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© 2016, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
The Economics and TCO of Migrating to AWS
Rotem Yossef
June 30, 2016
2/3Roughly two-thirds of
IT budgets go toward
keeping the lights on
66%of CEOs believe security
risk has increased in the
last 6 months and 66%
believe their risk management
capability is falling behind
15 yearsThe average lifespan
of an S&P company―—
dropped from 67 years in
the 1920s to 15 years today
How this affects you
You’re left without
the necessary resources
to pursue critical business
initiatives required to maintain
a competitive advantageYour traditional IT model
lacks the agility you
need to keep pace with
innovative startups
Insufficient security,
compliance and availability
can hamper your ability to
compete and open the door
to events that can cripple
your enterprise
Hotels Storage Insurance Grocery delivery
This is something “born in the cloud”
companies have already discovered
Devices
Disruption is much easier today
Responding requires a new model
Focus on differentiating your company
Innovate at start-up like speed
Reduce risk
What sets AWS apart?
Building and managing in the cloud since 2006
50+ services to support any cloud workload
History of rapid, customer-driven releases
13 regions, 35 Availability Zones, 56 edge locations
Over 50 proactive price reductions to date
Thousands of partners; 2,300+ Marketplace products
Experience
Service breadth and depth
Pace of innovation
Global footprint
Pricing philosophy
Ecosystem
Let’s dive deep on costs
Benefits of elastic and pay-per-use infrastructure
Unable to
Serve
Customers
Infrastructure
Cost $
Time
Large
Capital
Expenditure
Opportunity
Cost
Predicted
Demand
Traditional
Hardware
Actual
Demand
Automated
Virtualization
A couple of examples
Upgrades are your responsibility Upgrades happen automatically
On-premises infrastructure
VPC support
With AWS, service upgrades occur automatically
AWS
Managed services eliminate many operational tasks
Do-it-yourself MySQL replication
Potentially ~100+ manual steps
Set up primary and standby instances
Set up identical volumes
Create synchronous replication
Create and manage DNS entries
Detect instance failure conditions
Detect network failure conditions
Detect storage failure conditions
Decide when to fail over….
Re-establish primary secondary connections
Amazon RDS Multi-AZ
High availability
with a mouse click
Analysts have shown AWS reduces costs over long term
Source: IDC, Quantifying the Business Value of Amazon Web Services (May, 2015)
https://aws.amazon.com/resources/analyst-reports/IDC-business-value-aws/
The value of using AWS accelerates over time
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
$1 investment in AWS
$8.40 in benefits
At 60 months of using AWS
~8x$3.50 in benefits
$1 investment in AWS
At 36 months of using AWS
~3x
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. on AWS.
Used for:
1) Comparing the costs of running an entire infrastructure environment or
specific workload on-premises or in a co-location facility vs. on AWS
2) Budgeting and building the business case for moving to AWS
Comparing TCO is not easy
≠
TCO the way clients typically see it
Diagram doesn’t include every cost item. For example, software costs can include database, management, middle-tier software costs.
Facilities cost can include costs associated with upgrades, maintenance, building security, taxes, and so on. IT labor costs can
include security admin and application admin costs.
Hardware—Server, (+Maintenance)Software—OS, Virtualization Licenses
(+Maintenance)
Hardware—Storage Disks
Network Hardware—LAN Switches, Load Balancer
Bandwidth Costs
Server Admin Virtualization Admin
1
2
3
4
Server
Costs
Storage
Costs
Network
Costs
IT Labor
Costs
TCO the way it is = acquisition + operational costs
Diagram doesn’t include every cost item. For example, software costs can include database, management, middle-tier software costs.
Facilities cost can include costs associated with upgrades, maintenance, building security, taxes, and so on. IT labor costs can include
security admin and application admin costs.
Hardware—Server, Rack
Chassis PDUs, ToR
Switches (+Maintenance)
Hardware—Storage Disks,
SAN/FC Switches
Network Hardware—LAN
Switches, Load Balancer
Bandwidth Costs
Server Admin Virtualization Admin
1
2
3
4
Server
Costs
Storage
Costs
Network
Costs
IT Labor
Costs
Software—OS, Virtualization
Licenses
(+Maintenance)
Storage Admin Costs
Network Admin Costs
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling
When Performing a TCO analysis
• Build the TCO comparison collaboratively with the customer in multiple iterations, take the “No surprises” approach
• Make sure you have the right stakeholders in the room to discuss TCO (Finance, Procurement, IT support, Engineering)
• Avoid Comparing a duplicate of customer’s on-premise environment – problematic apples-to-apples comparisons of machines
• Assign cost/value to non-tangibles such as agility, opportunity costs
What about the cost of migration?
