AW S A cade my C l oud Foundat i ons

Module 2: Cloud Economics and Billing

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Welcome Module 2: Cloud Economics and Billing

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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This module will address the following topics:

• Fundamentals of Pricing
• Total Cost of Ownership
• AWS Organizations
• AWS Billing and Cost Management
• Technical Support

The module also includes an instructor-led demonstration that will show you how to
interact with the billing dashboard.

The module also includes an activity that challenges you to estimate the costs for a
company by using the AWS Pricing Calculator.

Finally, you will be asked to complete a knowledge check that will be used to test your
understanding of the key concepts that are covered in this module.
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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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
Module 2: Cloud Economics and Billing

Section 1: Fundamentals of pricing

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Introducing Section 1: Fundamentals of pricing.

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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There are three fundamental drivers of cost with AWS: compute, storage, and outbound
data transfer. These characteristics vary somewhat, depending on the AWS product and
pricing model you choose.

In most cases, there is no charge for inbound data transfer or for data transfer between
other AWS services within the same AWS Region. There are some exceptions, so be sure
to verify data transfer rates before you begin to use the AWS service.

Outbound data transfer is aggregated across services and then charged at the outbound
data transfer rate. This charge appears on the monthly statement as AWS Data Transfer
Out.
How do you pay for AWS?

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This philosophy is what underlies AWS pricing. While the number and types of services
offered by AWS have increased dramatically, our philosophy on pricing has not changed.
At the end of each month, you pay for what you use. You can start or stop using a
product at any time. No long-term contracts are required.

AWS offers a range of cloud computing services. For each service, you pay for exactly the
amount of resources that you actually need. This utility-style pricing model includes:

• Pay for what you use

• Pay less when you reserve
• Pay less when you use more
• Pay even less as AWS grows

You will now take a closer look at these core concepts of pricing.

To learn more about AWS pricing, see: AWS pricing overview

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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Unless you build data centers for a living, you might have spent too much time and
money building them. With AWS, you pay only for the services that you consume with
no large upfront expenses. You can lower variable costs, so you no longer need to
dedicate valuable resources to building costly infrastructure, including purchasing
servers, software licenses, or leasing facilities.

Quickly adapt to changing business needs and redirect your focus on innovation and
invention by paying only for what you use and for as long as you need it. All AWS
services are available on demand, require no long-term contracts, and have no complex
licensing dependencies.
 Pay less when you reserve

Invest in Reserved
Instances (RIs):
• Save up to 75 percent
EC2
• Options: 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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For certain services like Amazon Elastic Compute Cloud (Amazon EC2) and Amazon
Relational Database Service (Amazon RDS), you can invest in reserved capacity. With
Reserved Instances, you can save up to 75 percent over equivalent on-demand capacity.
Reserved Instances are available in three options:
• All Upfront Reserved Instance (or AURI)
• Partial Upfront Reserved Instance (or PURI)
• No Upfront Payments Reserved Instance (or NURI)

When you buy Reserved Instances, you receive a greater discount when you make a
larger upfront payment. To maximize your savings, you can pay all upfront and receive
the largest discount. Partial Upfront RIs offer lower discounts, but they give you the
option to spend less upfront. Lastly, you can choose to spend nothing upfront and
receive a smaller discount, which enables you to free capital to spend on other projects.

By using reserved capacity, your organization can minimize risks, more predictably
manage budgets, and comply with policies that require longer-term commitments.
 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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With AWS, you can get volume-based discounts and realize important savings as your
usage increases. For services like Amazon Simple Storage Service (Amazon S3), pricing is
tiered, which means that you pay less per GB when you use more. In addition, data
transfer in is always free. Multiple storage services deliver lower storage costs based on
your needs. As a result, as your AWS usage needs increase, you benefit from the
economies of scale that enable you to increase adoption and keep costs under control.

As your organization evolves, AWS also gives you options to acquire services that help
you address your business needs. For example, the AWS storage services portfolio offers
options to help you lower pricing based on how frequently you access data and the
performance that you need to retrieve it. To optimize your savings, you can choose the
right combination of storage solutions that help you reduce costs while preserving
performance, security, and durability.
 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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AWS constantly focuses on reducing data center hardware costs, improving operational
efficiencies, lowering power consumption, and generally lowering the cost of doing
business.

