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Ed Byrne, October 2012
Practical Cloud Economics
About Me
Cloud and Enterprise IT Entrepreneur
CEO, CloudVertical - “Reducing IT Waste”
Previously GM, Hosting365 (now SunGard)
@edbyrnewww.edbyrne.meblog.cloudvertical.com
Agenda
What is Cloud Economics
The Myths of Cloud Computing
Variables and Cost Models
Resources
Principles of Cloud Economics
IT as a Utility - Available and Scalable
IT is Paid for using a Consumption based model
Theoretically 100% capital efficient
Capacity is CapEx and Cyclically Driven
Usage follows predictable patterns
Cost increases with time and complexity
IT Cost Model
Capacity scales up and down in line with demand
Usage follows predictable patterns (no change)
Cost matches capacity - pay as you consume
Cloud Cost Model (Theory)
Capacity is provisioned based on expected load
Usage follows predictable patterns
Cost goes up and to the right, with an **** moment
IT Cloud Cost Model (Actual)
Cloud Economics Reality
The Cloud is not analogous to the Electricity model.
The Cloud is not Pay as You Go. It’s Pay as You Provision.
Utilisation is the problem -> the traditional capacity planning model has migrated to the Cloud.
• Physical Hardware - 20% Utilisation Average• Virtualised Infrastructure - 30% Utilisation Average • Cloud Deployments - 30% Utilisation Average
IT / the Cloud isn’t inefficient
You are
Traditional Culture
IT has never been responsible for Cost metering
Budgets are aspirational targets
Existing tools focus on Uptime, Usage and Performance Monitoring
Efficient Computing
You can’t manage what you don’t measure
Create Accountability, Visibility, Reporting
Meter Cost, Capacity and Usage
Show-back reports for each use type
1. Inform 2. Improve 3. Maintain
Myths
Myth # 1Cloud is Cheap
Like for Like - More Expensive
But it’s not Like-for-Like
• Scalability & Flexibility
• Resilience & Redundancy
• OpEx not CapEx
More Cost Effective for a lot of workloads
Truth
Myth # 2The Cloud is
Cheaper than DIY
Versus Fully Loaded Server Cost - True 90% of time
Do you know the true costs of your IT infrastructure?
Cloud often ‘looks’ more expensive but is not.
Netflix vs Zynga models -> both right
Truth
Myth # 3Pay for What You Use
Pay for What you Provision
Truth
Myth # 4“I can migrate easily”
Data IN is FREE
Data OUT is NOT. For a reason.
Data Gravity : Data attracts more Data
More Data = More Costly to Move
Truth
Myth # 5The Cloud is Managed
Cloud Providers manage their Cloud
Not Yours
Ops is going Nowhere
Truth
Myth # 7Cloud is more Efficient
Jevon's Paradox : The easier it becomes to consume a resource, the more of it that will be consumed.
The Cloud has enormous efficiency capabilities.
Waste is not a technology problem, it’s a people one.
Truth
Time KeyDay = 24 Hours Week = 168 HoursMonth = 730 HoursYear = 8,760 HoursMonth = 2,628,000 Seconds
AWS Costs Cheat Sheet
On-Demand Instance CostsInstance Hour Day Week Month Year
MicroSmallMediumLargeExtra LargeExtra Large High MemoryDouble Extra Large High MemoryQuadruple Extra Large High MemoryMedium High CPUExtra Large High CPUQuadruple Extra Large Cluster ComputeEight Extra Large Cluster ComputeQuadruple Extra Large Cluster GPUQuadruple Extra Large High I/O SSD
0.02 0.48 3.36 15 1750.08 1.92 13.44 58 7010.16 3.84 26.88 117 14020.32 7.68 53.76 234 28030.64 15.36 107.52 467 56060.45 10.8 75.6 329 39420.9 21.6 151.2 657 78841.8 43.2 302.4 1314 15768
0.165 3.96 27.72 120 14450.66 15.84 110.88 482 57821.3 31.2 218.4 949 113882.4 57.6 403.2 1752 210242.1 50.4 352.8 1533 183963.1 74.4 520.8 2263 27156
Regional Cost DifferencesRegion Variation
US East (Virginia) BASE US West (Oregon) 0%US West (California) 12.5%EU (Ireland) 8%Asia (Singapore) 8%Asia (Toyko) 15%South America (Sao Paulo) 45%
All Prices in Dollars, from US East Virginia as published 11 October 2012. Tiered Discounts and Free Tier Amounts Not Applied. For more info go to www.cloudvertical.com
StorageInstance Storage N/A EBS Standard 10c /gb-month (provisioned)EBS PIOPS 12.5c /gb-month (provisioned)EBS Requests 10c per million EBS Provisioned IOPS 10c /month (2.628m requests)EBS Snapshot 12.5c /gb-month (stored)S3 Standard 12.5c /gb-month (stored)S3 Reduced Redundancy 9.3c /gb-month (stored)Glacier 1c /gb-month (stored)
NetworkData IN FREEData OUT 12c /gbData within AZ FREEData within Region 1c /gb Managed Data (EIP/ELB) 1c /gb Load Balancer 2.5c /hourLoad Balanced Traffic .8c /gbIP Address Per Instance FREEExtra or Unused IP Address .5c /hour
Instance SizesAPI name Compute Memory Hourly Cost
t1.mirco < 2 0.613 0.02m1.small 1 1.7 0.08m1.medium 2 3.75 0.16m1.large 4 7.5 0.32m1.xlarge 8 15 0.64m2.xlarge 6.5 17.1 0.45m2.2xlarge 13 34.2 0.9m2.4xlarge 26 68.4 1.8c1.medium 5 1.7 0.165c1.xlarge 20 7 0.66cc1.4xlarge 33.5 23 1.3cc2.8xlarge 88 60.5 2.4cg1.4xlarge 33.5 22 2.1hi1.4xlarge 35 60.5 3.1
Average Reserved Instance SavingsType % Saving Yr 1 % Saving Yr 3
Light 40 56Medium 48 65Heavy 53 70
Know the Units
24 hours /day 168 hours /week730 hours /month8,760 hours /year
40 hours working week173 hours working month2,076 hours working year
Compute - CPU/hour Memory - GB/hour Storage - GB/storedNetwork - GB/managed
Optimise - Rightsize
Development Environment : 40 hours per week (24% available time)
Load Test / System Patch / Software Upgrade: 8 hours / 1 day - once-off
Back-office Applications : 40 hours per week ‘heavy’; outside hours 25% capacity
Travel / E-Commerce Site : Busy Consumer Hours. Seasonal. Marketing Driven.
ResourcesDeck: blog.cloudvertical.com
AWS Economics Centre : http://aws.amazon.com/economics/
Cloudonomics Book: http://www.amazon.com/Cloudonomics-Website-Business-Value-Computing/dp/1118229967
Microsoft Cloud Economics: http://www.microsoft.com/en-us/news/presskits/cloud/docs/the-economics-of-the-cloud.pdf
AWS Costs Cheat Sheet: https://blog.cloudvertical.com/2012/10/aws-cost-cheat-sheet-2/
On-Premise vs. Cloud Cost Model: http://andrewmcafee.org/2012/10/mcafee-cloud-costs-google-model
Data Gravity: http://datagravity.org/
www.cloudvertical.com