Cloud Computing: IDC Study shows Amazon Web Services Use Yields 626% ROI, More

Grazed from eWeek. Author: Darryl K. Taft.

IDC has released results of a study indicating that long-term, moving workloads to Amazon Web Services (AWS) pays off big-time for some – to the tune of an average five-year return on investment of 626 percent and a cumulative savings of $2.5 million per application.

Although AWS commissioned IDC to analyze the long-term implications of moving workloads to AWS, the market research firm maintains that the analysis was independent and impartial. The goal was to measure the impact of moving applications on developer productivity and business agility, and the new opportunities that businesses could address by moving resources onto Amazon cloud infrastructure services…

In early 2012, IDC interviewed 11 organizations worldwide. Customers were from the United States, Europe and Asia, and included companies such as Fox, Samsung, Netflix, Bankinter, Tomlinson Real Estate Group, United States Tennis Association and Cycle Computing. The organizations interviewed ranged from small and medium-sized companies to companies with as many as 160,000 employees. IDC said organizations in the study had been Amazon Web Services (AWS) customers for as few as seven months to as many as 5.3 years. The study represents a broad range of experiences, with companies discussing applications ranging from a small internally developed application to a large commercial application with over 20 million customers, IDC said. And use cases reviewed offered a variety of steady-state and variable-state workloads.

IDC found that the five-year TCO of developing, deploying and managing critical applications on AWS represented a 70 percent savings compared to deploying the same resources on-premises or in hosted environments. As stated earlier, IDC findings show the average five-year ROI of using AWS is 626 percent.

Moreover, over a five year period, each company saw cumulative savings of $2.5 million per application, IDC said. And total cost of ownership (TCO) savings included savings in development and deployment costs, which were reduced by 80 percent. In addition, application management costs were reduced by 52 percent, infrastructure support costs reduced by 56 percent, and organizations were able to replace $1.6 million in infrastructure costs with $302,000 in AWS costs.

The IDC study also showed that benefits also increased over time. The study found a definite correlation between the length of time customers have been using AWS services and their returns. At 36 months, the organizations are realizing $3.50 in benefits for every $1.00 invested in AWS; at 60 months, they are realizing $8.40 for every $1.00 invested, according to the report.

Also, despite some well-publicized outages that affected major customers, in the study customers reported that they were able to reduce their downtime by 72 percent per year with AWS, enabling organizations to reduce downtime by 3.9 hours per user, per year.

In the report, IDC analyst Stephen Hendrick, who wrote the study and performed the customer interviews, said: “Our findings show that AWS has an outstanding track record regarding availability. However, service interruptions are inevitable regardless of whether applications are deployed on-premise, on AWS, or elsewhere. To maximize the potential of cloud computing implementations, customers must evaluate the architecture of their applications. If availability is considered important, IDC recommends that organizations architect their applications across AWS Availability Zones in either active or passive ways that are commensurate with the level of availability.”

Meanwhile, the study indicated AWS has significant impact on application development and deployment, reducing overall developer hours required by as much as 80 percent. The organizations interviewed reported integrating systems twice as quickly using AWS than using other in-house alternatives.

The study includes a sampling of comments from customers. Though unidentified, one customer reportedly said: “"With AWS, we are able to launch some of the services instantaneously. It would take many months, if not a year or more, to build out that whole infrastructure from scratch. Estimated additional annual revenue is $2 million-plus."

Indeed, using AWS, customers were able to experience more than a 500 percent improvement in efficiency across the software development lifecycle (SDLC), particularly in development and testing, IDC said.

“The high scores received by AWS on development and testing were due to the availability, scope, and depth of AWS APIs. AWS APIs enabled developers to more effectively utilize services during application development, which reduced time spent writing additional custom code,” Hendrick wrote in the study. “The maturity of AWS also means that its services are well vetted and therefore lead to higher-quality applications with reduced defects and less time spent resolving defects. While many platform vendors will claim that such benefits stem simply from the adoption of platform technologies, we believe that these developer benefits are closely tied to the capabilities of the cloud infrastructure. For example, the automated provisioning, dynamic scalability, management, and monitoring that are part of AWS mean that the development of applications can be simplified because many key services that govern application behavior no longer have to be coded; instead, they can simply be configured as part of deployment.”

So what’s next for AWS? Hendrick identifies application lifecycle management (ALM) as a potential opportunity for AWS.

Hendrick notes that although AWS has already instilled significant functionality across key areas of application development and deployment, including SDKs, application services, databases, networking, relational and non-relational databases, identity and access, content delivery, and deployment, as AWS builds out its platform, enterprises will want to build and deploy more complex applications. This raises a question about how ALM will be addressed. Application lifecycle management encompasses tools that support the full life cycle of an application, including requirements, team development, versioning, software quality assurance, project management, continuous integration, change management, build management, and defect tracking, the report said.

“While there are open source tools that support some of these activities and AWS’ SDKs enable integration with some of today’s leading ALM tools, providing and connecting these capabilities across hybrid environments remain challenges,” Hendrick wrote in the IDC study. “While we don’t expect AWS to broach the many issues that characterize complex ALM implementations, we do believe that as AWS matures, customers will increasingly look to AWS to align with the leading lifecycle tools and provide APIs to better integrate development with deployment and ongoing operations with application development. Development complexity demands higher levels of ALM adoption. The need for a more comprehensive approach to ALM creates a significant opportunity for AWS and would elevate the stature of AWS among medium-sized and large enterprises as they increasingly seek to integrate their on-premise IT activities with public clouds.”