5. When calculating TCO…
#1 Start with a use case or an application – Buying racks vs.
deploying an application - and know its current utilization
6. Start with Use case or pick the low-hanging fruit
List your IT assets
Dash
board
Identify upward and
downward dependencies
Web CRM Auth Start classifying your IT assets
into different categories:
• Applications with high, medium,
LDAP Service low Information Assurance
DB
requirements
Search • Applications that are internal-only,
OLAP Engine
partner/supply chain or customer-
facing
• Applications with high, medium and
low coupling
ERP Report logs
• Applications with strict or relaxed
licensing
7. Start with Use case or pick the low-hanging fruit
Dash
board
Web CRM
CRM Auth
LDAP Service
DB
Search
Search
OLAP Engine
ERP Report logs
8. Stack Rank your IT Assets
Search for under-utilized
IT assets
Applications that has
immediate business need
to scale
Applications that are
running out of capacity
Easiest to move today
That Builds support within
your organization and
creates awareness and
excitement
9. Web Application Usage Patterns
Steady State Spiky Predictable Uncertain unpredictable
Usage Pattern Usage Pattern Usage Pattern
Scenario: Scenario: Scenario:
A Federal Agency Website A space program A State Agency disaster
launch event website Claim processing website
10. When calculating TCO…
#1 Start with a use case or an application - Migrating racks vs.
migrating application - and know its current utilization
#2 Take all the fixed costs into consideration
(Don’t forget administration and redundancy costs)
11. Take all the Fixed Costs in to consideration
Fixed Cost Factors One-time Upfront Monthly
AWS Co-lo On-Site AWS Co-lo On-Site
Server Hardware 0 $$$ $$ $$ 0 0
Network Hardware 0 $$ $$ 0 0 0
Hardware Maintenance 0 $$ $$ 0 0 0
Software OS 0 $$ $$ $ 0 0
Power and Cooling and Data 0 0 $$ 0 0 $
Center Efficiency
Data Center/co-lo Space 0 $$ $$ 0 0 0
Personnel (Administration) 0 $$ $$ $ $$ $$$
Storage and Redundancy 0 $$ $$ $ 0 0
Bandwidth $ $$ $ $$ $ $
Resource Management 0 0 0 $$ $ 0
Software
Total
13. When calculating TCO…
#1 Start with a use case or an application - Migrating racks vs.
migrating application - and know its current utilization
#2 Take all the fixed costs into consideration
(Don’t forget administration and redundancy costs)
#3 Use Updated Pricing (compute, storage and bandwidth)
Price cuts, Tiered Pricing and Volume Discounts
14. Massive economies of scale and
efficiency improvements allow us to
continually lower prices
16. 20 price cuts in last 6 years
“NASA shifted to a new web services model that uses
Amazon Web Services for cloud-based enterprise
infrastructure. This cloud-based model supports a wide
variety of web applications and sites using an
interoperable, standards-based, and secure environment
while providing almost a million dollars in cost savings
each year.”
Linda Cureton, NASA CIO
http://wiki.nasa.gov/cm/blog/NASA-CIO-Blog/posts/post_1339205656611.html
Massive economies of scale and efficiency
improvements allow us to continually lower prices.
17. Did you know?
AWS Free Usage Tier Free Services Data Transfer
New Customers
Amazon EC2
(Linux & Windows)
Amazon ELB AWS Elastic Beanstalk No Charge for Inbound
Amazon S3 AWS CloudFormation Data Transfer
Amazon EBS AWS IAM
Auto Scaling No Charge for Data
For all customers Consolidated Billing Transfer Between
Services within a region
Amazon SQS/SNS
Amazon DynamoDB
Amazon SES
Amazon SWF
And more…
aws.amazon.com/free
18. When calculating TCO…
#1 Start with a use case or an application - Migrating racks vs.
