Profiting from a cloud deployment

Cloud computing does offer enterprises and organizations a mixed bag of goodies. For one it provides for a utility style computing, the ability to grow and shrink with changing loads, zero upfront costs etc. The benefits of cloud computing are many but does it all add up to profit for an enterprise? That is the critical question that needs to be answered.

This post will take a look on what it takes for a cloud deployment to be profitable for an organization.

The critical parameters for any web application are latency and throughput.  A well designed web application whether it is an e-retail site or an ad serving application will try to minimize the latency or response time while at the same time maximizing the throughput of the application. For any application while the latency can be kept within specified limits the throughput will tend to plateau at a certain level and will not increase with increasing traffic. Utilizing a larger instance can improve the throughput plateau slightly. In any case the reality is that throughput tends to flatten as the traffic is increased.

A typical cloud application will be made of several compute instances, database instances, DNS services etc. Cloud usage is billed by the hour. Hence we can represent the cost of a cloud deployment as follows

Cost (cloud deployment) = m * compute instance + n * database instance + o * network bytes + P

Where P = cost of DNS + Elastic IPs + other costs.

This can be represented by the formula

C = a * D * t

where C = cost of cloud deployment

D = costs per hour of the deployment

and ‘a’ is some arbitrary constant and ‘t’ is the time

Let us assume that for the cloud deployment we get a throughput of T.

The revenue for a web application whether it is an e-commerce site, an e-ticketing site or an ad serving engine will all depend on the throughput i.e. larger the throughput, larger the revenue and hence profit. We can then say that ‘R’ the revenue is

R (revenue) α k * T * t

In others words  the revenue is proportional to the throughput.

Hence to determine the profitability of a particular cloud deployment we need to compare the cost of the deployment for a given throughput versus a projected  profit margin. As long the cost of the deployment is less than the revenue arising from the throughput, the deployment will be profitable.  This can be represented pictorially as below.

The graph clearly shows that for a profitable deployment

d/dt (k * T *t) > d/dt (a * D * t) or

k * T > a * D

Hence as can seen from the picture as long as the slope of the cumulative deployment costs are less that the slope of the revenue the deployment will be profitable.

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Working with Amazon’s EBS, ELB and Route 53

Here are some key learning’s  to get going on Amazon’s Elastic Block Storage (EBS), Elastic Load Balancer (ELB) and Route 53 which Amazon’s DNS  service

Amazon’s EBS: Amazon’s Elastic Block Storage provided persistent storage for your applications. It is extremely useful when migrating from a small/medium instance to a large/extra large instance. The EBS is akin to a hard disk. The steps that are needed to migrate are

– Create an EBS volume from your snapshot of your small/medium instance

– Launch a large instance

– Attach your EBS volume to your large instance (for e.g. /dev/sda2)

– Open a ssh window to your large instance

– Create a test directory (/home/ec2-user/test)

– Mount your volume (mount /dev/sda2 /home/ec2-user/test)

– Copy all your files and directories to their appropriate location

– Unmount the mounted volume (umount /dev/sda2)

– Now you have all the files from your medium instance

– Detach the volume

Amazon’s ELB: The key thing about the Amazon’s ELB is the fact that the ELB created ( actually maps to a set of IP addresses internally. Amazon suggests CNAMEing a subdomain to point to the ELB for better performance. Also an important thing to understand about Amazon’s ELB is that it performs significantly better if user requests come from different IPs rather from a single machine. So a performance tool that simulates users from multiple IPs will give a better throughput. The alternative is run the performance tool from multiple machines

Amazon’s Route 53: Route 53 is Amazon’s DNS service.  Route 53 distributes your domains to multiple geographical zones enabling quicker DNS lookup. To use Route 53 you need to

– create a hosted zone for your domain (for e.g in Route 53

– migrate all your A, MX, CNAME resource records from your current registered domain to Route 53.

Since Route 53 is distributed it will speed name lookups. Currently updates to Route 53 are through a Perl script. However there are good GUI tools that make the job very simple.

This should get you started on the EBS, ELB and Route 53. Do also take a look at my post “Managing multi-region deployments“.

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