The Migration Bubble – Components
Planning and
Assessment
Migration Tools Consulting Partners
Internal Training Duplicate
Environments
Lease Penalties
The Migration Bubble
AWS PS Application Migration Level of Effort
Very Low
Basic workload
Current/supported OS on AWS
Known / documented environment
No database
Projected to migrate with basic tools
Few dependencies
Scheduled outage is OK
Low
Basic workload
Partially documented components
No database
May require re-platforming (i.e. OS)
Scheduled outage is OK
Medium
Contains multiple components
Additional effort to document components
No database
May require re-platforming (i.e. OS change / upgrade)
Outage with advance planning
Business impact possible for production servers
High
Multiple components including database
System may include greater than five disks
Limited downtime permitted
Production servers likely to impact business if unavailable for an extended period of time
Very High
Multiple components including database
Complex system configuration (e.g. numerous disks)
Contains several dependencies
Limited to No acceptable downtime
Requires advanced detailed assessment and planning
High-touch migration
2 – 4 hours 4 – 6 hours 6 – 8 hours 10 – 14 hours 20 – 24 hours
VM Conversion
Host Cloning
VM Conversion
Host Cloning
Live Migration
App
Containerization
Live Migration
App
Containerization
Mig
rati
on
Me
tho
d
Live Migration
Host Cloning
Let’s do a sample Total Cost of
Migration (TCM) exercise…
Cost Model is based on a
Enterprise Migration of 469
workloads of varying complexities.
Mean Migration Effort Across
Hosts: 5.66 hours per host
Sample Migration Cost Model
Total Migration Effort Across 469 Hosts
88
205
55
109
120
50
100
150
200
250
Very Low Low Medium High Very High
2 4 6 10 20
Hours
$1202 per server (average)
$153
$849
$200
2656 hours @$150/hr Avg
250 hours @$287.50 Avg
Total Cost of Migration = $563,738
Average Cost To Migrate Each Server
Determining the Migration Bubble Payback Period
(i.e. Breakeven)
On Prem (3 yr) AWS (3 yr)
Compute $1,720,061 $698,858
Storage $774,800 $245,353
Network $367,659 $37,104
IT Labor $675,360 $550,240
AWS Support $0 $98,131
Total $3,537,880 $1,629,686
$636,064 Yearly Savings
One Time Migration Cost: $563,738 Breakeven: 10.6 Months
In summary:
With AWS, you can more easily...
Move quickly
Hit your deadlines
Have more time to focus on what
differentiates your business
Get faster turns
With AWS, you have fewer long
and large projects
• More likely to exceed budget
• More likely to run late
• More likely to fail to deliver full value
Long and large projects
Is there any truth behind this? Based on research from McKinsey Consulting
$66 billion in cost overruns in 5,400
IT projects
How much can your customer
save?
Reduce risks
Each additional year in a project boosts the
likelihood of missing targets by 15%
Reduce risks
Business Agility
The AWS Platform can act as a catalyst to transform
the business
Quality of Service
Cost
• Infrastructure
Savings
• Opportunity to re-
evaluate existing
outsourcing deals
• Significant Reduction
in Fixed IT Overhead
• Increased release
cycles
• Reduced outages
and service support
overhead
• Increased security
and resiliency
• Common global
platform
• Accurate
Application Portfolio
and Financial
management
• Architectural
framework for
Innovation
• Elimination of
legacy bottlenecks
• Reduce the cost of
failure and an
increase in the pace
of experimentation
Experiment and lower risks
Innovate by increasing the ability to “fail fast”
20 new projects
10
2
IT project funnel
Increase the number of new projects in the funnel
Increase the speed by which projects move through the funnel
Decrease the downside impacts of project “failures” (shut ’em down quick)
Keep costs low for the successes
What to do next?
Cloud center of excellence
AWS’s 13 regions,
35 Availability Zones,
50+ services,
and hundreds of innovations
can help you.
Leverage AWS global footprint
So this will result in
Lower costs
Increased agility
The ability to scale based on market needs
The ability to innovate around your unique value
If you need extra help…
AWS has tens of thousands of APN partners,
and Marketplace has over 2,300 software
listings in over 30 categories
The AWS Partner Network (APN)
• The APN is the global partner
program for AWS focused on
helping members connect to
customers and build a successful
AWS-based business
• Thriving ecosystem comprised
of tens of thousands of Consulting
and Technology Partners around
the world
Why engage with an APN Partner?
Consulting Partners provide expertise to help you
plan, migrate/build, run, and optimize your workloads
on AWS
Technology Partners offer solutions that provide
additional value for your firm on top of the AWS
platform
The goal of the APN: Set a high bar to help you find
the right APN Partner to address your business
needs
2016 AWS Premier Consulting Partners
Advanced APN Technology Partners
…and more
Resources to get you started
AWS TCO Calculator
https://awstcocalculator.com
AWS Economics Center
http://aws.amazon.com/economics/
Case Studies and Research
http://aws.amazon.com/solutions/case-studies
Remember to complete
your evaluations!
