2016 Utah Cloud Summit: TCO & Cost Optimization
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Transcript of 2016 Utah Cloud Summit: TCO & Cost Optimization
Building [And Realizing] The Economic Case for AWS
Keith JarrettBusiness Development Manager
Cloud Economics
What to expect….
We will introduce our approach for building the business case for moving to the cloud and share tips from some of our most innovative customers who are able to successfully architect for cost optimization in order to realize the economics of the AWS cloud.
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. AWS.
Used for:
1) Comparing the costs of running an entire infrastructure environment or specific workload on premises or in a co-location facility versus on AWS
2) Budgeting and building the business case for moving to AWS
TCO = Acquisition Costs + Operations Costs
Hardware – Server, Rack Chassis PDUs, ToR
Switches (+Maintenance)
Software - OS, Virtualization Licenses
(+Maintenance)
Facilities Cost
Hardware – Storage Disks, SAN/FC Switches Storage Admin costs
Network Hardware – LAN Switches, Load Balancer
Bandwidth costsNetwork Admin 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.
Space Power Cooling
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling
Server Costs
Storage Costs
Network Costs
IT Labor Costs
1
2
3
illustrative
Resources to get you startedAWS TCO Calculatorhttps://awstcocalculator.com
Case Studies & Researchhttp://aws.amazon.com/economics/
The Four Pillars of Cost Optimization
Right Sizing Reserved Instances
Increase Elasticity
Measure, Monitor, & Improve
Right Sizing
Right Sizing• Selecting the cheapest instance available while
meeting performance requirements• Looks at CPU, RAM, storage, and network
utilization to identify potential instances that can be downsized
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
Rule of thumb: Target 70-80% always on coverage and 95% RI Utilization rate.
Increase Elasticity
Turn off non-production instances• Look for dev/test, non-prod instances that are
running always-on and turn off
Autoscale Production• Use Autoscaling to scale up and down based
on demand and usage (e.g. spikes)
Rule of thumb: Shoot for 20-30% of EC2 instances running on demand to be able to handle elasticity needs.
Challenge: Minimizing Unit Costs under period of massive growth.
A consistent measure of CPU processing power
Elastic Compute Unit (ECU)
The Growth Challenge
August 2014
August 2015
1,601 ECU
13,957 ECU772% YoY Compute Growth!
33% DECREASE in
monthly EC2 costs!
Sounds pretty easy, right?
Not really.
In reality, it is very complex. • Scale• Behavioral Change• Visibility• Ownership
Uncovering the Cost Optimization Opportunities
1. Auto-tag resources2. Identify ‘always on’ Non Prod3. Identify instances to down-size4. Recommend RIs to purchase5. Dashboard our status6. Report on savings
Laying the Groundwork for Success
Taking Action: Where to Start• Tag instances to allocate costs by tag
and/or account• Enable Detailed Billing Reports with
resource tags (DBR-rt)• Set up CloudWatch metrics such as RAM
utilization for memory intensive workloads • Set up metrics to measure elasticity, RI
coverage, RI utilization, and right-sizing.
Right Sizing https://github.com/evancraw/AWSOptimizationTemplates
Analysts have shown AWS reduces cost over the long term
Source: IDC, Quantifying the Business Value of Amazon Web Services (May, 2015)
How do customers lower their TCO with AWS?
1
Replace up-front capital expense with
low variable cost
2
51 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
On-DemandReserved
Spot
Tiered PricingVolume
Discounts