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Cost Optimization on AWS

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With cloud, you have the flexibility to acquire and use IT resources and services on-demand, which represents a major shift from traditional approaches managing cost. A key first step on your organization’s cloud journey is to establish best practices for cost management in the cloud. AWS' cost optimization techniques help our customers understand cost drivers and effectively manage the cost of running existing application workloads or new ones in the cloud.

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Cost Optimization on AWS

  1. 1. © 2019, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Cloud Economics: The Financial Case for Cloud Migration and Cost Optimization on AWS
  2. 2. Agenda The AWS difference Working backwards – customer success stories Total Cost of Ownership (TCO) TCO and cost optimization in the AWS Cloud What next? Lessons learned from Coast Capital Savings
  3. 3. The AWS difference
  4. 4. What sets AWS apart? Building and managing cloud since 2006 165+ services to support any cloud workload Over 1,957 significant features and services launched in 2018 69 Availability Zones across 22 Regions, 187 Points of Presence 75 proactive price reductions to date (as of September 11, 2019) Experience Service Breadth & Depth Pace of Innovation Global Footprint Pricing Philosophy Partners Thousands of consulting and technology partners, 4,800+ AWS Marketplace products * As of July 30, 2019
  5. 5. Why choose AWS over traditional infrastructure? Equipment Resources and administration Contracts Cost Traditional No up front expense – pay for what you Use Improve time to market and agility Scale up and down Self-service infrastructure AWS Cloud
  6. 6. Working backwards – customer success stories
  7. 7. Municipal Property Assessment Corporation (MPAC) Nicole McNeill, Chief Financial Officer ” “AWS has had a transformational effect on our business, enabling us to serve our business clients better and faster than we ever have before. • Public sector organization evaluates 5M+ properties across Ontario for use in assessing $30B+ in property taxes • Formerly 95% “keep the lights on” and 5% innovation • Migrated off traditional IT architecture to AWS for greater speed and agility • Main valuation engine now runs 5,000% faster at 1/10th the cost of previous architecture • Developers release new features every one to two weeks instead of every three to six months as in the past • Started with a purchasing card at a spend of $50- 100/month MPAC is the largest assessment jurisdiction in North America, responsible for accurately assessing and classifying more than five million properties in Ontario.
  8. 8. Financial Industry Regulatory Authority (FINRA) Steve Randich, Chief Information Officer “ For our market surveillance systems, we are looking at about 40% (savings with AWS), but the real benefits are the business benefits. We can do things we physically weren’t able to do before, and that is priceless. ” • Wanted a platform to provide greater speed and scalability for analyzing petabyte-scale data • Migrating mission-critical operations to AWS • Can provide analysts with real-time access to 75 billion records collected daily • Can move faster and more efficiently in serving core business processes • Estimated savings of $10-20m annually by using AWS FINRA is the largest independent regulatory authority in the United States. It is based in Washington, D.C.
  9. 9. Total Cost of Ownership (TCO)
  10. 10. Comparing TCO isn’t easy ≠ Traditional data center and co-location Comparative Total Cost of Ownership analysis (acquisition and operating costs) for running an infrastructure environment end-to-end on premises vs. AWS
  11. 11. TCO considerations include ALL of the following… Diagram doesn’t include every cost item. 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 labor costs can include security admin and application admin costs. Business Value: Cost of delays Risk premium Competitive abilities Governance Server Admin, Virtualization Admin, Storage Admin, Network Admin, Support TeamIT Labor Costs4 Facilities Cost Hardware – Storage Disks, SAN/FC Switches Software – Backup Space Power Cooling Storage Costs2 Project Planning, Advisors, Legal, Contractors, Managed Services, Training, Cost of Capital Extras5 Hardware – Server, Rack Chassis PDUs, ToR Switches (+Maintenance) Software – OS, Virtualization Licenses (+Maintenance) Server Costs1 Facilities Cost Space Power Cooling Network Hardware – LAN Switches, Load Balancer Bandwidth Costs Software – Network Monitoring Network Costs3 Facilities Cost Space Power Cooling
  12. 12. What’s included in a typical TCO analysis? Economic Criteria Category Infrastructure Comparison Capacity Planning Benefits Financial Benefits of Innovation Cost Avoidance Workforce Productivity Accelerated Time To Value/Market Cost to Achieve (Migration, Platform, Training) Legacy Constraints Included Partially Included Not Included
