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The Economics of Cloud Computing

SESSION CODE: COS306. The Economics of Cloud Computing. Dianne O’Brien Sr. Director Business Strategy Microsoft Corporation. Growing role of central IT as a strategic partner . IT must become a strategic partner of organization Must deliver high value services across the company

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The Economics of Cloud Computing

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  1. SESSION CODE: COS306 The Economics of Cloud Computing Dianne O’Brien Sr. Director Business Strategy Microsoft Corporation

  2. Growing role of central IT as a strategic partner • IT must become a strategic partner of organization • Must deliver high value services across the company • Take on strategic projects with your existing resources • Extend IT by leveraging cloud to meet business needs IT Pro Development IT Procurement Business Unit CIO • Increase Agility • Reduce complexity • Cost Control • Standardization • Innovation • Strategic Vision • Time to market • Best in class

  3. Transforming to a “Services” business Purchasing Models Business Needs Service Management Increase agility, faster ROI, & better TCO Lower barrier & flexible payment models Reduce complexity & cost of service management Understanding both implications Business Technical

  4. Workload Patterns Optimal for Cloud “Growing Fast“ “On and Off “ Inactivity Period Compute Compute Average Usage Usage Average Time Time • On and off workloads (e.g. batch job) • Over provisioned capacity is wasted • Time to market can be cumbersome • Successful services needs to grow/scale • Keeping up w/growth is big IT challenge • Complex lead time for deployment “Unpredictable Bursting“ “Predictable Bursting“ Compute Compute Average Usage Average Usage Time Time • Unexpected/unplanned peak in demand • Sudden spike impacts performance • Can’t over provision for extreme cases • Services with micro seasonality trends • Peaks due to periodic increased demand • IT complexity and wasted capacity

  5. Real world examples of workload patterns •target.com•walmart.com •toysrus.com•barnesandnoble.com •turbotax.com•taxcut.com •hrblock.com•taxact.com ~10x normal load (Tax season) ~4x normal load (Holiday shopping) Jan 2009 Jan 2009 Jan 2010 Jan 2010 Source: Alexa Source: Alexa

  6. Quest Software Dmitry SotnikovDirector Cloud Solutions Quest Software PARTNER

  7. Case Study: Quest Software • Biggest enterprise systems management ISV • Needed a SaaS platform to expand to SMB market • In just a year ported flagship applications to Azure with low risk and no upfront costs: Quest OnDemand Recovery for Active Directory Quest OnDemand Log Management • Quest’s own IT now involved in core R&D and customer-facing operations “Windows Azure allowed Quest developers to use familiar development tools to quickly turn their applications into SaaS offerings and open up exciting business opportunities.” Dmitry Sotnikov, Director of Cloud Solutions

  8. Windows Azure Platform Purchasing Models Subscription Additional Licensing Consumption “Pay as you go and grow” “Value for a commitment“ “Coordinated purchasing” Planned for H2 2010 Select offers available now Available now • Discounts for commitment • Plans for payment predictability • Low barrier to entry and flexibility • Optimized for cloud elasticity • Centralized purchasing experience • Introduction to volume discounts Promotional Offers Development Pricing Integration withPrograms Partner Discount

  9. Windows Azure Platform Consumption Prices Pay as you go and grow for only what you use when you use it Elastic, scalable, secure, and highly available automated service platform Highly available, scalable, and self managed distributed database service Compute Storage Web Edition Business Edition $9.99/month per 1GB DB(scale up to 5GB’s) $99.99/month per 10GB DB (*NEW* scale up to 50GB) Per GB stored and transactions Per service hour Per database/month Per database/month $0.12/hour + Variable Instance Sizes $0.15 GB/month $0.01/10k transactions Windows Azure platform AppFabric Service Bus and Access Control Scalable, automated, highly available services for secure connectivity Access Control Service Bus $3.99/connection $1.99/100k Message Operations Per Message Operation Per Connection Prices shown in USD only International prices are available

  10. Windows Azure Instance Sizes • Variable instance sizes to handle complex workloads of any size Small Medium Large X-Large $0.12 $0.24 $0.48 $0.96 Per service hour Per service hour Per service hour Per service hour • Unit of Compute Defined Equivalent compute capacity of a 1.6Ghz processor (on 64bit platform) X-Large Large Medium Small 8 x 1.6Ghz 4 x 1.6Ghz 2 x 1.6Ghz 1 x 1.6Ghz (high IO) (high IO) (high IO) (moderate IO) 14 GB memory 7.0 GB memory 3.5 GB memory 1.75 GB memory 2000 GB (instance storage) 1000 GB storage (instance storage) 500 GB storage (instance storage) 250 GB storage (instance storage)

  11. Windows Azure Platform Data Transfer • Priced per GB transferred/month (prices shown in USD) North America Region Europe Region Asia Pacific Region $0.10 GB Ingress $0.15 GB Egress $0.10 GB Ingress $0.15 GB Egress $0.30 GB Ingress $0.45 GB Egress N. Europe Sub-region N. Central – U.S. Sub-region W. Europe Sub-region S. Central – U.S. Sub-region E. AsiaSub-region S.E. Asia Sub-region • No Charge For Off Peak Ingress Promotion (extended to 10/31/10!) On-board to Windows Azure platform at no charge Off peak times defined as: 10pm-6am Mon-Fri & from 10pm-Fri to 6am-Mon for weekends in each designated regional time zones below Europe WET = UTC • North America • PST = UTC-8 Asia Pacific SST = UTC+8

  12. CDN Reach, Scale and Capability Enabling customers to deliver content closest to end-users. Leads to better user experience, global reach, & engagement North America Region Europe Region Asia Pacific Region $0.15 GB CDN Egress $0.01/10K CDN Storage X-actions $0.15 GB CDN Egress $0.01/10K CDN Storage X-actions $0.20 GB CDN Ingress $0.01/10K CDN Storage X-actions • Free through CTP, CDN available now, no charges for usage in June! Over 2 terabits per second of capacity is available from our 20 global locations with 99.95% availability. CDN service scales automatically without user intervention.

