AWS Enterprise Summit Netherlands - Cost Optimisation at Scale

© 2016, Amazon Web Services, Inc. or its Affiliates. All rights reserved.

Mario ThomasSenior Consultant EMEA

AWS Professional Services

21 September 2016

Cost Optimisation at ScaleReducing the cost of using AWS


What We’ll Cover Today

• A quick overview of TCO• Does “at scale” apply to you?• Applying “architecting for cost” principles to your TCO

analysis and your AWS account(s)• Recap


What is TCO?

Definition: Comparative total cost of ownership analysis (acquisition and operating costs) for running an infrastructure environment end-to-endon-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


AWS Includes Everything In It’s Price

Hardware in a Data Center


Cost is Rarely the Only Reason to Choose AWS

Pay-as-you Go Model

Lower Overall Costs

StopGuessing Capacity

Agility / Speed / Innovation

Avoid Undifferentiated

Heavy LiftingGo Global in

Minutes

✔ ✔ ✔ ✔ ✔ ✔On-

Premise/ Co-Location

X X X X X X


Businesses are migrating IT to cloud

I'm not going to sell another aircraft engine because I run a global data center operation really well. That's

AWS's differentiator in the environment.

Jim Fowler, CIO General Electric (2015)

2014 201734 Data Centers

4 Data Centers


Cloud can be a better solution that build

We work closely with AWS to develop a security model, which we believe

enables us to operate more securely in the public cloud than we can in our

own data centers.

Rob Alexander, CIO Capital One (2015)

2014 20178 Data Centers

3 Data Centers


Trend: Retirement of Legacy Technology DebtFrom 6 Data Centers to 2. Time to market reduced by 6 months.

Productivity up 100% in front end-processes; up 40% in back-end processes.

Closed 8 Data Centers.Queries 98% faster, 80% cheaper than previous data warehouse solution.

Data Center server footprint cut 91%. $ 3.5M saved over 5 years.

75% ops migrated to AWS. $ 20M annual savings.

Saved 50% in CAPEX by exiting Data Centers.

From 40 Data Centers to 6. 25% cost savings vs. colo.30% faster development

Migrated 500+ servers, closed Data Centers, cut costs by 40%, grew productivity over 30%.

(Italy) Reduced CAPEX 30%. PCI-DSS compliant within 3 months.


So how do we do it?

≠


Traditional Data Centers are costly and inefficient…

Initial Fixed Capacity

Utilization

Unused Capacity = Wasted $

Downtime, Lost Customers, Lost Revenue (Impossible to measure)

More Wasted $

Time


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. For example, software costs can include database, management, and middle-tier software costs. Facilities cost can include costs associated with upgrades, maintenance, building security, taxes, etc. IT laborcosts 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


EfficiencyCategory Efficiencyp/app %ofTotalBusinessProductivity 181,669.00$ 41%ITStaffProductivity 133,389.00$ 30%ITInfrastructureCostReduction 131,073.00$ 29%

Total 446,131.00$ 100%

Source:2015StudyonAWSValue

The opportunity cost of on-premise IT

• Only 29% of the benefits of AWS Cloud are from IT cost reduction

• 41% of the AWS Cloud opportunity is increased productivity

IDC projects that organizations using AWS will realize increased revenue and productivity benefits worth an average of $173,003 per application per year over five years, or $7.04 million per organization


…and that these benefits increase 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


The TCO Window

$

1 2 3 4 50

TCO

Migration Cost

Cost Optimising / BAU

Current / Do Nothing

AWS Environment

Payback Period

Time (Months)

Cost


Cost Optimisation

$ $

Paying for whatyou use

Paying for whatyou need


The four pillars of cost optimisation

Right sizing Reserved Instances

Increase elasticity

Measure, monitor, and

improve


Cost Optimisation

Simple Stimulating Stretching

Consolidated BillingPermissionsTaggingIdle Resources

Design for Elasticity

Instance Right SizingStoragePurchasing Options

OS LicencingOffloading Architecture

Higher Level Services


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


Permissions

How are you controlling the provisioning of

resources?