migrating application - and know its current utilization
#2 Take all the fixed costs into consideration
(Don’t forget administration and redundancy costs)
#3 Use Updated Pricing (compute, storage and bandwidth)
Price cuts, Tiered Pricing and Volume Discounts
#4 Leverage Reserved Pricing instead of On-Demand Pricing
(Amortize Monthly over 3-5 years)
19. Multiple pricing models allow you to
optimize costs for both variable and
stable workloads
On-Demand, Reserved (Light, Medium and Heavy for 1-Year, 3-Year) and Spot
20. Save more when you reserve
On-demand Reserved Spot
Instances Instances Instances
• Pay as you go • One time low • Requested Bid
upfront fee + Price and Pay
Pay as you go as you go
• Starts from • $23 for 1 year • $0.005/Hour
$0.02/Hour term and as of today at
$0.01/Hour 9 AM
1-year and 3-
year terms
Heavy Medium Light Utilization
Utilization RI Utilization RI RI
22. $14,000
m2.xlarge running Linux in US-East Region
over 3 Year period
$12,000
$10,000
$8,000
Cost
Heavy Utilization
$6,000 Medium Utilization
Light Utilization
$4,000 On-Demand
$2,000
$-
Utilization
Utilization Sweet Spot Feature Savings over On-Demand
<10% On-Demand No Upfront Commitment
10% - 40% Light Utilization RI Ideal for Disaster Recovery Up to 56% (3-Year)
40% - 75% Medium Utilization RI Standard Reserved Capacity Up to 66% (3-Year)
>75% Heavy Utilization RI Lowest Total Cost Up to 71% (3-Year)
Ideal for Baseline Servers
23. www.agency.gov
(dynamic data)
Example: TCO of a Amazon Route 53
media.agency.gov
(DNS)
3-tier Web Application Elastic Load
(static data)
Balancer
Amazon
Auto Scaling group : Web Tier CloudFront
Amazon EC2
Auto Scaling group : App Tier
Amazon RDS Amazon Amazon S3
Availability Zone #1 RDS
Availability Zone #2
25. TCO of Steady State Web Application
Scenario: Federal Agency organization website
TCO Web Application - Steady State Usage Pattern
On-Premises AWS Option 1 AWS Option 2 AWS Option 3
Option All Reserved Mix of On-Demand All On-Demand
Amortized monthly costs over 3 years
(3-Year Heavy) and Reserved
Option 1: All Reserved
Recommended Option (Most Cost-
Compute/Server Costs
effective)Server Hardware $306 $0 $0 $0
Network Hardware $62 $0 $0 $0
Option 2:Hardware Maintenance
Mix of On-Demand and Reserved $47 $0 $0 $0
Power and Cooling $172 $0 $0 $0
Data Center Space $144 $0 $0 $0
Option 3:Personnel
All On-Demand $1,200 $0 $0 $0
Commitment-free and Risk-free Option
AWS Instances $0 $618 $1,079 $2,138
Total - Per Month $1,932 $618.33 $1,079 $2,138
Total - 3 Years $69,552 $22,260.00 $38,859 $76,982
Savings over On-Premises Option 68.00% 44% -11%
26. When calculating TCO…
#1 Start with a use case or an application - Migrating racks vs.
migrating application - and know its current utilization
#2 Take all the fixed costs into consideration
(Don’t forget administration and redundancy costs)
#3 Use Updated Pricing (compute, storage and bandwidth)
Price cuts, Tiered Pricing and Volume Discounts
#4 Leverage Reserved Pricing instead of On-Demand Pricing
(Amortize Monthly over 3-5 years)
#5 Intangible Cost Savings – Take a closer look at what you get
as part of AWS
27. AWS delivers a premium security spec at
non-premium prices
Certifications Physical Security HW, SW, Network
SOC 1 Type 2 Datacenters in Systematic change
(formerly SAS-70) nondescript facilities management
ISO 27001 Physical access Phased updates
strictly controlled deployment
PCI DSS for EC2,
S3, EBS, VPC, RDS, Must pass two-factor Safe storage
ELB, IAM authentication at decommission
least twice for floor
FISMA Moderate Automated
access
Compliant Controls monitoring and self-
Physical access audit
HIPAA & ITAR
logged and audited
Compliant Advanced network
Architecture protection
28. Reduced Time to Market =
More Revenue
Reduced Time to Decisions =
More Mission/Science/Outcomes
29. Elasticity + Auto Scaling
Infrastructure
Cost $
Large You just lost
Capital customers
Expenditure
Predicted
Demand
Opportunity Traditional
Cost Hardware
Waste
Actual
Demand
Cloud
Automated
Elasticity
time
30. AWS Pricing Resources
Try our Simple Monthly Calculator
• Estimate the cost of your deployment as a monthly cost
• aws.amazon.com/calculator
Visit our Economics Center
• Seven reasons customer are saving money on AWS today
• aws.amazon.com/economics
Learn more about Reserved Instances
• Reserved pricing – aws.amazon.com/ec2/reserved-instances
TCO Whitepaper:
• http://media.amazonwebservices.com/AWS_TCO_Web_Applications_
Public_Sector.pdf
Contact your Sales Rep for Custom Pricing or add’l questions
• High volume projects with unique requirements
32. Calculating AWS Total Cost of
(Non) Ownership
Session 2
Ben Butler
butlerb@amazon.com
Federal Solutions Architect
33. « Want to increase innovation?