These optimizations and the substantial and growing economies of scale of AWS result
in passing savings back to you as lower pricing. Since 2006, AWS has lowered pricing 75
times (as of September 2019).

Another benefit of AWS growth is that future, higher-performing resources replace

current ones for no extra charge.
Custom pricing

• Meet varying needs through custom pricing.

• Available for high-volume projects with unique
requirements.

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AWS realizes that every customer has different needs. If none of the AWS pricing models
work for your project, custom pricing is available for high-volume projects with unique
requirements.
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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To help new AWS customers get started in the cloud, AWS offers a free usage tier (the
AWS Free Tier) for new customers for up to 1 year. The AWS Free Tier applies to certain
services and options. If you are a new AWS customer, you can run a free Amazon Elastic
Compute Cloud (Amazon EC2) T2 micro instance for a year, while also using a free usage
tier for Amazon S3, Amazon Elastic Block Store (Amazon EBS), Elastic Load Balancing,
AWS data transfer, and other AWS services.

To learn more, see AWS Free Tier.

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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AWS also offers a variety of services for no additional charge.

• Amazon Virtual Private Cloud (Amazon VPC) enables you to provision a logically
isolated section of the AWS Cloud where you can launch AWS resources in a virtual
network that you define.
• AWS Identity and Access Management (IAM) controls your users’ access to AWS
services and resources.
• Consolidated Billing is a billing feature in AWS Organizations to consolidate payment
for multiple AWS accounts or multiple Amazon Internet Services Private Limited
(AISPL) accounts*. Consolidated billing provides:
• One bill for multiple accounts.
• The ability to easily track each account’s charges.
• The opportunity to decrease charges as a result of volume pricing discounts
from combined usage.
• And you can consolidate all of your accounts using Consolidated Billing and
get tiered benefits.
• AWS Elastic Beanstalk is an even easier way for you to quickly deploy and manage
applications in the AWS Cloud.
• AWS CloudFormation gives developers and systems administrators an easy way to
create a collection of related AWS resources and provision them in an orderly and
predictable fashion.
• Automatic Scaling automatically adds or removes resources according to conditions
you define. The resources you are using increase seamlessly during demand spikes to
maintain performance and decrease automatically during demand lulls to minimize
costs.
• AWS OpsWorks is an application management service that makes it easy to deploy
and operate applications of all shapes and sizes.

Though there is no charge for these services, there might be charges associated with
other AWS services used with these services. For example, when you automatically scale
additional EC2 instances, there will be charges for those instances.

* Note: The main difference between AWS accounts and AISPL accounts is the seller of
record. AWS accounts are administered by Amazon Web Services, Inc., but AISPL accounts
are administered by Amazon Internet Services Private Limited. If you used an Indian
address when you created your account, your account's default seller of record is AISPL.
By default, AISPL accounts are billed in Indian Rupees (INR).
 • 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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In summary, while the number and types of services offered by AWS have increased
dramatically, our philosophy on pricing has not changed. At the end of each month, you
pay only for what you use, and you can start or stop using a product at any time. No
long-term contracts are required.

The best way to estimate costs is to examine the fundamental characteristics for each
AWS service, estimate your usage for each characteristic, and then map that usage to
the prices that are posted on the AWS website. The service pricing strategy gives you the
flexibility to choose the services that you need for each project and to pay only for what
you use.

There are several free AWS services, including:

• Amazon VPC
• Elastic Beanstalk
• AWS CloudFormation
• IAM
• Automatic scaling services
• AWS OpsWorks
• Consolidated Billing
While the services themselves are free, the resources that they provision might not be
free. Additionally, there is no charge for inbound data or data transfer between services
within the same AWS Region. However, outbound data transfer costs are tiered.

To learn more about pricing, see:

AWS pricing
AWS pricing overview
Module 2: Cloud Economics and Billing

Section 2: Total Cost of Ownership

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Introducing Section 2: Total Cost of Ownership.

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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On-premises versus cloud is a question that many businesses ask. The difference
between these two options is how they are deployed.

An on-premises infrastructure is installed locally on a company’s own computers and

servers. There are several fixed costs, also known as capital expenses, that are
associated with the traditional infrastructure. Capital expenses include facilities,
hardware, licenses, and maintenance staff. Scaling up can be expensive and time-
consuming. Scaling down does not reduce fixed costs.