Control who canprovision resources


Tagging

• Use tagging to identify resources• Use tags to audit resources• Turn off untagged resources


Idle Resources

• Dev/Test (Non-Prod) instances• Use simple instance start/stop, or• Tear down/build up altogether• Instances are disposable


Instance Right Sizing

Right sizing• Selecting the cheapest instance available

while meeting performance requirements• Looking at CPU, RAM, storage, and network

utilization to identify potential instances that can be downsized

• Leveraging Amazon CloudWatch metrics and setting up custom RAM metrics

Rule of thumb: Right size, then reserve.(But if you’re in a pinch, reserve first).


Use Amazon CloudWatch to collect and track metrics

CloudWatch

Match resources to workload


Amazon CloudWatch monitoring

Basic• 7 metrics for Amazon EC2

including:• CPU utilization• Data transfer• Disk usage and more

• 5-minute frequency• Metrics for Amazon EBS,

Amazon DynamoDB, Amazon RDS, etc.

Detailed• 1-minute frequency• Aggregation by instance type and

AMI


Instance families: Example

Instance vCPU Mem(GiB)

Monthly price(3-yr AURI )

Ideal use case

c4.2xlarge 8 15 $125.44 Best price-compute performance

m4.2xlarge 8 32 $137.25 Balanced

r3.2xlarge 8 61 $179.25 Lowest cost per GiB RAM

r3.xlarge 4 30.5 $89.61 Lowest cost per GiB RAM


t2.medium

4 GiB RAM Baseline performance: 40%Bursts beyond this based on CPU creditsLess than $18 per monthDetails: http://amzn.to/1sl2bKaWeb servers, dev, small databases

t2


t2 vs m3.medium or c4.large

Instance vCPU Mem(GiB)

Monthly price(3-yr AURI )

Ideal use case

m3.medium 1 3.75 $19.08 Always available, balanced

c4.large 2 3.75 $31.36 Always available, compute

t2.medium 2 4 $16.86 Bursty workloads


Savings potential

If t2 works for you• 11%: Switch from m3.medium to t2.medium• 46%: Switch from c3.large to t2.medium

Instance optimization• 9%: Switch to c4 for compute-intensive apps

(m4.2xl -> c4.2xl)• 35%: Switch to r3 for memory-intensive apps

(m4.2xl -> r3.xlarge)


Storage

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 Standard Infrequent Access‒ Lower cost of storage

• Amazon S3 Reduced Redundancy‒ 99.99% durability vs. 99.999999999%‒ Up to 20% savings‒ Great for files that are easy to reproduce

• Amazon Glacier‒ Same durability as S3‒ 3 to 5 hours restore time‒ Up to 89% savings‒ Great for archiving, long-term backups and

old data


Instance Purchasing Options

On-Demand

Pay for compute capacity by the hour

with no long-term commitments

For spiky workloads, or to define needs

Reserved

Make a low, one-time payment and receive a significant discount on the hourly charge

For committed utilization

Spot

Bid for unused capacity, charged at a

Spot Price which fluctuates based on supply and demand

For time-insensitive or transient workloads


Reserved Instances

Commitment Level1 Year3 Year

AWS Services Offering RIsAmazon EC2 Amazon RDSAmazon DynamoDBAmazon RedshiftAmazon ElastiCache

* Dependent on specific AWS service, size/type, and region


Reserved Instances

Step 1: RI Coverage• Cover always on resources

Step 2: RI Utilization• Leverage RI flexibility to increase utilization• Merge and split RIs as needed

Rule of thumb: Target 70-80% always on coverage and 95% RI utilization rate.


• Be Fault Tolerant• Workloads should be Stateless• Loosely Coupled workloads preferred • If possible, deploy to Multiple AZs • Instant Flexibility is king• Take advantage of the 2 minutes warning • There is always Spot capacity available ¢

Save up to 90% compared to On-Demand¢

What could your team do with a 10,000 core data center that costs $100 per hour, with one click?

