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Difficulty: Very hardUnderstand concepts of cloud economics

A shipping company is migrating its legacy container tracking system to AWS. The system experiences high demand during the holiday season (300%300\% of baseline load), stable demand during the rest of the year, and requires a minimal baseline of 1010 servers running 24/724/7 for core operations. On-premises, the company pays for server hardware depreciation (fixed capital expenses), virtualization licenses, data center cooling, and physical security. The company aims to optimize its Total Cost of Ownership (TCO) and operational efficiency on AWS.

Which of the following actions align with the core principles of AWS cloud economics? (Select TWO.)

  1. Transitioning from physical server depreciation and upfront hypervisor licensing fees to AWS pay-as-you-go billing shifts fixed capital expenses (CapEx) to variable operating expenses (OpEx).Answer
  2. Applying Amazon EC2 Auto Scaling to dynamically provision instances to handle the seasonal holiday spikes and terminate them afterwards minimizes Total Cost of Ownership (TCO) by leveraging elasticity.Answer
  3. C
    Deploying Spot Instances for the critical 24/724/7 baseline of 1010 servers ensures maximum savings while guaranteeing the constant availability required for core tracking operations.
  4. D
    Purchasing 33-year Reserved Instances to cover the temporary seasonal holiday spikes (300%300\% increase) minimizes operational expenses (OpEx) because the unused capacity during off-peak months is refunded by AWS.
  5. E
    Provisioning a fixed fleet of Amazon EC2 instances sized to continuously run at the peak holiday capacity (300%300\%) throughout the entire year is an example of an elastic architecture.

Answer

Transitioning from physical server depreciation and upfront hypervisor licensing fees to AWS pay-as-you-go billing shifts fixed capital expenses (CapEx) to variable operating expenses (OpEx), and applying Amazon EC2 Auto Scaling to dynamically provision instances to handle the seasonal holiday spikes and terminate them afterwards minimizes Total Cost of Ownership (TCO) by leveraging elasticity.
The transition from physical server depreciation and licensing to pay-as-you-go billing is correct because it shifts capital expenses (CapEx) into operating expenses (OpEx), reducing upfront costs. The dynamic usage of Amazon EC2 Auto Scaling is correct because it utilizes elasticity to align resource supply with real-time demand, removing the financial burden of running idle servers during off-peak periods.

Step-by-Step Solution

1
Identify the financial transition
On-premises costs (server depreciation and upfront virtualization hypervisor licenses) are Capital Expenses (CapEx). Migrating to AWS pay-as-you-go billing replaces these with variable Operating Expenses (OpEx).
Understanding CapEx vs. OpEx is the foundation of cloud economics.
2
Assess workload characteristics and apply elasticity
The holiday spikes represent a 300%300\% surge that is temporary. Applying Auto Scaling dynamically handles the spikes and terminates instances off-peak, minimizing idle resource costs.
Elasticity is the direct countermeasure to the cost of idle capacity.
3
Evaluate baseline requirements against EC2 pricing options
The baseline of 1010 servers requires 24/724/7 constant availability. Spot Instances are interruptible and unsuitable here, while Reserved Instances are best suited for this steady-state baseline, not the seasonal spikes.
Matching the correct pricing model to the workload profile prevents availability issues and cost inefficiencies.

Key Concept

Cloud economics relies on transitioning CapEx to OpEx, minimizing Total Cost of Ownership (TCO) through elasticity, and selecting the appropriate pricing models for different workload profiles.
Estimated Time:3m 0s
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