San Diego AWS User Group AWS Economics: Learn how to efficiently optimize your resource utilization and control your costs San Diego AWS User Group Aaron C. Newman Founder, CloudCheckr Aaron.Newman@CloudCheckr.com

Agenda: Overview of Costs in AWS Going “Reserved” Going “Spot” Optimizing Resources CloudCheckr Demo Conclusion, Resource, and Questions

Overview of AWS Costs

State of Cloud Computing Cost 10 years ago The datacenter was a (mostly) fixed cost High cost for even the most basic data center You paid for your peak capacity Co-location/ISPs as an alternative Still buying your own equipment/building for peak capacity High margins were the norm About 2010 Public Cloud Turns the Corner Technology matures Becomes the de facto for getting a startup off the ground Amazon starts compressing the high margin IT business Over 20 price reductions in Amazon AWS by 2013 Prices continue to drop. But what is the reality of those 20 price reductions? EC2 Linux Small Instance (On-Demand Per Hour): Aug 2006 = $0.10, Nov 2009 = $0.085, May 2013 = $0.06 Extrapolate that to 2015 = somewhere between $0.035 and $0.05

Cost is a product of usage In old data center, cost was fixed Once you bought the equipment, little could be done to reduce your cost. No advantage to ever scale down. The public cloud is heavily weighted to variable costs If you can use less, you spend less Optimizing Resource Utilization in the Cloud matter Computational engines – run as close to 100% as possible Interactive components – need a cushion for peak usage Auto scaling - important tool for optimizing cloud usage Scale down as much as scaling up

AWS Costs (Bytes of Data Transferred) * Price + (Size of Compute Resource) * (Price of Compute Resource) * (Number of Hours) (Storage Used) * Price * (Time Stored) (Transactions Processed) * Price

Architecting Applications In the past, architecture was typically a large, multi-threaded executable talking to a single database running on the biggest boxes you could afford. Sat idle a lot. Moving old apps into the cloud Can you resize your resources different times of the day? Use load balancers or Multi AZ capabilities to resize Important to design your apps to scale horizontally Design you application into components That can be added or removed dynamically

Going “Reserved”

What is Reserved? Pay up front, get a lower variable cost ROI – as high as 500% over 3 years, 60% savings in cost Types of Reserved Resources Available EC2 Instance RDS DB Instance Elasticache Node Types Utilization – light, medium, heavy Utilization <> Resource Utilization Commitments – 1 or 3 year

Calculating ROI on Reserved Instances

Warnings using Reserved Instances Need to be able to predict what you’ll use If you design application to scale horizontally this becomes easier Heavy Reserved Instances – even if you don’t use it you’re charge Match reserved instances carefully! OS Type, Availability Zone, Size (VPC vs. Classic, Tenancy only matter for guaranteed availability) AWS tools do not show you if an instance is properly mapped Determine your highest ROI – Instances, Database, Nodes? Consolidated Billing Reserved Pricing is applied across AWS accounts AWS Tools do not show you how your reserved instances are applied

Going “Spot”

What is Spot Pricing Bidding for unused instances Supply and demand dictates current price Place your max bid, your instance shuts down if max bid exceeded by others Spot is almost always cheaper But you need to consider < 99% availability Spot prices spike frequently Slightly slower to spin up Wait for spot request to be fulfilled before instance can start More complex to manage Using EBS/Instance store

What Does Spot Pricing Look Like Example spot pricing: US East, Linux, M1 Small (1 ECU): 0.007 - 0.010 SA, Linux, M1 Small (1 ECU): 0.011 On demand: US East = 0.06, SA = 0.08 US East, Linux, M1 Extra Large (8 ECU): 0.055 - 0.64 SA, Linux, M1 Extra Large (8 ECU): 0.084 On-demand: US East = 0.48, SA = 0.64 US East, Linux, M3 Double Extra Large (26 ECU) 0.115 SA, Linux, M3 Double Extra Large (26 ECU) 0.185 On-demand: US East = 1.00, SA = 1.36 Spot Pricing is typically 10-20% of On-Demand But can easily spike HIGHER than On-Demand

Spot Strategies Most people don’t understand spot pricing, afraid to use it As more people understand and use it, pricing will be driven up Very tempting but dangerous to run exclusively on Spot From GigaOm: “A sudden spike in the price of “m2.2xlarge” servers (normally $.44/hour) drove the price briefly up to $999/hour, causing a site-wise outage.” If you follow this strategy, use a variety of instance sizes, Availability Zones, and even regions to minimize the risk Hybrid Reserved/Spot strategies Run as many spot instances as possible But maintain a base level of Reserved Instances Switch to On-Demand if Bid Price Exceeds On-Demand Price This is a manually intensive strategy

Optimizing Resources

Overview Keep track of what you are using Horizontally scale Find and eliminate idle instances Find and reduce under-utilized resources Unused EBS drives, ELB, multiple snapshots of same EBS drive Horizontally scale Find smallest instance type that can handle your transactions Find your bottle necks (network, disk I/O, CPU util, memory util) Turning off resources when they aren’t used Turn off over the weekend, overnight Use only what you need E.g. don’t check multiple copies of buckets in S3

Optimizing Instance Types Picking the optimal Instance Type: Comparing ECU (EC2 Compute Units) M1 Small (1 ECU) On-Demand in US East = $0.06 ($0.06 per ECU) M3 Double Extra Large (26 ECU) On-Demand in US East = $1.00 ($0.0385 per ECU) Comparing the cost of Memory M1 Small (1.7 GiB memory) On-Demand in US East = $0.06 ($0.035 per GiB) M3 Double Extra Large (30 GiB memory) On-Demand in US East = $1.00 ($0.033 per GiB) But you need to compare Resource Type, Pricing Type (on-demand/spot/reserved), Region, AZ, etc… for your circumstance

S3, Glacier, and RRS S3 Pricing: > $0.10 cents per gigabyte (starts at 9.5c in US East) Reduced Redundancy Storage AWS doesn’t store as many copies of your S3 objects Typically about 20% cheaper (US East $0.095 reduced to $0.076) Ideal if you are storing terabytes or petabytes of songs, movies, documents that can be recovered How much of your S3 storage can you convert to RRS? Glacier Pricing – about 1 cent per gigabyte Pricing difference from S3 decreases as the price goes up Takes 3-5 hours to retrieve files, and cost to retrieve

5 Strategies To Optimize Keep a close handle on what you are running in the cloud Measure what you are spending Calculate Return On Investment Minimize what you don’t need

CloudCheckr Demo

It’s Not About the Price Cloud Computing is not about the cost It’s about accelerating business, moving faster IaaS is following in SaaS footstep SalesForce.com pioneered the movement Hard to imagined a third-party controlling your entire customer list (one of your most valuable assets) They proved it was secure, prudent, and effective Still see some of the slower moving Corporate types claiming “production work loads can’t be run on the cloud” While their competitors leveraging the cloud eat their lunch

Resources Further reading: “How AWS Pricing Works” http://media.amazonwebservices.com/AWS_Pricing_Overview.pdf AWS Service Pricing Overview http://aws.amazon.com/pricing/ CloudCheckr Whitepaper Cost Series http://www.cloudcheckr.com/whitepapers AWS Simple Monthly Calculator http://calculator.s3.amazonaws.com/calc5.html

Questions? Questions on: Cloud Computing Resource Utilization Optimizing Your Costs CloudCheckr

Thank You for Attending Get your FREEMIUM account to check your public cloud at www.cloudcheckr.com Aaron Newman is the Founder of CloudCheckr (www.cloudcheckr.com) Please contact me with additional questions at: aaron.newman@cloudcheckr.com