Lower the cost of failure »
Joi Ito
34. Experiment Often & Fail Quickly
Cost of failure falls dramatically
People are free to try out new ideas
More risk taking, more innovation
36. When calculating TCO…
#1 Start with a use case or an application - Migrating racks vs.
migrating application - and know its current utilization
#2 Take all the fixed costs into consideration
(Don’t forget administration and redundancy costs)
#3 Use Updated Pricing (compute, storage and bandwidth)
Price cuts, Tiered Pricing and Volume Discounts
#4 Leverage Reserved Pricing instead of On-Demand Pricing
(Amortize Monthly over 3-5 years)
#5 Intangible Cost Savings – Take a closer look at what you get
as part of AWS
37. Web Application Usage Patterns
Steady State Spiky Predictable Uncertain unpredictable
Usage Pattern Usage Pattern Usage Pattern
Scenario: Scenario: Scenario:
A Federal Agency Website A space program A State Agency disaster
launch event website Claim processing website
38. Save more when you reserve
On-demand Reserved Spot
Instances Instances Instances
• Pay as you go • One time low • Requested Bid
upfront fee + Price and Pay
Pay as you go as you go
• Starts from • $23 for 1 year • $0.005/Hour
$0.02/Hour term and as of today at
$0.01/Hour 9 AM
1-year and 3-
year terms
Heavy Medium Light Utilization
Utilization RI Utilization RI RI
40. TCO of Spiky Predictable Web Application
Scenario: A space program has a launch event
TCO Web Application - Spiky Usage Pattern
On-Premises AWS Option 1 AWS Option 2 AWS Option 3
Amortized monthly costs over 3 years Option All Reserved Mix of On-Demand All On-Demand
and Reserved
Compute/Server Costs
Option 1: All Reserved
Server Hardware $511 $0 $0 $0
Network Hardware $103 $0 $0 $0
Option 2: Mix of On-Demand and Reserved
Hardware Maintenance $79 $0 $0 $0
Recommended Option (Most Cost-
effective) Power and Cooling $287 $0 $0 $0
Data Center Space $241 $0 $0 $0
Option 3: All On-Demand
Personnel $2,000 $0 $0 $0
Commitment-free and Risk-free Option
AWS Instances $0 $992 $791 $1850
Total - Per Month $3,220 $992 $791 $1850
Total - 3 Years $115,920 $35,718 $28,491 $66,614
Savings over On-premises Option 69% 75% 43%
43. TCO of Web Application with
uncertain unpredictable usage pattern
Scenario: A state agency disaster claim website
Option 2:
Option 3:
Option 1:
Amortized monthly costs over 3 years
On-Premises Option 1: On-Demand
All On-
Option All Reserved + All
Web - 7 Reserved 3-Yr Heavy Reserved
Demand
App Compute/Server Costs 3-Yr Heavy
– 7 Reserved
DB – 2 Reserved 3-Yr Heavy
Server Hardware $817 $0 $0 $0
Network Hardware $165 $0 $0 $0
Option 2: Hardware Maintenance $126 $0 $0 $0
Web – 7 Reserved 1-Yr Heavy, then on-demand
Power and Cooling $459 $0 $0 $0
App – 7 Reserved or Co-located Space then on-demand
Data Center 1-Yr Heavy, $385 $0 $0 $0
DB – 2 Reserved Administration on-demand
Hardware 1-Yr, then $3,200 $0 $0 $0
Instances $ $1,553 $1,394 $1,051
Option 3: - Per Month
Total $5,152 $1,553 $1,394 $1,051
Recommended Option (Most Cost-effective)
Total - 3 Years $185,472 $55,904 $50,193 $37,843
Web – On-Demand Instances
Savings over On-Premises 70% 73% 80%
App – On-Demand Instances
DB – On-Demand Instances
44. Cost of lost business or disappointed customers
Uncertain Usage Pattern
20
18
Traffic measured in Servers/Instances
16
14
12
10
Traffic Pattern
8
EC2 Baseline
Reserved
6 EC2 On-Demand
Physical servers
4 (on-premises)
2
0
0 5 10 15 20 25 30 35
Months
45. When you turn off your cloud resources,
you actually stop paying for them
46. Light and Medium Utilization
Reserved Instances
Low upfront one-time fees
When you turn off, you save on hourly usage
47. When calculating TCO…
#1 Start with a use case or an application - Migrating racks vs.
