VMware Cloud
Economics
Building a Solid Business Case for Your
Cloud Migration
Bill Roth
broth@vmware.com
May 2020
Confidential │ ©2020 VMware, Inc.
Data-Defined Business
Processes
Next-generation
storefronts
Self-service experiences
More applications and
solutions will be deployed
in the next five years
than in the last 40 years
Advanced
analytics
Industrial
IoT
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Business process
automation
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Today’s Cloud Migration Challenge
Historical
Future State: Multi-Cloud
Datacenter
Datacenter
Datacenter
Datacenter
Datacenter
Datacenter
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Public Clouds
Private Clouds
Datacenter
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Cloud Economics
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Economics is the study of human
decision-making
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Cloud Economics is the study of human
decision-making related to cloud infrastructure
and applications
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Classical Economics
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Adam Smith, Wealth of Nations, 1776
•
Humans are Rational
•
Individual Choices Seek to Maximize Value
•
Human Update Opinions Correct with New Information
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Behavioral Economics
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Kahneman, Tversky and Thaler, 1979
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Secular Change
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Humans are Not Always Rational; Have Blind Spots
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The Context of the Decision Matters a Great Deal
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Cloud Economics
Move to Cloud was a Secular Change
Classical Economics
Behavioral Economics
Traditional economic value
People have Blind Spots
• Provides Value at a Lower Total Cost
– Usually
• Don’t consider “rework tax”
• Economies of Scale
• Don’t consider “platform lock-in”
• Allows pay-per-use
• Increases flexibility
• Don’t consider “talent reskiling tax”
• Don’t consider “data egress tax”
• Allows for workload arbitrage
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VMware Hybrid Cloud Economics
Refactoring and
Rework
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Talent Reskilling
Optionality and
Lock-in
Operational Costs
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New Cloud Economic Factor
Refactor and Rework
Refactoring apps requires
significant investment
Development time can
consume months or
years
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Multiply by the
thousands of
applications
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REWORK
IDC surveyed 418 companies
•
Studied those migrated apps from on-premises to native
public cloud
•
Examined dev costs, data migration costs, application
updates
$1M for 1000 VMs
3-year Rework Costs
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VMware Cloud Economics: Software Provider
REWORK
Black Mountain
0*
Time to Refactor Workloads
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380
$3.7M
Number of Workloads Moved to
VMC in 20 days
Total Estimated Savings from
avoiding Reworking Workloads
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New Cloud Economic Factor
Talent Reskilling
IT teams deeply invested
in IT, management, and
operations solutions
Investment is not
transferable to native
clouds
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Hybrid or multi-cloud
often means multiple
teams
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RESKILL
London School of Economics finds:
•
71% of IT Departments lost revenue due to lack of
skills
•
Total loss is $258M on average
•
65% of IT pros see talent slowing the pace of cloud
migration
Cloud innovation pushes talent
to the brink
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VMware Cloud Economics: Sample Customer
RESKILL
Production Workloads
$8K*
1 Week of In-Class
cloud training
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FTEs
Undisturbed from
current workstreams
$265K
Total Estimated
Savings from
Avoiding Reskilling
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New Cloud Economic Factor
Optionality and Lock-In
Significant rework
costs to move to
native cloud
Rework applies to
every move
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Organizations
want flexibility of
a multi-cloud
landscape
Drives lock-in;
limits portability
and innovation
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REMAND
•
Refactoring for native-cloud architectures limits
portability
•
Future cloud migrations mean more investment
•
IoT requires portability for Edge apps
Lock-in plagues enterprises
everywhere
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VMware Cloud Economics: Educational Institution
REMAND
East Coast Higher Education
9
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DAYs
Months
To move 700+ workloads from
private cloud to
VMC on AWS
Time saved not refactoring 700+
workloads from on-premise to
cloud native
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$7.8M
Total Estimated
Savings for new refactoring
while preserving ability to go
back on-premise
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New Cloud Economic Factor
Operational Costs
OpEx is mistaken
for entire cloud
cost structure
Costs often change for
hybrid and multi-cloud
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Network egress
charges can overwhelm
budgets
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VMware Cloud Economics: Customer Example
REPAY
Education
50%
Reduction in Admin Headcount
Cost for retargeted employees
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$675K
Saved in salary expense while
employees were moved to
higher value projects
$2M
Total Estimated
Savings across 3 years
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Unique Economic Value of VMware Hybrid Cloud
Consistent Infrastructure
for Zero Rework Cloud
Migration
Workload Portability
for Zero Cloud Lock-in
Consistent Operations
to Maximize Talent
Enterprise Class
Scale-out Architecture and
Capabilities
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How we can help
Building a TCO Model for You
http://bit.ly/vmctco
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Engagement Model for TCO Analysis
Built in Collaboration with Amazon
How to Get a Model
• Contact your Account Manager
– Or submit at http://bit.ly/vmctco
• Collect required data
• Send to Account Team
• Vmware Team Schedules Call
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Step 1: Get a Sizing
http://VMCSizer.VMware.com
Example of Data We Need:
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Step 2: Collect Information
Neede for a comparison
CO Opportunity ID
Target RAM Ratio
# of servers (or hosts)
Use Case
Avg # of vCPUs per VM
# of sockets/server
Workload Type
Avg vRAM per VM
# of Cores/Processor
Total Count of VMs
IOPS/VM
RAM per server
Storage per VM
# of VMs protected by DR/SRM
Total storage utilized
Avg Resource Utilization
Preferred currency
Total storage
Avg # of vCPUs per Core
Preferred region
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Step 3: We Build a Model
What Does a VMC on AWS TCO Look Like:
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What can you do next?
Try VMC on AWS Today
Request a TCO Analysis of Your Current Infrastructure: Ask Your Account Manager
• Have Account Manager Email Us at vmc-econ@vmware.com
• Online TCO Estimator: http://bit.ly/vmctco
Check out http://Cloud.VMware.Com
Try a Hands-on-Lab: https://www.vmware.com/try-vmware/vmc-aws-hol-labs.html
How Many Do You Need? Try the VMC Sizer: http://vmcsizer.vmware.com
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Questions?
broth@vmware.com
http://bit.ly/vmctco
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