  13. 13. On premises capacity planning Studies by Gartner, McKinsey, and the Uptime Institute have stated that typical data centers are on average less than 50% utilized www.uptimeinstitute.org anthesisgroup.com/wp-content/uploads/2014/08/Data-Center-Issue-Paper-final826.pdf www.nytimes.com/2012/09/23/technology/data-centers-waste-vast-amounts-of-energy-belying-industry-image.html A typical on-premises compute environment is massively under-utilized Utilized Capacity Idle Capacity 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% On-Premises IT Compute Capacity
  14. 14. Why is on-premises infrastructure so under-utilized? Part-time Peak Fluctuating/“Spiky” Peak Cyclical Peak Part of this can be explained by buying for “peak load” requirements with inflexible infrastructure
  15. 15. Why is on premises built for peak? Idle Capacity = Wasted $ OUTAGE! Downtime Lost Customers, Citizens, Students Lost Service Opportunity Lost Confidence, Trust, Interest Lost Revenue (… Impossible to measure) More Wasted $ Yet More Wasted $ Time $ Initial fixed capacity $$ New purchase after “Don’t let it happen again!” $$$ Increased capacity, again Utilization Utilized Capacity
  16. 16. TCO and cost optimization in the AWS Cloud
  17. 17. How does AWS help customers reduce their TCO? Source: IDC Whitepaper, sponsored by Amazon, “The Business Value of Amazon Web Services Accelerates Over Time.” December 2013 “Customers will have spent 63.4% more on average on premises or in co- location.” Remove over-provisioning and move to a pay-for- what-you-use model Economies of scale allow AWS to continually lower costs Pricing model choice to support variable and stable workloads: • On Demand • Reserved Instances • Spot Market Save more money as you grow bigger: • Tiered pricing • Volume discounts 1 2 3 4
  18. 18. Consider traditional approaches to capacity management Build to peak load Build to average load
  19. 19. Reduce over-provisioning via elasticity Auto Scaling allows you to: • Reduce over-provisioning • React dynamically to changes in load • Schedule regular workloads • Optimize your instance usage • Free service
  20. 20. Benefit from AWS economies of scale More Services, Reduced Prices More Customers More AWS Usage Economies of Scale Lower Infrastructure Costs More Infrastructure Community Global Footprint New Features New Services Infrastructure Innovation We pass the savings along to our customers in the form of low prices and continuous reductions (75 price reductions to date – continuously lowering prices for customers is in our DNA)
  21. 21. Select the appropriate Amazon EC2 pricing model On Demand Reserved Instances Spot Market Capacity reservation… and up to 75% savings vs. On Demand pricing Bid on AWS spare capacity… Up to 90% savings vs. On Demand pricing
  22. 22. Get volume-tiered pricing discounts (e.g. Amazon S3 *) $0.025 GB/month $0.024 GB/month $0.023 GB/month First 50 TB/month Next 450 TB/month Over 500 TB/month *Example based on Canada (Central) Region
  23. 23. Five pillars of cost optimization in the AWS Cloud Right-size your instances Increase elasticity Pick the right pricing model Match usage to storage class Measure and monitor
  24. 24. Economic cost improves through optimization Instance Right-Sizing Improved Elasticity Storage Optimization Optimized Lift and Shift Measure Monitor and Improve Serverless Architecture Managed Services Re-platformed, AWS Optimized On Premises Lift and Shift Traditional TCO Comparisons
  25. 25. Establish metrics and targets Set up metrics to define success and track progress “What KPI makes sense for this workload?” % Instances turned off daily % of Instances right-sized % Always-on resources covered by RIs % RI utilization ✔ ✔ ✔ ✔
  26. 26. Monitor your workloads Monitor AWS Resources Monitor Custom MetricsSet Alarms View Graphs and Statistics Monitor and React to Resource Changes Amazon CloudWatch AWS Trusted Advisor AWS Cost Explorer
  27. 27. Schedule your workloads 100.0 71.4 35.7 29.8 0 20 40 60 80 100 24 x 7 24 x 5 12 x 5 10 x 5 % Running Time Up to 70% savings for non-production workloads Use AWS Instance Scheduler or a partner solution
  28. 28. Consider serverless architectures No Server Management Flexible Scaling High Availability No Idle Capacity
  29. 29. What next?
  30. 30. Questions to consider when exploring TCO Capacity Planning 1 How do you plan for capacity? How many servers have you added in the past year? Anticipating next year? Can you switch your hardware on and off and only pay for what is used? Utilization 2 What is your average server utilization? How much do you overprovision for peak load? Operations 3 Will you run out of data center space some time in the future? What was your last year power utility bill for the data center(s)? Have you budgeted for both average and peak power requirements? Optimization 4 Are you on AWS today? Is your architecture cost optimized (Auto Scaling, Reserved Instances, Spot, Instances turn on/off)?