migrating application - and know its current utilization
#2 Take all the fixed costs into consideration
(Don’t forget administration and redundancy costs)
#3 Use Updated Pricing (compute, storage and bandwidth)
Price cuts, Tiered Pricing and Volume Discounts
#4 Leverage Reserved Pricing instead of On-Demand Pricing
(Amortize Monthly over 3-5 years)
#5 Intangible Cost Savings – Take a closer look at what you get
as part of AWS
48. AWS delivers a premium security spec at
non-premium prices
Certifications Physical Security HW, SW, Network
SOC 1 Type 2 Datacenters in Systematic change
(formerly SAS-70) nondescript facilities management
ISO 27001 Physical access Phased updates
strictly controlled deployment
PCI DSS for EC2,
S3, EBS, VPC, RDS, Must pass two-factor Safe storage
ELB, IAM authentication at decommission
least twice for floor
FISMA Moderate Automated
access
Compliant Controls monitoring and self-
Physical access audit
HIPAA & ITAR
logged and audited
Compliant Advanced network
Architecture protection
50. On a global footprint
Region
US-WEST (N. California) EU-WEST (Ireland)
GOV CLOUD ASIA PAC
(Tokyo)
US-EAST (Virginia)
US-WEST (Oregon)
ASIA PAC
(Singapore)
SOUTH AMERICA (Sao
Paulo)
53. Continuous optimization in your
architecture results in
recurring savings
as early as your next month’s bill
54. How customers are
saving money with AWS
AWS Economics Center
TCO Whitepapers
Calculator Tools
Case Studies
Other Resources
55. AWS Pricing Philosophy
Pay as you go
• No minimum commitments or long-term contracts required
• Capex -> Opex
• Turn off when you don’t need it
Pay less per unit when you use more
• Tiered Pricing and Volume Discounts
Pay even less when you reserve
• Reserved pricing
Pay even less as AWS grows
• Efficiencies, optimizations and economies of scale result in passing the
savings back to you in the form of lower pricing
Custom Pricing
56. Recap on when calculating TCO…
#1 Start with a use case or an application - Migrating racks vs.
migrating application - and know its current utilization
#2 Take all the fixed costs into consideration
(Don’t forget administration and redundancy costs)
#3 Use Updated Pricing (compute, storage and bandwidth)
Price cuts, Tiered Pricing and Volume Discounts
#4 Leverage Reserved Pricing instead of On-Demand Pricing
(Amortize Monthly over 3-5 years)
#5 Intangible Costs – Take a closer look at what you get as part
of AWS
57. AWS Pricing Resources
Try our Simple Monthly Calculator
• Estimate the cost of your deployment as a monthly cost
• aws.amazon.com/calculator
Learn more about Reserved Instances
• Reserved pricing – aws.amazon.com/ec2/reserved-instances
Try our Total Cost of Ownership Calculator
TCO Whitepaper:
• http://media.amazonwebservices.com/AWS_TCO_Web_Applications_
Public_Sector.pdf
Contact your Sales Rep for Custom Pricing or add’l questions
• High volume projects with unique requirements