A cloud infrastructure is purchased from a service provider who builds and maintains the
facilities, hardware, and maintenance staff. A customer pays for what is used. Scaling up
or down is simple. Costs are easy to estimate because they depend on service use.

It is difficult to compare an on-premises IT delivery model with the AWS Cloud. The two
are different because they use different concepts and terms.

Using on-premises IT involves a discussion that is based on capital expenditure, long

planning cycles, and multiple components to buy, build, manage, and refresh resources
over time.
Using the AWS Cloud involves a discussion about flexibility, agility, and consumption-
based costs.
So, how can you identify the best option?
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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You can identify the best option by comparing the on-premises solution to a cloud
solution. Total Cost of Ownership (or TCO) is a financial estimate that is intended to help
buyers and owners determine the direct and indirect costs of a product or system. TCO
includes the cost of a service, plus all the costs that are associated with owning the
service.

You might want to compare the costs of running an entire infrastructure environment for
a specific workload in an on-premises or collocation facility to the same workload
running on a cloud-based infrastructure. This comparison is done for budgeting purposes
or to build a business case for business decisions about the optimal deployment
solution.
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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Some of the costs that are associated with data center management include:
• Server costs for both hardware and software, and facilities costs to house the
equipment.
• Storage costs for the hardware, administration, and facilities.
• Network costs for hardware, administration, and facilities.
• And IT labor costs that are required to administer the entire solution.

When you compare an on-premises to cloud solution, it is important to accurately assess

the true costs of both options. With the cloud, most costs are upfront and readily
calculated. For example, cloud providers give transparent pricing based on different
usage metrics, such as RAM, storage, and bandwidth, among others. Pricing is frequently
fixed per unit of time.

Customers gain certainty over pricing and are then able to readily calculate costs based
on several different usage estimates.

Compare this process to on-premises technology. Though they are sometimes difficult to
determine, calculations of in-house costs must take into account all:
• Direct costs that accompany running a server—like power, floor space, storage, and
 IT operations to manage those resources.
• Indirect costs of running a server, like network and storage infrastructure.

This diagram is conceptual, and it does not include every cost item. For example,
depending on the solution you are implementing, software costs can include database,
management, and middle-tier costs. Facilities costs can include upgrades, maintenance,
building security, taxes, and so on. IT labor costs can include security administration and
application administration costs. This diagram includes an abbreviated list to
demonstrate the type of costs that are involved in data center maintenance.
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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Here is a sample cost comparison. This example shows a cost comparison for an on-
premises solution and a cloud solution over 3 years. For this comparison, two similar
environments were constructed to represent the on-premises and AWS environments.
Additional direct and indirect costs that are associated with the on-premises solution
were not included. The components of the on-premises solution include:
• 1 virtual machine with 4 CPUs, 16 GB of RAM, and a Linux operating system
• Average utilization is 100 percent
• Optimized by RAM

The components of a comparable AWS environment include:

• 1 m4.xlarge instance with 4 CPUs, 16 GB of RAM
• The instance type is a 3-year Partial Upfront Reserved Instance

The on-premises 3-year total cost is $167,422. The AWS Cloud 3-year total cost is
$7,509, which is a 96 percent savings over the on-premises solution. Thus, the 3-year
total savings on cloud infrastructure would be $159,913. This comparison helps a
business clearly understand the differences between the alternatives.

What is the difference in the costs?

Remember, the on-premises solution is predicted. It continues to incur costs whether
the capacity is used.

In contrast, the AWS solution is commissioned when needed and decommissioned when
the resources are no longer in use, which results in lower overall costs.
 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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AWS offers the AWS Pricing Calculator to help you estimate a monthly AWS bill. You can
use this tool to explore AWS services and create an estimate for the cost of your use
cases on AWS. You can model your solutions before building them, explore the price
points and calculations behind your estimate, and find the available instance types and
contract terms that meet your needs. This enables you to make informed decisions
about using AWS. You can plan your AWS costs and usage or price out setting up a new
set of instances and services.

The AWS Pricing Calculator helps you:

• Estimate monthly costs of AWS services
• Identify opportunities for cost reduction
• Model your solutions before building them
• Explore price points and calculations behind your estimate
• Find the available instance types and contract terms that meet your needs

The AWS Pricing Calculator enables you to name your estimate and create and name
groups of services. Groups are containers that you add services to in order to organize
and build your estimate. You can organize your groups and services by cost-center,
department, product architecture, etc.

