Professional Documents
Culture Documents
Course overview
Module Module Name
Module 1 AWS Cloud Economics: Introduction to Business Value
Cloud
Economics
Cloud Financial
Business Value Management
Cloud Economics: Two primary focus areas
Cloud
Economics
Cloud
Economics
Cloud Financial
Business Value Management
Why cloud economics?
2x 5x 20 days
Greater win rate Greater revenue growth Faster sales cycle
Giving customers confidence that migrating to AWS brings known and defined business value. Earn
customer trust through proactive cost reduction and optimization strategies.
Module 1: Agenda
Typical focus
https://pages.awscloud.com/Global_IDC_Enterprise_Whitepaper.html
Cloud value framework: Staff productivity
https://pages.awscloud.com/Global_IDC_Enterprise_Whitepaper.html
Cloud value framework: Operational resilience
Nucleus Research
Cloud value framework: Business agility
https://pages.awscloud.com/Global_IDC_Enterprise_Whitepaper.html
Examples of Value Realized
Example: Cost savings
Samsung
85% OPEX
$ Capital and
Operational Savings
https://aws.amazon.com/solutions/case-studies/samsung-heavy-industries/
Example: Staff productivity
AdRoll
https://aws.amazon.com/solutions/case-studies/adroll/
Example: Operational resilience
MedStar Health
https://aws.amazon.com/solutions/case-studies/medstar-health/
Example: Business agility
Aon
https://aws.amazon.com/solutions/case-studies/aon/
Cloud value framework
https://aws.amazon.com/enterprise/executive-insights/how-live-
nation-realized-business-value-with-aws/
Live Nation: Realized value with AWS
True or False:
Cloud Economics = Business Value + Cloud Financial Management
A.
A. True
True
B. False
B. False
Question #2
Which of the following are pillars of the Cloud Value Framework ?
(Select the four best answers).
A. Business agility
B. Cost savings
C. Effective security
D. Operational resilience
E. Smart purchasing
F. Staff productivity
Thank You
Cost Savings
Agenda
This module:
• Provides examples of cost savings
• Explains why cost savings matters
• Describes three main ways AWS can help lower costs
• Identifies migration challenges
• Discusses best practices for working with your customers to realize
cost savings
Cloud economics
Cloud economics: Business value
Cloud Value Framework
Cloud value framework: Cost savings
Typical focus
Cost savings analysis
Cost savings
Cost savings analysis
Lower costs with AWS
Lower costs with AWS
• Consumption-based model
• AWS pricing models
• Frequent price reductions
© 2019 Amazon Web Services, Inc. or its affiliates. All rights reserved.
Consumption-based model
Overprovision vs. underprovision
AWS pricing models
AWS pricing models
AWS pricing models
https://aws.amazon.com/resources/idc-business-value-learn-more/
Amazon flywheel
AWS flywheel
Reduced
Infrastructure innovation
prices
Lower More
infrastructure customers
costs • Global footprint
• New features
• New services
More
We pass the savings to our
infrastructure customers in the form of low
prices and continuous reductions
Example
Cloud economics model example
Infrastructure
cost $
Time
Capital investment
Infrastructure
cost $
Large capital
expenditure Predicted peak
demand
Traditional hardware
Time
Actual demand
Infrastructure
cost $
Large capital
expenditure Predicted peak
demand
Traditional hardware
Actual demand
Time
Provisioning infrastructure
Infrastructure
cost $
Unable to serve
customers
Large capital
expenditure Predicted peak
demand
Traditional hardware
Actual demand
Opportunity
cost
Time
Provisioning infrastructure
Infrastructure
cost $
Unable to serve
customers
Large capital
expenditure Predicted peak
demand
Traditional hardware
Actual demand
Opportunity
cost AWS
Time
Migration challenges
Migration challenges for customers
• Migration-related costs
• Shifting to an operational expenditure (opex) model
• Lack of cloud readiness
• Entrenched IT organization
Migration costs
Migration challenges
Cost savings
= Return on investment (ROI)
Sunk costs + Migration costs
Sunk costs
Depreciation and recovery value
© 2019 Amazon Web Services, Inc. or its affiliates. All rights reserved.
Migration costs
© 2019 Amazon Web Services, Inc. or its affiliates. All rights reserved.
Customer target ROI
ROI
Cost savings
Sunk costs
© 2019 Amazon Web Services, Inc. or its affiliates. All rights reserved.
