Module 2

Cloud Economics and Billing

Muhammad Iqbal, ST., MT

MK Cloud Computing
D3 Teknologi Telekomunikasi
Fakultas Ilmu Terapan
 AWS A cad emy Clou d Fou n d ation s

Module 2: Cloud Economics and Billing

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Module overview

Topics Activities
• Fundamentals of pricing • AWS Pricing Calculator
• Total Cost of Ownership • Support plans scavenger hunt
• AWS Organizations
• AWS Billing and Cost Management
• Technical Support

Demo
• Overview of the Billing Dashboard

Knowledge check

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Module objectives

After completing this module, you should be able to:

• Explain the AWS pricing philosophy
• Recognize fundamental pricing characteristics
• Indicate the elements of total cost of ownership
• Discuss the results of the AWS Pricing Calculator
• Identify how to set up an organizational structure that simplifies billing and account
visibility to review cost data.
• Identify the functionality in the AWS Billing Dashboard
• Describe how to use AWS Bills, AWS Cost Explorer, AWS Budgets, and AWS Cost and
Usage Reports
• Identify the various AWS technical support plans and features
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Module 2: Cloud Economics and Billing

Section 1: Fundamentals of pricing

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AWS pricing model
Three fundamental drivers of cost with AWS

Compute Storage Data transfer

• Charged per hour/second* • Charged typically per GB • Outbound is aggregated and
charged
• Varies by instance type
• Inbound has no charge (with
some exceptions)
*Linux only • Charged typically per GB

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How do you pay for AWS?

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Pay for what you use
Pay only for the services that you consume, with no large
upfront expenses.

On premises AWS

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 Pay less when you reserve

Invest in Reserved
Instances (RIs):
• Save up to 75 percent
• Options: EC2
instance
• All Upfront Reserved
Instance (AURI) → largest
discount
• Partial Upfront Reserved NURI PURI AURI
Instance (PURI) → lower
discounts
• No Upfront Payments
Reserved Instance
(NURI) → smaller discount

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 Pay less by using more
Realize volume-based discounts:
• Savings as usage increases.
• Tiered pricing for services like Amazon
Simple Storage Service (Amazon S3), Amazon
Elastic Block Store (Amazon EBS), or Amazon
Elastic File System (Amazon EFS) → the more
you use, the less you pay per GB.
• Multiple storage services deliver lower
storage costs based on needs.

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 Pay even less as AWS grows

As AWS grows:

• AWS focuses on lowering cost of doing business.

• This practice results in AWS passing savings from economies
of scale to you.
• Since 2006, AWS has lowered pricing 75 times (as of
September 2019).
• Future higher-performing resources replace current resources
for no extra charge.

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Custom pricing

• Meet varying needs through custom pricing.

• Available for high-volume projects with unique
requirements.

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AWS Free Tier

Enables you to gain free hands-on experience with the AWS platform,
products, and services. Free for 1 year for new customers.

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Services with no charge

Amazon VPC

Elastic Beanstalk**

Auto Scaling**

AWS CloudFormation**

AWS Identity and Access **Note: There might be

Management (IAM) charges associated with other
AWS services that are used
with these services.
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 • There is no charge for:
Key takeaways • Inbound data transfer.
• Data transfer between services within
the same AWS Region.
• Pay for what you use.
• Start and stop anytime.
• No long-term contracts are required.
• Some services are free, but the other
AWS services that they provision
might not be free.

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Module 2: Cloud Economics and Billing

Section 2: Total Cost of Ownership

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On-premises versus cloud
Traditional Infrastructure AWS Cloud

Equipment Resources and

administration
≠ No upfront
expense—pay for
what you use
Improve time to
market and agility

Scale up Self-service
Contracts Cost and down infrastructure

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What is Total Cost of Ownership (TCO)?

Total Cost of Ownership (TCO) is the financial

estimate to help identify direct and indirect
costs of a system.

Why use TCO?

• To compare the costs of running an entire
infrastructure environment or specific
workload on-premises versus on AWS
• To budget and build the business case for
moving to the cloud

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TCO considerations
Hardware: Server, rack chassis Facilities cost
Software: Operating system
power distribution units (PDUs),
1 Server Costs top-of-rack (TOR) switches (and
(OS), virtualization licenses
(and maintenance) Space Power Cooling
maintenance)

Hardware: Storage disks, storage Facilities cost

2 Storage Costs area network (SAN) or Fibre Storage administration costs
Channel (FC) switches Space Power Cooling

Network hardware: Local area Facilities cost

3 Network Costs network (LAN) switches, load Network administration costs
balancer bandwidth costs Space Power Cooling

4 IT Labor Costs Server administration costs

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On-premises versus all-in-cloud
You could save up to 96 percent a year by moving your infrastructure to AWS.
Your 3-year total savings would be $159,913.
Server Storage Network IT-Labor Total
400000

350000

300000

250000

200000

150000

100000

50000
AWS cost includes business-level support and 0
a 3-year PURI EC2 instance On-Premises AWS
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 AWS Pricing Calculator

Use the AWS Pricing Calculator to:

• Estimate monthly costs
• Identify opportunities to reduce monthly
costs
• Model your solutions before building
them
• Explore price points and calculations
behind your estimate
• Find the available instance types and Access the AWS Pricing Calculator
contract terms that meet your needs
• Name your estimate and create and name
groups of services
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Reading an estimate
Your estimate is broken into: first 12 months total, total upfront, and total monthly.

First 12 months total Total upfront Total monthly

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Activity: AWS Pricing Calculator activity

• Break up into groups of four or five and use the AWS Pricing Calculator and
specifications provided to develop a cost estimate.
• Be prepared to report your findings back to the class.