For more information, see the AWS Pricing Calculator website.

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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AWS Pricing Calculator estimates are broken into:

• The total for your first 12 months – The total estimate for your current group and all
of the services and groups in your current group. It combines the upfront and
monthly estimates.
• Your total upfront – How much you are estimated to pay upfront as you set up your
AWS stack.
• Your total monthly – How much you're estimated to spend every month while you
run your AWS stack.

Within a group, you can see how much each service is estimated to cost. If you want to
price out different ways to build your AWS setup, you can use different groups for each
variation of your setup and compare the estimates for the different setups.

For more information, see Reading an estimate.

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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Break up into groups of four or five and use the AWS Pricing Calculator and the
specifications provided to develop a cost estimate.

Be prepared to report your findings back to the class.

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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Hard benefits include reduced spending on compute, storage, networking, and security.
They also include reductions in hardware and software purchases; reductions in
operational costs, backup, and disaster recovery; and a reduction in operations
personnel.

Cloud Total Cost of Ownership defines what will be spent on the technology after
adoption—or what it costs to run the solution. Typically, a TCO analysis looks at the as-is
on-premises infrastructure and compares it with the cost of the to-be infrastructure
state in the cloud. While this difference might be easy to calculate, it might only provide
a narrow view of the total financial impact of moving to the cloud.

A return on investment (ROI) analysis can be used to determine the value that is
generated while considering spending and saving. This analysis starts by identifying the
hard benefits in terms of direct and visible cost reductions and efficiency improvements.

Next, soft savings are identified. Soft savings are value points that are challenging to
accurately quantify, but they can be more valuable than the hard savings. It is important
for you to understand both hard and soft benefits to understand the full value of the
cloud. Soft benefits include:
• Reusing service and applications that enable you to define (and redefine solutions) by
using the same cloud service
• Increased developer productivity
• Improved customer satisfaction
• Agile business processes that can quickly respond to new and emerging opportunities
• Increased global reach

Now, you will review a case study from Delaware North to see an actual TCO example.
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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Background:
Delaware North originated in 1915 as a peanut and popcorn concessions vendor; today,
it’s a major food and hospitality company. Although the company deliberately keeps a
low profile, it is a leader in the food-service and hospitality industry.

Delaware North serves more than 500 million customers annually at more than 200
locations around the world, including venues the Kennedy Space Center in Florida,
London Heathrow Airport, Kings Canyon Resort in Australia, and the Green Bay Packers’
Lambeau Field in Wisconsin. This global presence has turned Delaware North into a $3
billion enterprise.
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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The company’s on-premises data center was becoming too expensive and inefficient to
support its global business operations.

Kevin Quinlivan, Delaware North’s Chief Information Officer, said, “As the company
continued to grow, the demand to rapidly deploy new solutions to meet customer
requirements increased as well. This fact, combined with the need to constantly
upgrade aging equipment, required an even greater commitment of resources on our
part. We had to find a better strategy.”

Delaware North turned to AWS for a solution.

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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After a successful migration of about 50 websites to AWS in 2013, Delaware North

evaluated the cost benefit and Total Cost of Ownership to move their IT infrastructure to
AWS. Their focus was to answer executive-level business demands for measurable
benefits that could convince an executive committee that the AWS Cloud was the right
approach.

The evaluation process centered on three criteria:

• First, a cloud solution needed a broad set of technologies that could handle all of
Delaware North’s enterprise workloads while delivering support for critical
functions.
• From an operational perspective, Delaware North wanted the features and flexibility
to modify core IT processes to improve efficiencies and lower costs. This included
eliminating redundant or time-consuming tasks like patching software or pushing
test and development tasks through outdated systems that, in the past, added
months to the deployment of new services.
• Finally, financial requirements needed to demonstrate a return on investment with a
solid cost-benefit justification for moving away from their existing data center
environment.
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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A cost comparison completed by Delaware North demonstrated that it could save $3.5
million US dollars based on a 5-year run rate by moving its on-premises data center to
AWS and using 3-year Amazon EC2 Reserved Instances and Reserved Instance renewals.

