 8 32 RAM 60%

5 8 68 RAM 40%

5 16 128 Disk I/O 8%

# of Instances Instance vCPU RAM Instance Type

25 m1.small 1 1.7 On Demand

35 m3.xlarge 4 15 3 Yr. Heavy RI

30 m3.2xlarge 8 30 3 Yr. Med. RI

5 m2.4xlarge 8 68.4 3 Yr. Light RI

5 i2.4xlarge 16 122 3 Yr. Light RI

Avg. vCPU

Avg. vRAM

Optimize by?

1 2 CPU

4 14 CPU

8 32 CPU

8 68 CPU

16 128 Disk I/O

Instance vCPU RAM

m1.small 1 1.7

c3.xlarge 4 7

c3.2xlarge 8 15

c3.2xlarge 8 15

i2.4xlarge 16 122

1, 1.7, 0.044 1, 3.75, 0.07

2, 3.75, 0.105 2, 7.5, 0.14 2, 15, 0.41

4, 7, 0.21 4, 15, 0.28

4, 30.5, 0.82

8, 15, 0.42 8, 30, 0.56

8, 61, 1.64

4, 30.5, 0.853

8, 61, 1.705

16, 122, 1.4

16, 30, 0.84

32, 60, 1.68

32, 244, 3.5

16, 122, 3.41 16, 117, 4.6

0

50

100

150

200

250

300

0 5 10 15 20 25 30

On Demand Prices shown (N.Virginia region), only latest generation instances (M3,C3) shown where applicable, GPU and Micro instances not shown above

Memory-Optimized Instances (R3)

Compute-Optimized Instances (C3)

General Purpose Instances (M3)

Storage-Optimized Instances (I2)

vCPU

RA

M

TCO Example : Choosing EC2 instances

TCO Example : 100 VMs On-Premises vs. AWS

NEW: AWS TCO Calculator

•  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.

7/2011 - ~50GB/day

4/2013 - ~5TB/day

10/2013 - ~20TB/day

03/2014 - ~40TB/day

Customer Spotlight:

AdRoll S3 Usage by the numbers

•  1.5+ PB of compressed data stored •  5-10TB of compressed new data each day •  ~5B monthly requests

No engineers spend time on storage

AdRoll EC2 Infrastructure

•  ~500 c3.4xlarge in 4 regions •  Close to 100% uptime since launch •  <100ms max latency •  500K+ requests/second globally on DynamoDB •  Operated by 2 engineers

AdRoll estimate that they would need about 20 engineers to design and maintain a similar infrastructure on-site.

AdRoll TCO

AdRoll estimate that they would need about 20 engineers to design and maintain a similar infrastructure on-site.

Their entire AWS cost is less than the cost of such a team

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 Focus on your business

Cost Optimization on AWS

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

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

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

3. Turn off un-used instances

•  Dev./test instances •  Simple instance start/stop •  Tear down/build up altogether •  Instances are disposable

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

/Spot Instances

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

Customer Spotlight: Pinterest

AWS Set-up

•  8 billion objects and 400 terabytes of data (May 2012), 10x growth from August 2011; EC2 instances have grown by 3x in the same time period

•  150 EC2 instances ( web tier), 90 instances (in-memory caching), 70 master databases •  Reserved instances used for standard traffic; On-demand and spot instances used to handle daily elastic

load. Most services targeted to run at about 50% on-demand and 50% spot

Source: Pinterest AWS Case study, Pinterest Architecture update, 410TB of data, 10X Growth, 12 employees

Source: Return on Agility, Werner Vogels

“Imagine we were running our data center, and we had to go through a process of capacity planning and ordering and racking hardware. It wouldn't have been possible to scale fast enough,"– Ryan Park, Pinterest Operations Engineer

Costs have gone from $54 per hour to $20 per hour

Only 2 weeks of engineering effort was required to achieve this cost savings

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

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

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

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

Res

pons

e Ti

me

Ser

ver L

oad

Res

pons

e Ti

me

Ser

ver

Load

Res

pons

e Ti

me

Ser

ver

Load

No CDN CDN for Static

Content

CDN for Static & Dynamic Content 90% of calls

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)

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)

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

10. Leverage AWS tools

AWS Trusted Advisor

AWS EC2 Usage Reports

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…

Summary

TCO •  Make reasonable assumptions and leverage industry benchmarks •  Know the on-premises hidden costs •  Use our new TCO Calculator

Cost Optimization

•  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

© 2014 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.

Optimizing Total Cost of Ownership for AWS

Thanks!

Jean-Pierre LeGoaller Principal Solutions Architect Amazon Web Services