AWS Pricing calculator website

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Additional benefit considerations

Hard benefits Soft Benefits

• Reduced spending on compute, • Reuse of service and applications
storage, networking, security that enable you to define (and
redefine solutions) by using the
• Reductions in hardware and software same cloud service
purchases (capex)
• Increased developer productivity
• Reductions in operational costs,
backup, and disaster recovery • Improved customer satisfaction
• Reduction in operations personnel • Agile business processes that can
quickly respond to new and
emerging opportunities
• Increase in global reach

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Case study: Total Cost Of Ownership

Background: • Growing global company with over 200 locations

• 500 million customers, $3 billion annual revenue

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Case study: Total Cost of Ownership

Background: • Growing global company with over 200 locations

• 500 million customers, $3 billion annual revenue

Challenge: • Meet demand to rapidly deploy new solutions

• Constantly upgrade aging equipment

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Case study: Total Cost of Ownership

Background: • Growing global company with over 200 locations

• 500 million customers, $3 billion annual revenue

Challenge: • Meet demand to rapidly deploy new solutions

• Constantly upgrade aging equipment

Criteria: • Broad solution to handle all workloads

• Ability to modify processes to improve efficiency and lower costs
• Eliminate busy work (such as patching software)
• Achieve a positive return on investment (ROI)

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Case study: Total Cost of Ownership

Background: • Is a growing global company with over 200 locations

• Have 500 million customers, $3 billion (USD) annual revenue

Challenge: • Meet demand to rapidly deploy new solutions

• Constantly upgrade aging equipment

Criteria: • Have a broad solution to handle all workloads

• Be able to modify processes to improve efficiency and lower costs
• Eliminate busy work (such as patching software)
• Achieve a positive return on investment (ROI)

Solution: • Moved their on-premises data center to AWS

• Eliminated 205 servers (90 percent)
• Moved nearly all applications to AWS
• Used 3-year Amazon EC2 Reserved Instances
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Case study: Total Cost of Ownership

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Case study: Total Cost of Ownership

Business Goals:
Growth
Enhanced 24/7 business
Results: Operational efficiency

Resource Speed to market Operational

optimization • One day to provision new efficiency
businesses
• Robust security • Continuous cost
compliance • Just minutes to push out a optimization and
service reduction
• Enhanced disaster
recovery
• Increased computing
capacity
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Module 2: Cloud Economics and Billing

Section 3: AWS Organizations

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Introduction to AWS Organizations

AWS Organizations

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AWS Organizations terminology

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Key features and benefits

Policy-based account management

Group based account management

Application programming interfaces (APIs)

AWS
Organizations
that automate account management

Consolidated billing
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Security with AWS Organizations

Service control policies

Control access with
IAM policies enable you (SCPs) enable you to
AWS Identity and
to allow or deny access allow or deny access to
Access Management
to AWS services for AWS services for
(IAM).
users, groups, and roles. individuals or group
accounts in an
organizational unit (OU).
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Organizations setup

Step 1 Step 2 Step 3 Step 4

Create Create Create Test
Organization organizational service restrictions
units control
policies

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Limits of AWS Organizations

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Accessing AWS Organizations

AWS Management Console

AWS Command Line

Interface (AWS CLI) tools
Software development kits
AWS (SDKs)
Organizations

HTTPS Query application

programming interfaces (API)
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Module 2: Cloud Economics and Billing

Section 4: AWS Billing and Cost Management

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Introducing AWS Billing and Cost
Management

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AWS Billing Dashboard

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Tools

AWS Budgets AWS Cost and Usage Report AWS Cost Explorer

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Monthly bills

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Cost Explorer

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Forecast and track costs

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Cost and usage reporting

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Recorded demo:
Amazon Billing
dashboard
Amazon Billing
dashboard demo

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Billing dashboard demonstration

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Module 2: Cloud Economics and Billing

Section 5: Technical support

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AWS support

• Provide unique combination of tools and expertise:

• AWS Support
• AWS Support Plans
• Support is provided for:
• Experimenting with AWS
• Production use of AWS
• Business-critical use of AWS

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AWS support

• Proactive guidance :
• Technical Account Manager (TAM)
• Best practices :
• AWS Trusted Advisor
• Account assistance :
• AWS Support Concierge

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 Support plans

AWS Support offers four support plans:

• Basic Support – Resource Center access, Service
Health Dashboard, product FAQs, discussion forums,
and support for health checks
• Developer Support: Support for early development
on AWS
• Business Support: Customers that run production
workloads
• Enterprise Support: Customers that run business
and mission-critical workloads

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Case severity and response times

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Activity: Support plan scavenger hunt

• Break up into groups of four or five and develop a recommendation for the
best support plan for one of the business cases that are provided.

• Be prepared to report your findings back to the class.

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Module 2: Cloud Economics and Billing

Module wrap-up

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Module summary

• Explored the fundamental of AWS pricing

• Reviewed TCO concepts
• Reviewed an AWS Pricing Calculator estimate
• Reviewed the Billing dashboard
• Reviewed Technical Support options and costs

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Complete the knowledge check

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Sample exam question

Which AWS service provides infrastructure security optimization recommendations?

A. AWS Price List Application Programming Interface (API)
B. Reserved Instances
C. AWS Trusted Advisor
D. Amazon Elastic Compute Cloud (Amazon EC2) Spot Fleet

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Additional resources

• AWS Economics Center: http://aws.amazon.com/economics/

• AWS Pricing Calculator: https://calculator.aws/#/
• Case studies and research: http://aws.amazon.com/economics/
• Additional pricing exercises: https://dx1572sre29wk.cloudfront.net/cost/

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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: [email protected]. For all other
questions, contact us at: https://aws.amazon.com/contact-us/aws-training/. All trademarks are the property of their owners.