Quinlivan noted that the deep technology stack available on AWS was more than
sufficient to meet the company’s technical and operational requirements. The pricing
structure of the AWS offerings—which includes paying only for what is used—provided
total cost of ownership benefits that were presented to senior leaders.

Quinlivan stated, “We compared the costs of keeping our on-premises data center
versus moving to the AWS Cloud, measuring basic infrastructure items such as hardware
cost and maintenance.” He also says “We estimate that moving to AWS will save us at
least $3.5 million over five years by reducing our server hardware by more than 90
percent. But the cost savings will likely be greater due to additional benefits, like the
increased compute capacity we can get using AWS. That lets us continually add more
and larger workloads than we could using a traditional data center infrastructure, and
achieve savings by only paying for what we use.”

Delaware North moved almost all of its applications to AWS, including enterprise
software such as its Fiorano middleware, Crystal Reports and QLIK business intelligence
solutions, its Citrix virtual desktop system, and Microsoft System Center Configuration
Manager, which is used to manage workstations.
The most dramatic physical change was the elimination of 205 servers. Everything that
ran on that hardware was migrated to AWS. The IT department decided to keep about 20
servers on-premises at the new headquarters building to run communications and file-
and-print tasks.

“We erred on the side of caution to ensure there is no latency with these tasks, but once
we reach a certain comfort level, we may move these to the cloud as well,” said Scott
Mercer, head of the IT department’s service-oriented architecture team.
Case study: Total Cost of Ownership

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This chart displays the cost comparison done by Delaware North showing the costs of
their on-premises environment and the proposed AWS environment. The estimates
showed a $3.5 million savings based on a five-year run rate by moving from an on-
premises data center to AWS.
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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About 6 months into its cloud migration, Delaware North realized benefits in addition to
its data center consolidation, including cost-effective security compliance, enhanced
disaster recovery, and faster deployment times for new services.

“Robust security in a retail environment is critical for us because of our many retail
operations, and AWS is enormously helpful for that,” said Brian Mercer, the senior
software architect for the project. “By leveraging the security best practices of AWS,
we’ve been able to eliminate a lot of compliance tasks that in the past took up valuable
time and money.”

Brian Mercer added that the company also increased its disaster recovery capabilities at
a lower cost than what was available in its previous data center deployment. “It
significantly improved our business continuity capabilities, including seamless failovers,”
he said.

The solution is also helping Delaware North operate with greater speed and agility. For
example, it can bring in new businesses—either through contracts or acquisitions—and
get them online more quickly than in the past by eliminating the need for traditional IT
procurement and provisioning. It used to take between 2 and 3 weeks to provision new
business units; now it takes 1 day. The Delaware North IT team is also using AWS to
overhaul its operations by eliminating outdated and cumbersome processes, cleaning up
documentation, and using the benefits of running test and development tasks in
combination with rapid deployment of services through the cloud.

“Our DevOps team can now spin up the resources to push out a service in just minutes,
compared to the weeks it used to take,” said Brian Mercer. “With AWS, we can respond
much faster to business needs. And we can start repurposing time and resources to
deliver more value and services to our internal teams and to our customers.”
Module 2: Cloud Economics and Billing

Section 3: AWS Organizations

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved.

Introducing Section 3: AWS Organizations.

Introduction to AWS Organizations

AWS Organizations

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 31

AWS Organizations is a free account management service that enables you to

consolidate multiple AWS accounts into an organization that you create and centrally
manage. AWS Organizations include consolidated billing and account management
capabilities that help you to better meet the budgetary, security, and compliance needs
of your business.

The main benefits of AWS Organizations are:

• Centrally managed access policies across multiple AWS accounts.
• Controlled access to AWS services.
• Automated AWS account creation and management.
• Consolidated billing across multiple AWS accounts.
AWS Organizations terminology

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. *Organizational Units (OUs) 32

Here is some terminology to understand the structure of AWS Organizations.

The diagram shows a basic organization, or root, that consists of seven accounts that are
organized into four organizational units (or OUs). An OU is a container for accounts
within a root. An OU can also contain other OUs. This structure enables you to create a
hierarchy that looks like an upside-down tree with the root at the top. The branches
consist of child OUs and they move downward until they end in accounts, which are like
the leaves of the tree.

When you attach a policy to one of the nodes in the hierarchy, it flows down and it
affects all the branches and leaves. This example organization has several policies that
are attached to some of the OUs or are attached directly to accounts.