  31. 31. Thank you … and introducing Coast Capital Savings
  32. 32. Private & Confidential / Property of Coast Capital Savings 32 How can we help you? Coast Capital Savings Cloud Overview Date: November 5, 2019 Infrastructure & IT Operations Prepared By: Jason Hikida
  33. 33. Private & Confidential / Property of Coast Capital Savings 33 How can we help you? Robotic Process Automation (RPA) Released CCS Cloud Overview | Coast Capital Savings Cloud Journey Coast Capitals Cloud journey began in early 2017, with the formation of a multi-discipline team (aka Cloud Swat); Including representatives from Enterprise Architecture, Information Security, Networks, Platform Engineering, Infrastructure, Operations, QA and Application Development A strategic partnerships with cloud integrator, Onica (formerly TriNimbus) helped accelerate this journey by working with the team to build out the foundational components (including the cloud governance framework) to ensure a successful deployment Q3Q2 Q4 2017 2018 Q1 Q3Q2 Q4Q1 Build Foundational Capabilities Competitive Advantage & Innovation CCS Cloud Journey Begins Cloud Swat Team Formed First AWS Workloa d Cloud Governance Committee Established Foundationa l Setup Complete Where are we today? Over 290 AWS instances, spanning Production, QA and Development Announced New I/O Team Structure and Operating Model Adoption of Cloud First Strategy & Workload Migration Ongoing Investment in Training & Development to Build Internal Cloud Capabilities First AWS Production Workload Q1 2019 Coast Capital Public Web Site (PWS) Launched Financial Well Being (FWB) Launched Q2 Q3 CRM Go-Live Contact Centre Live Auto Financing Web Site Launched Digital Membership Opening Launched Digital Credit Union (Online Banking) Go-Live Personal Financial Management (PFM) Launched IaaS/PaaSSaaS Enterprise Service Bus (ESB) Live Note: Coast has also partnered with over 90 different SaaS-based service providers Data Lake / Date Warehouse Go-Live
  34. 34. Private & Confidential / Property of Coast Capital Savings 34 How can we help you? Cloud Financials | Is the Cloud Cheaper? When comparing cloud Infrastructure As A Service (IaaS) versus traditional On Premise solutions, you need to consider total value of ownership (TVO), which includes value of agility, time to market and operational efficiency. There are many hidden costs associated with managing and maintaining physical hardware On-Premise Cloud Services • Subscription Fees • Network fees • Hardware Maintenance & Evergreen • Hardware Setup & Installation • Data Centre / Facilities Costs (incl. UPS and HVAC) • Hardware Support & Maintenance Contracts • Unutilized Capacity (Disaster Recovery / Anticipated Growth) • Outages & Downtime • Firmware Patching & OS Upgrades • IT Personnel • Implementation & Customization • Training • Software License • Hardware (Server, Network & Storage) • Implementation & Customization • Training With the emergence of cloud and the shift towards cloud or subscription based solutions, you will see a shift from traditional CAPEX spend to OPEX. This will impact how you prepare and manage your budgets
  35. 35. Private & Confidential / Property of Coast Capital Savings 35 How can we help you? Cloud Financials | Tips for Managing Costs  Educate your stakeholders and effectively manage expectations • Dispel myths & misconceptions – Cloud is not always cheaper • Explain the “why” – What’s important to the business? Agility & Innovation?  Choose the right instance & storage types • Some trial & error • Use tools to monitor resource utilization & performance –  Automate your build process & leverage auto-scaling • Scale to meet capacity needs • Easily swap instance types  Actively manage your environment • Establish a governance process upfront • Turn off unused instances • Use Reserved Instances (RI’s) where appropriate – • Monitor you workloads –  Implement a tagging strategy • Easily identify systems • Cost transparency Our next steps: • Continue automation journey • Increase use of serverless computing • Seek opportunities to leverage spot instances Tips from the Coast trenches & lessons learnt
  36. 36. Private & Confidential / Property of Coast Capital Savings 36 How can we help you? BEST NEW APP (DMO & PFM) RANKED TOP 5 MOBILE BANKING APP IN CANADA BEST FINTECH PARTNERSHIP (DCU) RISK & SECURITY EXCELLENCE 2019 CREDIT UNION of THE YEAR TOP DIGITAL INNOVATION & BEST USE OF CLOUD Gain external recognition for the innovations, features & capabilities launched on our digital banking platform at various industry events to reinforce Coast Capital Savings as thought leaders in the financial industry SHOWCASING COAST CAPITAL’S INDUSTRY AWARDS | Notable Awards & Accomplishments WINNER of Finovate’s Best Fintech Partnership award • Recognized for the best partnership (with ebankIT) – implementing a robust Digital Banking platform, resulting in new groundbreaking digital banking experiences for our members (i.e. Security, personalization, end-to-end product acquisition) TOP 5 RANKING Canadian Mobile Banking Experience • Ranked #1 for Mobile APP ‘Account Information’ availability • Ranked #1 in Digital Relationship Services & Response Times WINNER 2020 Top 50 Cyber Security & Risk award • Showcased excellence in developing an innovative, best-in-class fraud prevention & detection solution on our new Digital Banking Platform such as a secure biometric login, personalized username & passwords and risk-driven multifactor authentication (OTP) FINALIST for 2 award categories • Top Digital Innovation award – the implementation of a digital- focused banking solution that has demonstrated genuine innovation and modernized FIs offerings • Best Use of Cloud award – the successful implementation of cloud- focused digital banking solutions that has demonstrated viability, scalability and operational efficiency FINALIST for the 2019 Credit Union of the Year award • Recognized as a leading Canadian Credit Union in digital innovation and providing innovative & inclusive financial services for it’s member base. WINNER of MuleSoft’s 2018 Technology Innovator • Recognized for the innovative implementation of MuleSoft’s Anypoint Platform for our Digital Membership Opening application (DMO) and Take Charge Money Manager tool (PFM) SURVISCOR Winner announced NOV 18th Winner announced DEC 5th
  37. 37. © 2019, Amazon Web Services, Inc. or its Affiliates. All rights reserved. Thank you!