  13. Monthly Service Level Agreement Compute connectivity Service bus and access control availability Instance monitoring and restart Database availability Storage availability • Service bus and access control endpoints will have external connectivity • Message operation requests processed successfully • Storage service will be available/reachable (connectivity) • Your storage requests will be processed successfully • Database is connected to the internet gateway • All databases will be continuously monitored • All running roles will be continuously monitored • If role is not running, we will detect and initiate corrective state • Your service is connected and reachable via web. Internet facing roles will have external connectivity >99.9% >99.9% >99.9% >99.95% >99.9%

  14. The Value of Service Management • Reduce IT Complexity • Shift valuable resources to focus on high value areas Lower TCO • Reduce infrastructure and operational costs Automated Management • Automated service management means automatic upgrades and no more patches Comprehensive SLA Platform as a service provided at global scale with a dependable service level agreement • Price for Service Management is Zero $ Service lifecycle management is always included in the low base price!

  15. 3M Rick Weyenberg3M Corporate Research Laboratory3M Corporation CUSTOMER

  16. Case Study: 3M • Able to get our product to market extremely fast because of Azure infrastructure creation and deployment times • Infrastructure support required by IT is minimal – no security configuration, service packs, hot fixes, etc. to install • Used Windows Azure Service Management API to automatically deploy to the cloud, making our internal escalation processes very efficient “Our infrastructure goal was to make sure the IT staff could focus on the bigger, higher value solutions in our organization and not have to manage, monitor and maintain our application infrastructure in additional to everything else they have on their plates.” Rick Weyenberg, Advanced Software Development Specialist, 3M SEMS

  17. Promotional Offers and Programs • Introductory Special • MSDN • Premium • Biz Spark • One Anyone can try the platform at no charge (monthly service allocations) Investing in high potential start-ups; receive full platform services at no charge Subscribers receive monthly allocation of platform services at no additional charge *New* • Development Accelerator • Extended • $109.95 • SQL Azure • $74.95 • Core • $59.95 • Accelerate cloud development projects • Flexible consumption (flex # of instances) • Predictable payments (6 mo. subscription) • Exceptional value (discounted price) Includes SQL Azure Business Edition Includes Windows Azure Core plus SQL Azure Business Edition Includes Windows Azure compute, storage, storage transactions, data transfer, and message operations

  18. International Roadmap Windows Azure Platform availability in worldwide geographies • Available in 41 countries 1. Austria 2. Australia Belgium Brazil Canada Chile Colombia Costa Rica Cyprus Czech Republic Denmark • Finland • France • Germany • Greece • Hong Kong • Hungary • Ireland • India • Italy • Israel • Japan • 33. Puerto Rico • Romania • Singapore • Spain • Sweden • Switzerland • Trinidad and Tobago • U.K. • United States • Luxemburg • Malaysia • Mexico • Netherlands • New Zealand • Norway • Peru • Philippines • Poland • Portugal

  19. International Roadmap Windows Azure Platform availability in worldwide geographies • Available in 11 currencies • Canadian Dollar (CAD)/FX Rate 1.11 • British Pound (GBP)/FX Rate 0.6061 • Danish Krone (DKK) FX Rate 5.46 • 5. EURO (EUR)/FX Rate 0.7092 • Norwegian Kroner (NOK)/FX Rate 6.15 • Swedish Krona (SEK)/FX Rate 7.5 • Swiss Franc (CHF)/FX Rate 1.1 • Japanese Yen (JPY)/FX Rate 98 • New Zealand Dollar (NZD)/FX Rate 1.563 • Australian Dollar (AUD)/FX Rate 1.25 • Italian • Japanese • Norwegian • Polish • Portuguese Brazilian • Romania • Spanish • Swedish • Traditional Chinese • Czech • Danish • Dutch • English • Finnish • French • German • Greek • Hungarian • Billing localized in 18 languages International prices determined by using USD prices and applying FX rates

  20. Some Final Thoughts…. • CPU cost is allocated when the instance is deployed • Consumption vs. Subscription and service predictability • Take advantage of existing programs and promotions • (e.g. MSDN, dev accelerator, introductory, data transfer promo) Leverage the TCO tool and additional resources to help build your business case http://www.microsoft.com/windowsazure/tco/ CPU Utilization TCO Tool Purchasing Models Programs & Promotions

  21. © 2010 Microsoft Corporation. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries. The information herein is for informational purposes only and represents the current view of Microsoft Corporation as of the date of this presentation. Because Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft cannot guarantee the accuracy of any information provided after the date of this presentation. MICROSOFT MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, AS TO THE INFORMATION IN THIS PRESENTATION.

  22. Support for Customers and Partners • Assisted Support • Online Self Help • Windows Azure Platform Portal • (http://windows.azure.com) • Customer Care • (no charge 24/7 phone access) • Service Dashboard • (available to all users) • Developer Support • (paid developer support) • Public Forums • (available to all users) • Premier Windows Azure Platform • (now fully integrated) • Microsoft Developer Network (MSDN) and Microsoft Partner Network (MPN) benefits • Managed forums w/response SLA, incident support, advanced technical guidance, and training

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