An OU can have only one parent and, currently, each account can be a member of
exactly one OU. An account is a standard AWS account that contains your AWS
resources. You can attach a policy to an account to apply controls to only that one
account.
Key features and benefits

Policy-based account management

Group based account management

Application programming interfaces (APIs)

AWS
Organizations
that automate account management

Consolidated billing
© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 33

AWS Organizations enables you to:

• Create service control policies (SCPs) that centrally control AWS services across
multiple AWS accounts.
• Create groups of accounts and then attach policies to a group to ensure that the
correct policies are applied across the accounts.
• Simplify account management by using application programming interfaces (APIs) to
automate the creation and management of new AWS accounts.
• Simplify the billing process by setting up a single payment method for all the AWS
accounts in your organization. With consolidated billing, you can see a combined
view of charges that are incurred by all your accounts, and you can take advantage of
pricing benefits from aggregated usage. Consolidated billing provides a central
location to manage billing across all of your AWS accounts, and the ability to benefit
from volume discounts.
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).
© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 34

AWS Organizations does not replace associating AWS Identity and Access Management
(IAM) policies with users, groups, and roles within an AWS account.

With IAM policies, you can allow or deny access to AWS services (such as Amazon S3),
individual AWS resources (such as a specific S3 bucket), or individual API actions (such as
s3:CreateBucket). An IAM policy can be applied only to IAM users, groups, or roles, and
it can never restrict the AWS account root user.

In contrast, with Organizations, you use service control policies (SCPs) to allow or deny
access to particular AWS services for individual AWS accounts or for groups of accounts
in an OU. The specified actions from an attached SCP affect all IAM users, groups, and
roles for an account, including the AWS account root user.
Organizations setup

Step 1 Step 2 Step 3 Step 4

Create Create Create Test
Organization organizational service restrictions
units control
policies

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 35

Keep in mind that this process assumes that you have access to two existing AWS
accounts, and that you can sign in to each account as an administrator.

Review these steps for setting up AWS Organizations:

• Step 1 is to create your organization with your current AWS account as the primary
account. You also invite one AWS account to join your organization and create
another account as a member account.
• Step 2 is to create two organizational units in your new organization and place the
member accounts in those OUs.
• Step 3 is to create service control policies, which enable you to apply restrictions to
what actions can be delegated to users and roles in the member accounts. A service
control policy is a type of organization control policy.
• Step 4 is to test your organization’s policies. Sign in as a user for each of the roles
(such as OU1 or OU2) and see how the service control policies impact account
access. Alternatively, you can use the IAM policy simulator to test and troubleshoot
IAM and resource-based policies that are attached to IAM users, groups, or roles in
your AWS account.

To learn more about the IAM policy simulator, see:

IAM policy simulator
Limits of AWS Organizations

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 36

There are restrictions on names that you can create in AWS Organizations, which
includes names of accounts, OUs, roots, and policies.

Names must be composed of Unicode characters and not exceed 250 characters in
length.

AWS Organizations has several maximum and minimum values for entities.
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)
© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 37

AWS Organizations can be managed through different interfaces.

The AWS Management Console is a browser-based interface that you can use to
manage your organization and your AWS resources. You can perform any task in your
organization by using the console.

AWS Command Line Interface (AWS CLI) tools enable you to issue commands at your
system's command line to perform AWS Organizations tasks and AWS tasks. This method
can be faster and more convenient than using the console.

You can use also AWS software development kits (SDKs) to handle tasks such as
cryptographically signing requests, managing errors, and retrying requests
automatically. AWS SDKs consist of libraries and sample code for various programming
languages and platforms, such as Java, Python, Ruby, .NET, iOS, and Android.

The AWS Organizations HTTPS Query API gives you programmatic access to AWS
Organizations and AWS. You can use the API to issue HTTPS requests directly to the
service. When you use the HTTPS API, you must include code to digitally sign requests by
using your credentials.
Module 2: Cloud Economics and Billing

Section 4: AWS Billing and Cost Management

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved.

Introducing Section 4: AWS Billing and Cost Management.

Introducing AWS Billing and Cost
Management

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 39

AWS Billing and Cost Management is the service that you use to pay your AWS bill,
monitor your usage, and budget your costs. Billing and Cost Management enables you to
forecast and obtain a better idea of what your costs and usage might be in the future so
that you can plan ahead.

