A Framework to Measure and Maximize Cloud ROI

MEASURE AND MAXIMIZE

CLOUD ROI: A FRAMEWORK AND RECOMMENDATIONS

Kim Weins, VP Marketing,

RightScale

Who is RightScale?

Self-Service Cloud Analytics

RightScale Cloud Portfolio Management

Cloud Management

Design

Virtualized

Environments

Public

Clouds

Other

Services

Private

Clouds

Automate

Multi-Cloud Orchestration & Governance

Operate Deploy Report Optimize

1

• About Cloud ROI

• Maximize Cloud Value

• 5 Elements of Cloud Value

• Real-World Examples

• Framework to Measure

• Recommendations to Maximize

• Minimize Cloud Costs

• Real-World Examples

• Framework to Measure

• Recommendations to Minimize

Agenda

2 2

POLLING QUESTIONS

You’re Operating in a Multi-Cloud World

Single private 5%

Single public 10%

No plans 3%

Multiple private 14%

Multiple public 13%

Hybrid cloud 55%

82%

Enterprise Cloud Strategy 1000+ employees

Multi-Cloud

Source: RightScale 2015 State of the Cloud Report

4

If you are just adding up the cost of

infrastructure in cloud vs. on-premise,

you will miss the value of cloud

About Cloud ROI

5

Understanding Cloud ROI

6

Cloud ROI

Value from Cloud

Costs of Cloud

Maximize

Minimize

Your Mileage Will Vary

7

Elements of Cloud Value

to gain competitive advantage Accelerate Application Delivery

of staff and infrastructure Improve IT Efficiency

with new geographies and capabilities Expand Markets

to optimize for best return Increase Investment Flexibility

with continuity of critical applications Reduce Risk

ACCELERATE

APPLICATION DELIVERY

• Everyone is different…

• Three examples…

• Accelerate sales cycle

• Accelerate development cycles

• Accelerate batch processing

Critical Elements to Accelerate Delivery

10

$5B+ Learning Company

• Deliver single-tenant SaaS option for

learning software

• Spin up customer environments

quickly

• Clone-able, customizable

environments

• On-board customers in days, not

weeks

• Deliver around the globe

Accelerate Sales Cycle with Hosted Software

“The ability to spin up a pilot and

get an entire school on a test

quickly has really shortened our

sales cycle.”

11

$4B+ Entertainment Services

• Greater agility with a cloud-first

strategy

• Single-click provisioning for 7 clouds

• Automated launching of large render

farms or CI environments

• Cut 4-6 week requisition cycle to 10-

15 minutes – near instant gratification

Accelerate Development Cycles

12

Large Digital Media Company

• Self-Service access to AWS, VMware

and (soon) OpenStack

• Cut first video transcoding project from

6 months to 7 weeks

• Doubled throughput for transcoding

video catalog. Converted in 15 days.

Accelerate Batch Processing

13

Measure: Accelerate Delivery (per app)

14

Benefit Year 1 Year 2 Year 3 Total

Product available in market

with prior schedule

12 months 12 months 18 months

Product available in market

using cloud

6 months 12 months 12 months 32 months

Paying users of product 10,000 20,000 30,000

Monthly subscription price

per user

$50 $50 $50

Average profit margin 20% 20% 20%

Total Benefit $600K $0 $0 $600K

Measure: Accelerate Delivery (multiple apps)

15


Business Unit A, App 1 $600,000 $600K

Business Unit A, App 2 $600,000 $600K

Business Unit B, App 3 $600,000 $600K

Business Unit C, App 4 $600,000 $600K

Business Unit D, App 5 $600,000 $600K

Business Unit D, App 6 $600,000 $600K

Total Benefit $1,200K $1,200K $1,200K $3,600K

Assumes 2 apps per year

Increase Innovation

• Catalog of templates that

meet corporate standards

• Orchestrate and automate

deployment and

operations

• Instant access to

approved clouds,

provisioning in minutes

• Increase experiments and

innovations

Maximize: Developer Self-Service

16

Basic instances

Stacks for Dev or Prod Applications

RightScale

Right

Maximize: Automate Dev Process

17

Continuous

Integration

Successful

Build?

