how to reduce your spend on aws

How to Reduce Your Spend

Joe Ziegler

Startup Business Development Manager APAC

@jiyosub

On AWS

APAC Webinar Series | AWS 201

How do the benefits of

AWS help to reduce my

spend?

Elastic On Demand

Pay as you go

Focus on

YOUR

business

Traditional IT

capacityCapacity

Time

Your IT needs

Elastic Capacity

On and Off Fast Growth

Variable Peaks Predictable Peaks

Elastic Capacity

On and Off Fast Growth

Predictable PeaksVariable Peaks

WASTE

CUSTOMER DISSATISFACTION

Elastic Capacity

When you turn off your cloud resources,

you actually stop paying for them

Elastic cloud capacity

Traditional IT capacity

Your IT needs

Time

Capacity

Elastic Capacity

Fast GrowthOn and Off

Predictable peaksVariable peaks

Elastic Capacity

Hardware, Software, Database, Network :

Procurement, Installation, Maintenance and Administration Costs

Economies of Scale

Pricing Models

Cost Aware Architecting

Powering the Most Popular Internet Businesses

Free steak campaign

Facebook page

Mars exploration ops

Consumer social app

Ticket pricing optimization

SAP & Sharepoint

Securities Trading Data Archiving

Gene sequencing

Marketing web site

Interactive TV apps

Financial markets analytics

R&D data analysis

Consumer social app

Big data analytics

Web site & media sharing

Disaster recovery

Media streaming

Web and mobile apps

Streaming webcasts

Facebook app

Consumer social app

Every Imaginable Use Case

Every Day…

AWS adds the equivalent server

capacity to power Amazon when it was

a global, $5.2B enterprise in 2003

2003

$5.2B retail business

7,800 employees

A whole lot of servers…

The AWS Price Reduction Philosophy

Ecosystem

Global Footprint

New Features

New ServicesInfrastructure

Innovation

More AWS Usage

More Infrastructure

Economies of Scale

Lower Infrastructure

Costs

Reduced Prices

More Customers

Economies of Scale

Pricing Models


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

Pay less when you use more

On-Demand

Pay for compute

capacity by the

hour with no long-

term commitments

For spiky

workloads,

or to define needs

Cost Optimization using different purchase models

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

Free Tier

Get Started on

AWS with free

usage & no

commitment

For POCs and

getting started

aws.amazon.com/free

Utilise the Free Tier

Time

Scale

Scenario Small team with initial idea for Mobile app

3 months to get to launch

Unknown customer/problem/solution

No cash….

• Internal testing with your team

• 2 Tier Web - Database Servers

• Use t1.micro Instances

Dev / Test Environment

Time

Scale

Average Spend

$0p/m

• Release to small group of ‘core testers’

• 2 Tier Web & Database Servers

• 2 x t1.micro Instances

Alpha Release

Time

Scale

Average Spend

$15p/m

• First public release – limited audience

• Master / Slave DB setup

• m1.small Instances

• Auto-Scaling Instances (2 Instance minimum)

Beta Release / MVP

Time

Scale

Average Spend

$235p/m

Getting to MVP for $250

Time

Scale

Total Spend to MVP

$250$235$15$0

• 3 months dev/test/release

• Serving Beta customers

• Ready for full production

and scale

Reserved Instance Pricing

Make a low, one-time payment and receive a

significant discount on the hourly charge

For committed utilization

•Light Utilization RI

•Medium Utilization RI

•High Utilization RI

•1-year

•3-year

2 Terms3 Versions

Reserved Instance Pricing

Utilization RI option Savings over On-Demand

<10% On-Demand

10% - 40% Light Utilization RI Up to 56%

40% - 75% Medium Utilization RI Up to 66%

>75% Heavy Utilization RI Up to 71%

S3 Storage Volume

EC2 Instance Hours

February 2013

48.7 million users globally

Raised $200M (Total = $338M)

$2.5B valuation

• Most traffic happens in the afternoons and evenings, so they reduce the number of

instances at night by 40%.

• At peak traffic $52 an hour is spent on EC2 and at night, during off peak, the spend is as

little as $15 an hour. Saving per hour = 71%

Save more money by using Spot Instances

Up to 85% savings over On Demand pricing

Spot market for under-utilized capacity

Requested Bid Price and Pay as you go

Spot Price < On-Demand Price

Use Case Types of Applications

Batch Processing Generic background processing (scale out computing)

Hadoop Hadoop/MapReduce processing type jobs (e.g. Search, Big Data, etc.)

Scientific Computing Scientific trials/simulations/analysis in chemistry, physics, and biology

Video and Image Processing/Rendering

Transform videos into specific formats

Testing Provide testing of software, web sites, etc

Web/Data Crawling Analyzing data and processing it

Financial Hedgefund analytics, energy trading, etc

HPC Utilize HPC servers to do embarrassingly parallel jobs

Cheap Compute Backend servers for Facebook games

Use Cases for Spot Pricing

Optimizing Video Transcoding Workloads

for a FREEMIUM model

Free OfferingOptimize for reducing cost

Acceptable Delay Limits

Implementation

– Leverage spot pricing

– Maximum Bid Price

– < On-demand Rate

– Use on-demand Instances, if delay

Get strongly reduced price for your workload

Premium OfferingOptimized for Faster response

No Delays

Implementation

– Invest in Reserved Instances

– Use on-demand for Elasticity

Get Instant Capacity for higher price

Economies of Scale

Pricing Models


“Give me 4 fault tolerant algorithms and I can pick

the best one almost with my eyes closed.