Spot Instances


Spot InstancesPricing• Up to 90% discount

Elastic• Minimum Commitment

• Commit to 1 hour• Tradeoff

• Potential for interruption

Picking the right Spot Bid Price - Tolerance for interruptions, % likelihood of termination


0

2

4

6

8

10

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

/Spot

Mixed Use Instances

Reserved Instances enable you to reserve capacity for one or three years by paying a low, one-time fee for the capacity reservation and receiving a significant discount on the hourly charge for your instances

AWS Services Offering RIs • Amazon EC2 • Amazon RDS• Amazon DynamoDB• Amazon Redshift• Amazon ElastiCache

On DemandSpotRI


OS Licensing

• Utilise Amazon Linux• Supported by Amazon• No licence fees• Regularly updated• Savings of up to 30% over other options*


Offload Your Architecture

Standard Setup• 4 x Medium Instances

$485• AWS Data Transfer 1 TB

$194• Total = $679


Offload Your Architecture

+

Standard Setup• 4 x Medium Instances

$485• AWS Data Transfer 1 TB

$194• Total = $679

Optimized• 1 x Medium Instance

$121• CloudFront Data 1 TB

$168• CloudFront Requests

$1.89• Total = $291

57%

6X

Cheaper

Faster



Turn off non-production instances• Look for dev/test, non-prod instances that are

running always-on and turn off

Autoscale production• Use Auto Scaling 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.


Use Auto Scaling or queue-based approaches to add resources when needed, and turn them off when not

Amazon SQS Queue

Auto Scaling


Automatic resizing of compute clusters based on demand

Trigger autoscaling policy

Feature DetailsControl Define minimum and maximum instance pool

sizes and when scaling and cool down occurs.

Integrated to Amazon

CloudWatch

Use metrics gathered by CloudWatch to drive scaling.

Instance types Run Auto Scaling for On-Demand and Spot Instances. Compatible with VPC.

AWS autoscaling create-autoscaling-group— Auto Scaling-group-name MyGroup— Launch-configuration-name MyConfig— Min size 4— Max size 200— Availability Zones us-west-2c

Use Auto Scaling

Amazon CloudWatch


Utilization and Auto-Scaling: GranularityMore small instances vs. less large instances

29 Large @ $0.32/hr= $9.28

59 Small @ $0.08/hr= $4.72


Utilization and Auto-Scaling: Lost $ / Lost Customers

Initial Fixed Capacity

Utilization

Unused Capacity = Wasted $

Downtime, Lost Customers, Lost Revenue (Impossible to measure)

More Wasted $

Time



AWSLambda

Elastic Load Balancing

Amazon ECR Amazon CloudFront

Amazon EFS Amazon Glacier

AmazonS3

AmazonDynamoDB

Amazon ElastiCache

AmazonRDS

Amazon Redshift

Amazon VPC

AmazonRoute 53

AWS KMS

AWS WAF Amazon Elasticsearch Service

Amazon EMR

Amazon Kinesis

Amazon Machine Learning

AWS IoT AmazonWorkSpaces



Amazon RDS Multi-AZ

High availability with a mouse click

Set up primary and standby instancesSet up identical volumesCreate synchronous replicationCreate and manage DNS entriesDetect instance failure conditionsDetect network failure conditionsDetect storage failure conditions…......Decide when to fail overRe-establish primary secondary connections

Do-it-yourself MySQL replication

Potentially ~100+ manual steps


Reviewing & Reporting


Detailed billing reports and

cost insights


Detailed Billing Reports

http://amzn.to/1swNwLV


Cost Explorer


Forecasting


Budgeting


AWS Well Architected

• Security• Reliability• Performance• Cost Optimisation

https://d0.awsstatic.com/whitepapers/architecture/AWS_Well-Architected_Framework.pdf


Creating a culture of cost transparency

Targets and Metrics Cloud Competency Center

AWS Enterprise Support


Metrics & targets

% Instances turned off daily% of Instances Right-Sized% Always on Resources Covered by RIs% RI Utilization

✔✔✔✔✘

✘

✘

✘

Set up metrics to define success and track progress


Recap

Simple Stimulating Stretching

Consolidated BillingPermissionsTaggingIdle Resources


Instance Right SizingStoragePurchasing Options

OS LicencingOffloading Architecture



If you need extra help


AWS Professional Services

• A global team of consultants across EMEA, APAC and the Americas

• Work with Enterprise and mid-market customers across many industries

• Specialists in IT Transformation, Security, DevOps, Big Data and Infrastructure

• Medium to long-term engagements of one month or more

• Provide guidance, advice, best practice and accelerates adoption

Partners


Resources to get you startedAWS TCO Calculatorhttps://awstcocalculator.com

AWS Economics Centrehttp://aws.amazon.com/economics/

Case Studies & Researchhttp://aws.amazon.com/economics/


Email me if you have any questions about today’s presentation:[email protected]

Thank You!