Automated

Testing

Provision

Test

Infrastructure

Report on

Test Results

De-Provision

Test

Infrastructure

Continuous

Delivery

Successful

Test?

Acceptance

Test

Provision

Staging

Infrastructure

Read

y

Continuous

Build

Source Code

Commit

Automated

Build

Provision

Build

Infrastructure

Report on

Build Results

De-Provision

Build

Infrastructure

RightScale

INCREASE EFFICIENCY

• Must haves

• Automation

• Reduce manual work

• Self-Service

• Offload work

• But….

• Don’t forget about governance

Critical Elements to Increase IT Efficiency

19

Innovative Digital Marketing

• Scalable campaigns on tight deadlines

• Avoid overpaying for infrastructure

• Clone-able, customizable

environments

• HA/DR options available for customers

that need it

• Deliver SLAs during huge traffic spikes

• Control infrastructure costs for clients

Automated and Repeatable Infrastructure

20

$4B+ Global Beauty Products

• Gain agency independence without

increasing lean IT staff

• Provide standard IT stacks to

agencies

• Support dozens of constantly

changing websites

• Increase scalability and stability during

traffic spikes

• Launch new sites quickly

• Work with most creative agencies

Standardize and Automate for Lean IT

“We've created a process that's

so easy to do the right thing,

the agencies won't do

the wrong thing.”

21

VM Lifecycle

22

Source: Dell

Self-Service and Automation are Critical

23

X X

X

X X

X

Handled by

cloud

Handled by

cloud Handled by

cloud

Self-

Service Self-

Service

Self-

Service or

Automated

1. Monitor Servers

2. Detect Failure

3. Notify NOC

4. Log in

5. Restart

6. Check for Success

Didn’t work?

7. Relaunch the server

8. Reconfigure the server

The Old Way With Automation

1. Monitor Servers

2. Detect Failure via Automated Alert

3. Automated Escalation Triggers

Execute Restart Script

Didn’t Work?

4. Monitoring Detects Continued

Failure and Relaunches /

Reconfigures Server Automatically

Automated Ops Scenario

24

Measure: Increase IT Efficiency

25


VMs per Sys Admin

with legacy approach

200 200 200

VMs per Sys Admin

with cloud management

500 500 500

# of VMs 4,000 4,000 4,000

Staffing Cost

with legacy approach

$1,700K $1,700K $1,700K

Staffing Cost

with cloud and automation

$760K $760K

$760K

Total Benefit $940K $940K $940K $2,820K

Assumes salary of $72k per glassdoor.com and fully-loaded cost of sys admin at $85K

Maximize: Remember Self-Service?

26

Basic instances

Stacks for Dev or Prod Applications

Sample Workflow

(yours will vary)

1. Launch master & slave

DB

2. Take backup of master

3. Initialize slave from

backup

4. Launch app servers

5. Launch LBs

6. Connect tiers

7. Update DNS records

8. Run automated test

9. Automatically update

CMDB

Maximize: Automate Applications

27

Load Balancers

App Servers

Master DB Slave DB

Replicate >

DNS

Configure a

system: Cloud

Application

Template

(CAT)

Configure a server: • Chef/Puppet/Salt

• Scripts

• Docker

• VM template

• AMI

• Cloud Formation

FLEXIBILITY

• Reduce Excess Capacity (pay for what you use)

• Preserve ability to change your cloud provider

• Adjust to longer-term business shifts – Zynga example

Elements of Investment Flexibility

Traditional Hardware Provisioning

Cloud Provisioning: Pay for What you Use

Measure: Flexibility (Reduce Excess Capacity)

32


# of VMs 2,000 2,000 2,000

Cost/ Medium VM $4,200 $4,200 $4,200

% Utilization with legacy approach

60% 60% 60%

% Utilization with cloud management

80% 80% 80%

Unused Capacity with legacy approach

$3,360K $3,360K $3,360K

Unused Capacity with cloud management

$1,680K $1,680K

$1,680K

Total Benefit $1,680K $1,680K $1,680K $5,040K

Per VM cost from http://searchservervirtualization.techtarget.com/feature/Computing-with-a-price-tag-VM-cost-calculation-guide