You can set a custom time period and determine whether you would like to view your
data at a monthly or daily level of granularity.

With the filtering and grouping functionality, you can further analyze your data using a
variety of available dimensions. The AWS Cost and Usage Report Tool enables you to
identify opportunities for optimization by understanding your cost and usage data trends
and how you are using your AWS implementation.
AWS Billing Dashboard

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 40

The AWS Billing Dashboard lets you view the status of your month-to-date AWS
expenditure, identify the services that account for the majority of your overall
expenditure, and understand at a high level how costs are trending.

One of the graphs that is located on the dashboard is the Spend Summary. The Spend
Summary shows you how much you spent last month, the estimated costs of your AWS
usage for the month to date, and a forecast for how much you are likely to spend this
month.

Another graph is Month-to-Date Spend by Service, which shows the top services that
you use most and the proportion of costs that are attributed to that service.
Tools

AWS Budgets AWS Cost and Usage Report AWS Cost Explorer

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 41

From the billing dashboard, you can access several other cost management tools that
you can use to estimate and plan your AWS costs. These tools include AWS Bills, AWS
Cost Explorer, AWS Budgets, and AWS Cost and Usage Reports.
Monthly bills

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 42

The AWS Bills page lists the costs that you incurred over the past month for each AWS
service, with a further breakdown by AWS Region and linked account.

This tool gives you access to the most up-to-date information on your costs and usage,
including your monthly bill and the detailed breakdown of the AWS services that you
use.
Cost Explorer

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 43

The AWS Billing and Cost Management console includes the Cost Explorer page for
viewing your AWS cost data as a graph.

With Cost Explorer, you can visualize, understand, and manage your AWS costs and
usage over time.

The Cost Explorer includes a default report that visualizes your costs and usage for your
top cost-incurring AWS services. The monthly running costs report gives you an overview
of all your costs for the past 3 months. It also provides forecasted numbers for the
coming month, with a corresponding confidence interval.

The Cost Explorer is a free tool that enables you to:

• View charts of your costs.
• View cost data for the past 13 months.
• Forecast how much you are likely to spend over the next 3 months.
• Discover patterns in how much you spend on AWS resources over time and identify
cost problem areas.
• Identify the services that you use the most
• View metrics, like which Availability Zones have the most traffic or which linked AWS
account is used the most.
Forecast and track costs

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 44

AWS Budgets uses the cost visualization that is provided by Cost Explorer to show you
the status of your budgets and to provide forecasts of your estimated costs.

You can also use AWS Budgets to create notifications for when you go over your budget
for the month, or when your estimated costs exceed your budget. Budgets can be
tracked at the monthly, quarterly, or yearly level, and you can customize the start and
end dates. Budget alerts can be sent via email or via Amazon Simple Notification
Service (Amazon SNS).
Cost and usage reporting

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 45

The AWS Cost and Usage Report is a single location for accessing comprehensive
information about your AWS costs and usage. This tool lists the usage for each service
category that is used by an account (and its users) in hourly or daily line items, and any
tax that you activated for tax allocation purposes.

You can choose to have AWS to publish billing reports to an S3 bucket. These reports can
be updated once a day.
Recorded demo:
Amazon Billing
dashboard
Amazon Billing
dashboard demo

46 © 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved.

Show the Billing dashboard demo

Billing dashboard demonstration

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 47

Show the Amazon Billing dashboard demo

Module 2: Cloud Economics and Billing

Section 5: Technical support

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved.

Introducing Section 5: Technical support.

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

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 49

Whether you are new or continuing to adopt AWS services and applications as your
business solutions, AWS want help you do amazing things with AWS. AWS Support can
provide you with a unique combination of tools and expertise based on your current or
future planned use cases.

AWS Support was developed to provide complete support and the right resources to aid
your success. We want to support all our customers, including customers that might be
experimenting with AWS, those that are looking for production uses of AWS, and also
customers that use AWS as a business-critical resource. AWS Support can vary the type
of support that is provided, depending on the customer’s needs and goals.
AWS support

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

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 50

With AWS, customers can plan, deploy, and optimize with confidence.

