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Georg Singer is a researcher in the area of cloud computing at the University of Tartu in Estonia. His research focuses on ROI, economic and business aspects of cloud computing.

Purchasing Amazon EC2, an easy task?

 

We have recently taken a look at how easy it would be to shop at Amazon cloud computing offerings.  Let’s assume the following scenario. We are running an e-commerce site with all the IT in house. Now we are considering to migrate to the cloud and Amazon seems to be an interesting partner. We have asked ourselves, given a demand curve (needed computational power/time unit) what would be the price minimal configuration of Amazon EC2 instances that we can buy? After some discussions and more thinking we have discovered that this far away form being an easy task. For this little exercise we have deliberately not taken storage costs and data transfer costs into account. Just trying to purchase a set of Amazon EC2 standard linux images that is price minimal for a given demand curve required us to set up a linear programming environment to run the optimization under several constraints. Why is that so? Well, the customer has the choice to buy 1-year reserved instances, 3-year reserved instances and on demand instances. When using the reserved instances he gets a cheaper on demand price (0,04 $/hour in Europe) compared to the standard on demand price (0,095$/hour in Europe).  He pays 227$ for a one year reservation and 350$ for a three year reservation. Even if he does not use the reserved instance all the time, it still pays off to make the reservation if the demand is over a certain threshold. On the other hand just buying on demand offers flexibility.  To cut a long story short, we have been successful in get the price minimal configuration. The following figure the price minimal configuration for a typical demand curve of a travel site like lastminute.com.

Purchasing Amazon EC2, an easy task?

Price minimal Amazon EC2 standard image configuration for travel site demand curve

We can now take any demand curve and run our optimization algorithm over it. In the near future we will work on extending the model by also integrating storage costs and data transfer costs.


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  1. Research group digest – ulno.net - March 18, 2011

    [...] Purchasing Amazon EC2, an easy task? We have recently taken a look at how easy it would be to shop at Amazon cloud computing offerings.  Let’s assume the following scenario. We are running an e-commerce site with all the IT in house. Now we are considering to migrate to the cloud and Amazon seems to be an interesting partner. We have [...] [...]

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