Large Australian Retail Chain

• Drive innovation with “Cloud First”

strategy

• Drive down costs in low-margin

business

• Portfolio of public and private clouds

• Cloud portability to avoid lock-in

• Innovate quickly in competitive

environment

• Choose or move between clouds to

save money

Choose Clouds for Lowest Cost

33

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

0.16

0.18

0.2

Standard (2 cores) High memory (2 cores) High CPU (2 cores)

Google New Pricing vs. AWS (per hour)

AWS On-demand

Google On-demand

AWS 1yr RI No upfront

AWS 1yr RI All upfront

Google Typical

Google 100% Sustained use

AWS 3yr RI All upfront

Cloud Costs are Highly Variable

34

Measure: Flexibility (Change Providers)

35


# of VMs 4,000 4,000 4,000

AWS Cost/VM (m3.medium) 1 yr no upfront RI

$438 $438 $438

GCE Cost/VM (n1-standard-1) 100% sustained use discount

$307 $307

$307

AWS Total Cost $1,752K $1,752K

$1,752K

Google Total Cost $1,228K $1,228K $1,228K


Adjust to Significant Business Shifts

36

Startup Phase Growth Phase Mature Phase

• New products and services

• Discontinue or ramp down services

• New geographies and markets

• Acquisition

• Divestment

• Strategy changes

• …and more

What Business Shifts Will Affect You?

37

Maximize: Broker Cloud Services

Broker to Cloud Users Manage and Govern

Demo/Train

Dev/QA

LOB

Finance

I&O

Governance

38

Maximize: Auto-Scaling

39

Server Array

Server Array

Server Array

Auto-scale: • Load balancers

• App servers

• Workers

• Batch jobs

• Big data

• CI instances

• Any scalable service..

Baseline

Heavy load

Minimal load

Au

to-s

ca

le u

p

Au

to-s

ca

le d

ow

n

Maximize: Templates for Portability

40

AWS Azure Google CloudStack OpenStack vSphere

Multi-Cloud Image

Configuration Scripts Containers

ServerTemplate

Cloud ROI

41

Cloud ROI

Value from Cloud

Costs of Cloud

1. Reduce time-to-market

2. More VMs/Sys admin

3. Higher utilization

4. Leverage lower cost providers

5. Adjust for business shifts

REDUCE WASTE

• Show cloud users costs upfront when provisioning

• Set schedules and end dates when provisioning

• Monitor for unused and underutilized instances

• Show and send reports with current costs

• Set budgets and alert if spending is tracking higher

• Right-size instances

• Find and leverage unused RIs

7 Ways to Reduce Waste

43

Measure: Reduce Waste (Off Hours Use)

44


# of Dev Instances 1000 1000 1000

Hours needed M-F 12 hrs

60 60 60

Hours per week 24x7

168 168 168

AWS Cost/VM (m3.medium) On-demand hourly

$.07 $.07 $.07

AWS Work Hours Cost M-F 12 hrs

$218K $218K

$218K

AWS Full-Time Cost 24x7

$612K $612K

$612K


Measure: Reduce Waste (End Dates)

45


# of Dev Instances Launched 2000 2000 2000

Actual Days

120 120 120

Days Needed

90 90 90

AWS Cost/VM (m3.medium) On-demand hourly

$.07 $.07 $.07

AWS Cost No end dates

$403K $403K

$403K

AWS Cost with end dates

$302K $302K

$302K

Total Benefit $101K $101K $101K $303K

Minimize Cost: Set Schedules and End Dates

46

Minimize Cost: Set Budgets and Get Alerts

47

Minimize Cost: Terminate Unused Instances

48

Cloud ROI

49

Cloud ROI

Value from Cloud

Costs of Cloud

1. Reduce time-to-market

2. More VMs/Sys admin

3. Higher utilization

4. Leverage lower cost providers

5. Adjust for business shifts

1. Run instances when needed

2. Schedule end dates

3. Reduce underutilization

4. Right-size instances

5. Leverage purchase options

Our examples: $14M+

Your mileage will vary

• Download link for ROI calculator spreadsheet

• www.rightscale.com/cloud-roi-calculator

Q&A

50

http://www.rightscale.com/cloud-roi-calculator





Technology

A Framework to Measure and Maximize Cloud ROI