Shifting to an opex model
capex + opex
Cloud readiness
Lack of cloud readiness
Human factor
The customer’s team lacks the skills and
experience required to transition to the
cloud
Applications:
The customer’s legacy applications or
workloads are not ready for (or would
not immediately benefit from) moving
to the cloud
App readiness questions
1 C4.2XL = C4.large x 4
Traditional IT
Perceived IT costs
Staff productivity
4 IT labor costs Server admin, virtualization admin, storage admin, network admin, support team
On-premises
On-premise
AWS
AWS
AWS
Cost savings vs. pricing
Cost analysis Starting point Pricing
On-premises
On-premises
On-premises
AWS
AWS
AWS
What to avoid
• 3 or 5 year depreciation
Works • 3 year RIs
• Use volume RI discounts
• Use realistic ratios
• Use realistic ratios (VM density, servers, racks)
• Explore on-premises CPU and mem usage
• Apply cost benefits of automation
(automatic scaling, APIs, AWS Trusted Advisor, Cost
Optimization
What to avoid
Kickoff
• Cost savings overview
• Timeline, scope, and roles
Engagement process: Roles
Kickoff
• Cost savings overview
• Timeline, scope, and roles
Engagement process: Data collection
Kickoff
• Cost savings overview
• Timeline, scope, and roles
Data collection
(2–4 weeks)
Engagement process: Initial assessment
Kickoff
• Cost savings overview • Full assessment
• Timeline, scope, and roles • Incorporate new data
• Repeat as needed
Q&A
(~1 week)
Data collection
(2–4 weeks) • Review data
• Initial assessment
• ID open questions,
assumptions
Initial assessment
Engagement process: Full assessment
Data collection
(2–4 weeks) • Review data
• Initial assessment
• ID open questions,
assumptions
Initial assessment
Engagement process
For more information, contact your AWS PDM and complete the
TSO Logic Foundations training
Migration Portfolio Assessment tool
Summary
A. Depreciation
B. Cost savings
C. Deployment
D. Customer satisfaction
Question #2
A.
A. To
To show
show lower
lower price
price is
is all
all that
that matters
matters
B.
B. To
To convince
convince a
a customer
customer that
that the
the cloud
cloud is
is more
more secure
secure than
than traditional
traditional IT
IT
C.
C. Providing
Providing a
a complete
complete view
view of
of costs
costs to
to deliver
deliver equal
equal or
or improved
improved performance
performance
with
with AWS
AWS when
when compared
compared to
to an
an on-premises
on-premises or
or co-location
co-location infrastructure
infrastructure
D.
D. None
None of
of the
the above
above
Question #3
AWS helps customers lower costs with (select all that apply):
A. A consumption-based model
B. AWS pricing models
C. Frequent price reductions
D. Restrictive access
Question #4
A.
A. Migration-related
Migration-related costs
costs
B.
B. Shifting
Shifting to
to an
an operational
operational expenditure
expenditure (opex)
(opex) model
model
C.
C. Hesitancy
Hesitancy about
about AWS’ pricing
the AWS model
pricing model
D.
D. Lack
Lack of
of cloud
cloud readiness
readiness
E.
E. Entrenched
Entrenched IT
IT organization
organization
Thank You
© 2019 Amazon Web Services, Inc. or its affiliates. All rights reserved. This work may not be reproduced or redistributed, in whole or in part, without prior written permission
from Amazon Web Services, Inc. Commercial copying, lending, or selling is prohibited. Corrections or feedback on the course, please email us at: aws-course-
feedback@amazon.com. For all other questions, contact us at: https://aws.amazon.com/contact-us/aws-training/. All trademarks are the property of their owners.
Staff Productivity
Agenda
Cloud
economics
Cloud financial
Business value management
Cloud economics: Two primary focus areas
Cloud
economics
Cloud financial
Business value management
Cloud Value Framework
Strategic (differentiated)
Activities
Tactical (undifferentiated)
2x 1.8x 43.4%
Increase in number Increase in number Reduction in
of virtual machines of TBs managed per total incidents
(VMs) managed per administrator
administrator
Source: n = 500 AWS Customers. AWS Cloud Economics Benchmarking, August 2018
Staff productivity: Typical functions
Calculating server benefits
Task Typical Reduction Description
Apply storage system updates, patches, and No longer required—AWS manages system
Up to 100%
configuration changes updates
Security audits and make policy Simplified due to AWS shared responsibility
Up to 40%
recommendations model
Perform threat, vulnerability, and risk Reduced effort since AWS provides
Up to 75%
assessments significant security capability
Pharmaceutical Services
Provider
Staff productivity refers to the ____ gained from reducing or eliminating tasks no
longer needed with cloud services.
A. Money
B. Energy
C. Clarity
D. Efficiency
Question #2
A.
A. Security
Security
B.
B. Marketing
Marketing
C.
C. Application
Application
D.
D. Server,
Server, Network,
Network, and
and Storage
Storage
E.
E. Facilities
Facilities
Question #3
A. Security
B. Application
C. Server, Network, and Storage
D. Facilities
Question #4
A.
A. Security
Security
B.
B. Application
Application
C.
C. Server,
Server,Network,
Network,and
andStorage
Storage
D.
D. Facilities
Facilities
Question #5
A. Facilities
B. Application
C. Server, Network, and Storage
D. Security
Question #6
A. Facilities
B. Application
C. Server, Network, and Storage
D. Security
Thank You
© 2019 Amazon Web Services, Inc. or its affiliates. All rights reserved. This work may not be reproduced or redistributed, in whole or in part, without prior written permission
from Amazon Web Services, Inc. Commercial copying, lending, or selling is prohibited. Corrections or feedback on the course, please email us at: aws-course-
feedback@amazon.com. For all other questions, contact us at: https://aws.amazon.com/contact-us/aws-training/. All trademarks are the property of their owners.