If you then ask me which one is best for the

business, in terms of dollar costs, I would be

clueless...”

Werner Vogels, CTO, Amazon

Cost optimization through „Cost Aware Architecting‟

…by leveraging:Reduce Cost of…

Compute1. S3 & CloudFront for Caching & Offloading

Storage 5. Storing derivative objects in S3 „Reduced Redundancy‟

Database 6. Read Replicas and/or ElastiCache

Test & Dev 7. Rapid proto-typing & Lean Dev/Test

2. Auto-Scaling done Right

3. Leverage Managed Services

4. Sizing your Application for AWS

1. S3 & CloudFront for Caching & Offloading

• Reduce your compute demand and costs

• Improve end-user experience

• Increase reliability and durability

Cost Aware Architecting to Reduce costs of EC2

1. S3 & CloudFront for Caching & Offloading


2. Auto-Scaling done Right with Real Time reaction response

• Elastic Load Balancing and (event-driven) Auto Scaling

• Notification of pending news flash (with audible alarm)

• On-demand ramp up of capacity (6 mins.)

• Subscriber alert push delivered

• Mass response traffic handled (followed by ramp down)


BuUuk for Singapore Press Holding (SPH)



Straits TimesBuuuk

3. Leverage Managed Services


Rabbit MQ, MSMQ

Cron

Running a mail server

Running a NoSQL cluster

Running MySQL on EC2

Memcached

Encoding Server

VS

Simple Queuing Service

Simple Workflow Service

Simple Email Service

Dynamo DB

Relational Database Service

ElastiCache

Elastic Transcoder

4. Sizing your Application for AWS


256

128

64

32

16

8

4

2

1

1 2 4 8 16 32 64 128 256

High I/O 4XL 60.5 GB35 EC2 Compute Units16 virtual cores2*1024 GB SSD-based local instance storage

EC2 Compute Units

Me

mo

ry (

GB

)

Small 1.7 GB, 1 EC2 Compute Unit1 virtual core

Micro 613 MB Up to 2 ECUs (for short bursts)

Large 7.5 GB4 EC2 Compute Units 2 virtual cores$0.32/0.46

Hi-Mem XL 17.1 GB6.5 EC2 Compute Units 2 virtual cores

Hi-Mem 2XL 34.2 GB13 EC2 Compute Units4 virtual cores

Hi-Mem 4XL 68.4 GB26 EC2 Compute Units 8 virtual cores

High-CPU Med 1.7 GB 5 EC2 Compute Units 2 virtual cores

High-CPU XL 7 GB 20 EC2 Compute Units8 virtual cores

Medium 3.7 GB, 2 EC2 Compute Units1 virtual core

M3 XL 15 GB 13 EC2 Compute Units 4 virtual coresEBS storage only

M3 2XL 30 GB 26 EC2 Compute Units 8 virtual coresEBS storage only

Extra Large 15 GB 8 EC2 Compute Units4 virtual cores

10 GB Inter-Instance

Network

Cluster GPU 4XL 22 GB 33.5 EC2 Compute Units, 2 x NVIDIA Tesla “Fermi” M2050 GPUs

Cluster Compute 4XL 23 GB 33.5 EC2 Compute Units

Cluster Compute 8XL 60.5 GB 88 EC2 Compute Units

High Storage 8XL 117 GB35 EC2 Compute Units, 24 * 2 TB ephemeral drives10 GB Ethernet

Hi-Mem Cluster Compute 8XL 244 GB 88 EC2 Compute Units16 virtual cores240 GB SSD

5. Storing derivative objects in S3 „Reduced Redundancy‟

• Original vs. derived assets : 33% savings

• Single reference and consistency

• Control, accurate logs and tracking

Cost Aware Architecting to Reduce costs of S3

Reduced Redundancy Storage

„RRS‟

6. Read Replicas and/or ElastiCache („Database Smarts‟)

• Scale out and share work

• Optimal performance, minimize load

• Enhance reliability, ensure data safety

• Cost reduction

Cost Aware Architecting to Reduce costs of DB

7. Rapid proto-typing & Lean Dev/Test

• Inexpensive idea validation

• Seamless switch over and versioning

• Rapid dev / test agility

Cost Aware Architecting to Reduce costs of Test/Dev

Bringing this all Together

Enterprise software provider in APAC

Focused on SaaS for storage, security, collaboration, etc.

Backed by leading VC’s in the region

Strong growth – winning customers globally

Focused on profitability & reducing unit costs

Worked closely with the AWS team to optimize its architecture

Margin

Growth

-10%

price drop

in S3

-20%

RI purchase

-22%

Migration

Cassandra

to Dynamo

-18%

Price drop in

S3 of 25%

54%

reduction in

unit costs

“Based on a True Story”

New CustomersAmazon EC2

Amazon RDS

Amazon ELB

Amazon S3

Amazon EBS

For All CustomersAmazon SQS/SNS

Amazon DynamoDB

Amazon SES

Amazon SWF

And more…

AWS Elastic Beanstalk

AWS CloudFormation

AWS IAM

Auto Scaling

Consolidated Billing

No Charge for

Inbound Data Transfer

Data Transfer between

Instances within an

Availability Zone

Free Usage Tier

Did you know?

Free Services Data Transfer

Trusted Advisor

Survey

Please fill out the survey at the end for

$25 USD in AWS Credits

Thank You

Joe Ziegler

Startup Business Development Manager

APAC

@jiyosub

APAC Webinar Series | AWS 201

how to reduce your spend on aws

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