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 Confidential │ ©2020 VMware, Inc. Business process automation 2 Today’s Cloud Migration Challenge Historical Future State: Multi-Cloud Datacenter Datacenter Datacenter Datacenter Datacenter Datacenter Confidential │ ©2020 VMware, Inc. Public Clouds Private Clouds Datacenter 3 Cloud Economics Confidential │ ©2020 VMware, Inc. 4 Economics is the study of human decision-making Confidential │ ©2020 VMware, Inc. 5 Cloud Economics is the study of human decision-making related to cloud infrastructure and applications Confidential │ ©2020 VMware, Inc. 6 Classical Economics Confidential │ ©2020 VMware, Inc. • Adam Smith, Wealth of Nations, 1776 • Humans are Rational • Individual Choices Seek to Maximize Value • Human Update Opinions Correct with New Information 7 Behavioral Economics Confidential │ ©2020 VMware, Inc. • Kahneman, Tversky and Thaler, 1979 • Secular Change • Humans are Not Always Rational; Have Blind Spots • The Context of the Decision Matters a Great Deal 8 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 Confidential │ ©2020 VMware, Inc. 9 VMware Hybrid Cloud Economics Refactoring and Rework Confidential │ ©2020 VMware, Inc. Talent Reskilling Optionality and Lock-in Operational Costs 10 New Cloud Economic Factor Refactor and Rework Refactoring apps requires significant investment Development time can consume months or years Confidential │ ©2020 VMware, Inc. Multiply by the thousands of applications 11 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 Confidential │ ©2020 VMware, Inc. 12 VMware Cloud Economics: Software Provider REWORK Black Mountain 0* Time to Refactor Workloads Confidential │ ©2020 VMware, Inc. 380 $3.7M Number of Workloads Moved to VMC in 20 days Total Estimated Savings from avoiding Reworking Workloads 13 New Cloud Economic Factor Talent Reskilling IT teams deeply invested in IT, management, and operations solutions Investment is not transferable to native clouds Confidential │ ©2020 VMware, Inc. Hybrid or multi-cloud often means multiple teams 14 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 Confidential │ ©2020 VMware, Inc. 15 VMware Cloud Economics: Sample Customer RESKILL Production Workloads $8K* 1 Week of In-Class cloud training Confidential │ ©2020 VMware, Inc. 25 FTEs Undisturbed from current workstreams $265K Total Estimated Savings from Avoiding Reskilling 16 New Cloud Economic Factor Optionality and Lock-In Significant rework costs to move to native cloud Rework applies to every move Confidential │ ©2020 VMware, Inc. Organizations want flexibility of a multi-cloud landscape Drives lock-in; limits portability and innovation 17 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 Confidential │ ©2020 VMware, Inc. 18 VMware Cloud Economics: Educational Institution REMAND East Coast Higher Education 9 15 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 Confidential │ ©2020 VMware, Inc. $7.8M Total Estimated Savings for new refactoring while preserving ability to go back on-premise 19 New Cloud Economic Factor Operational Costs OpEx is mistaken for entire cloud cost structure Costs often change for hybrid and multi-cloud Confidential │ ©2020 VMware, Inc. Network egress charges can overwhelm budgets 20 VMware Cloud Economics: Customer Example REPAY Education 50% Reduction in Admin Headcount Cost for retargeted employees Confidential │ ©2020 VMware, Inc. $675K Saved in salary expense while employees were moved to higher value projects $2M Total Estimated Savings across 3 years 21 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 Confidential │ ©2020 VMware, Inc. 22 How we can help Building a TCO Model for You http://bit.ly/vmctco Confidential │ ©2020 VMware, Inc. 24 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 Confidential │ ©2020 VMware, Inc. 25 Step 1: Get a Sizing http://VMCSizer.VMware.com Example of Data We Need: Confidential │ ©2020 VMware, Inc. 26 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 Confidential │ ©2020 VMware, Inc. 27 Step 3: We Build a Model What Does a VMC on AWS TCO Look Like: Confidential │ ©2020 VMware, Inc. 28 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 Confidential │ ©2020 VMware, Inc. 29 Questions? broth@vmware.com http://bit.ly/vmctco Confidential │ ©2020 VMware, Inc. 30