If you would like proactive guidance, AWS Support has Technical Account Managers
(TAMs) who are designated as that user’s primary point of contact. The TAM can provide
guidance, architectural review, and continuous ongoing communication to keep you
informed and prepared as you plan, deploy, and optimize your solutions.

If you want to ensure that you follow best practices to increase performance and fault
tolerance in the AWS environment, AWS Support has AWS Trusted Advisor. AWS Trusted
Advisor is like a customized cloud expert. It is an online resource that checks for
opportunities to reduce monthly expenditures and increase productivity.

For account assistance, the Support Concierge is a billing and account expert who will
provide quick and efficient analysis on billing and account issues. The concierge
addresses all non-technical billing and account-level inquiries.
 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

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 51

AWS wants you to be able to plan, deploy, and optimize with confidence. We have
developed specific plans to support you, including Basic, Developer, Business, and
Enterprise support plans.

• The Basic Support Plan offers:

• 24/7 access to customer service, documentation, whitepapers and support
forums.
• Access to six core Trusted Advisor checks.
• Access to Personal Health Dashboard.

• The Developer Support Plan offers resources for customers that are testing or doing
early development on AWS, and any customers who:
• Want access to guidance and technical support.
• Are exploring how to quickly put AWS to work.
• Use AWS for non-production workloads or applications.

• The Business Support Plan offers resources for customers that are running production
workloads on AWS, and any customers who:
• Run one or more applications in production environments.
• Have multiple services activated, or use key services extensively.
 • Depend on their business solutions to be available, scalable, and secure.

• The Enterprise Support Plan offers resources for customers that are running business
and mission-critical workloads on AWS, and any customers who want to:
• Focus on proactive management to increase efficiency and availability.
• Build and operate workloads that follow AWS best practices.
• Use AWS expertise to support launches and migrations.
• Use a Technical Account Manager (TAM), who provides technical expertise for
the full range of AWS services and obtains a detailed understanding of your
use case and technology architecture. The Technical Account Manager is the
primary point of contact for ongoing support needs.
Case severity and response times

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 52

It addition to understanding the costs that are associated with different support plans, it
is critical that you understand the service levels that are associated with each plan. In
addition to the support plan you select, the case severity will drive the type of response
that you receive. There are five different severity levels:
• Critical – Your business is at risk. Critical functions of your application are unavailable.
• Urgent – Your business is significantly impacted. Important functions of your
application are unavailable.
• High – Important functions of your application are impaired or degraded.
• Normal – Non-critical functions of your application are behaving abnormally, or you
have a time-sensitive development question.
• Low – You have a general development question, or you want to request a feature.

Note that there is no case support with the Basic Support Plan. These response times
should be considered when you determine which support plan is best for your
organization.

To learn more about AWS Support plans, see Compare AWS Support Plans.
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.

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 53

In this activity, your group will read the description of a business and develop a
recommendation for the appropriate support plan. When you report back to the class,
describe the support plan that you selected, and the decision-making criteria that you
used to develop your recommendation.
Module 2: Cloud Economics and Billing

Module wrap-up

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved.

It’s now time to review the module and wrap up with a knowledge check and discussion
of a practice certification exam question.
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

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 55

In summary you:
• Explored the fundamentals of AWS pricing
• Reviewed Total Cost of Ownership concepts
• Reviewed an AWS Pricing Calculator estimate.

Total Cost of Ownership is a concept to help you understand and compare the costs that
are associated with different deployments. AWS provides the AWS Pricing Calculator to
assist you with the calculations that are needed to estimate cost savings.

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 contracts that meet your needs

AWS Billing and Cost Management provides you with tools to help you access,
understand, allocate, control, and optimize your AWS costs and usage. These tools
include AWS Bills, AWS Cost Explorer, AWS Budgets, and AWS Cost and Usage Reports.
These tools give you access to the most comprehensive information about your AWS
costs and usage including which AWS services are the main cost drivers. Knowing and
understanding your usage and costs will enable you to plan ahead and improve your AWS
implementation.
Complete the knowledge check

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 56

Now, complete the knowledge check.

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

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 57

Let’s look at the answer choices and rule them out based on the keywords we have
previously highlighted.
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/

© 2019 Amazon Web Services, Inc. or its Affiliates. All rights reserved. 58

If you want to learn more about the topics covered in this module, you might find the
following additional resources helpful:
• 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/
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.

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