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Getting to Profitability

Time

UsagePage Views

RevenueEtc.

The Infamous Hockey Stick

Time

UsagePage Views

RevenueEtc.


Costs

You want only 3 things

Revenue to go Up

Unit Costs to go Down

Margin to go Up

Time

UsagePage Views

RevenueEtc.


Costs

How does AWS help here?

Economies of Scale

Pricing Models

Cost Aware Architecting

What does this look like in the real world?

An example

Enterprise software provider in APACFocused on SaaS for storage, security, collaboration, etc.Backed by leading VC’s in the regionStrong growth – winning customers globallyFocused on profitability & reducing unit costsWorked 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”

01

02

03

04

Idea MVP Profitability

Scale

Getting to Profitability03

04

Profitability

Scale

Pricing Models


Total Cost of Ownership

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/ko/activate

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%

• 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


04

Profitability

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 3. Storing derivative objects in S3 ‘Reduced Redundancy’

Database 4. Read Replicas and/or ElastiCache

Test & Dev 5. Rapid proto-typing & Lean Dev/Test

2. Auto-Scaling done Right

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









Static content

Dynamic calls

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. 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’

4. 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

90% of calls

5. 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


04

Profitability

Scale

Pricing Models



When calculating TCO…

#1 Start by understanding your use cases & usage patterns

Traditional HW / Hosting

On and Off Fast Growth

Predictable peaksVariable peaks

WASTE

CUSTOMER DISSATISFACTION

AWS = Elastic Capacity

Fast GrowthOn and Off

Predictable peaksVariable peaks



#2 Apples to Apples – Take all the fixed costs into consideration




#3 Leverage ‘Cost Aware Architecting’ to reduce resources

Hosting 0

10

20

30

40

50

60

Traditional Hosting vs AWS

# of (virtual) servers

Offload to S3

Caching with CF

Auto-Scaling

Etc.Hosting





#4 Include pricing models (RI, Spot) and economies of scale

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”





#4 Include pricing models (RI, Spot) and economies of scale

#5 Take a look at what’s included: Intangible Cost Savings !

New CustomersAmazon EC2 Amazon RDSAmazon ELBAmazon S3

Amazon EBS

For All CustomersAmazon SQS/SNS

Amazon DynamoDBAmazon SESAmazon SWFAnd more…

AWS Elastic BeanstalkAWS CloudFormation

AWS IAMAuto 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

A premium security spec at non-premium prices

• Security groups for EC2

and VPC

Network ACL

• Multi-Factor Authentication

• CloudHSM

• RDS Oracle transparent

encryption

• VPC

• Direct connect

• Dedicated instances

• Identity & Access

Management

• S3 Encryption

DEMOGetting to Scale

Off-loading of static content to CloudFront to reduce required server capacity

So what does this mean in terms of costs?

Month

Medium EC2 instances 1 $ 121

CloudFront Data Transfer Out 1Tb $ 168

CloudFront Requests $1.89

TOTAL $ 291

Month

Medium EC2 instances 4 $ 485

AWS Data Transfer Out 1Tb $ 194

TOTAL $ 679

Standard Architecture

Optimized Architecture

57% lower cost – 6 x faster

Thank Youaws.amazon.com/start-ups

amzn.to/1heA2Ei

Technology

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