As befitting any great online vendor, Amazon cloud product guys listen carefully to their market targets and ensure fast implementation and delivery to satisfy their needs. It is clear that Amazon cloud is eager to conquer the enterprise market, as I already mentioned in my past post, “Amazon AWS is the Cloud (for now anyway)“.
Key buzzwords that I expect are being used in Amazon HQ holes are “adoption” and “migration”. In order for the AWS cloud to reel in the big enterprise fishes, the cloud giant must go with the flow. This week Amazon cloud announced “AWS Cost Allocation For Customer Bills” – As a matter of fact Amazon announced that it believes in instances’ tagging – why? in the cloud, where a single instance doesn’t count, do you need a tag? The answer is simple – enterprise customers’ requests.
Adoption, TCO and ROI
In the past I had an interesting discussion with a cloud oerations VP of a great known traditional ISV (independent software vendor) about how after their POC on AWS they found that the costs are not feasible, and they wanted to go back on-premises. The winds of rejection, such as “our servers are better” and “why pay so much when I already could buy these” (someone once called these IT guys the “server huggers”) are still there. Amazon understands that and strives to fill the gap between their advanced “cloud understating” and the traditional perception of the enterprise.
This week Amazon published an important white paper – The Total Cost of (Non) Ownership of Web Applications in the Cloud . Finding it important AWS marketing guys promoted it everywhere from Werner’s (AWS famous CTO) blog all the way to TechCrunch. The PDF write-up done by Jinesh Varia, one of the most respected Technology Evangelists at Amazon. The article presented three cases of online site utilization, starting from a “Steady State Website” to “Spiky but Predictable”, all the way to “Uncertain and Unpredictable”. The article discusses the cost differences between on-premise and on AWS. Without a doubt, AWS is much better if only because of its on-demand elastic capacity. Besides being a great informative educational piece, the article serves as an important support guide for enterprise CIOs who wishes to prove that AWS is worth the investment and that ROI exists.
Reserved is the new Dedicated
Yesterday, Newvem cloud usage analytics published a cool infographic that reveals details behind AWS including the types of customers and their cost improvement opportunities. Check it out below (disclosure: I am the company cloud evangelist and community Chief). It is not a surprise that the enterprise customers start small with AWS on-demand instances, while suffering from major costs. Many enterprise CIOs and DevOps that use AWS are confronted with the dilemma of whether or not to move their cloud off AWS to a private cloud, usually when they’re footprint has scaled to a high level and opportunities for cost savings from alternatives become more attractive. The only way to understand the exact balance point between on-demand and reserved capacity is by analyzing your past patterns – Newvem does exactly that and more.
It is all about your usage. For example, in order for a Costco membership purchase to make sense, you have to know how much you and your family will use for the year (for example, how much cereal your children will eat).The same principle applies here with Reserved Instances (at least for the light and medium plans). AWS cloud customers are not buying the actual instance as a dedicated server but pay upfront to get an ongoing discount point. In order for Reserved Instances to make sense, a consistent amount of usage over a 1-3 year period must be identified. Though the fact it is not a dedicated hardware the reserved instance feature can help the AWS sales guy to offer a dedicated capacity to the potential enterprise CIO.
I believe that Amazon already has a significant toehold inside the enterprise. The AWS cloud enables innovation and makes a great difference in how IT is consumed. Enterprise changes in perception take time and AWS understands that. The cloud hype is everywhere, but at the end of the road the cloud elasticity just makes sense – not only for the small niche SaaS vendor but also and maybe even more so for the traditional enterprise. Indeed a love story!