Question

Difficulty: HardUnderstand concepts of cloud economics

A retail corporation is planning to migrate its transaction processing database to AWS. Currently, the database runs on on-premises proprietary servers that must be replaced every 33 years at a high upfront cost. The servers are sized to handle peak traffic during holiday sales, meaning they run at less than 15%15\% utilization for the remainder of the year. Which of the following actions best demonstrates how the company can leverage AWS cloud economics to resolve their capacity utilization and hardware funding challenges?

  1. A
    Purchasing dedicated physical host servers on AWS upfront and depreciating them over a three-year period to maintain a consistent capital asset structure on their balance sheet.
  2. B
    Provisioning fixed-size cloud database instances sized to the maximum peak holiday capacity to ensure application reliability, while utilizing upfront payment options for all storage volume demands.
  3. Adopting a pay-as-you-go model with auto-scaling resources that match database capacity to real-time consumer demand, thereby shifting hardware costs to variable operating expenses.Answer
  4. D
    Running the database workloads on Spot Instances to achieve maximum cost savings, accepting that the database instances can be terminated without notice during peak holiday transactions.

Answer

Adopting a pay-as-you-go model with auto-scaling resources that match database capacity to real-time consumer demand, thereby shifting hardware costs to variable operating expenses.
Adopting a pay-as-you-go model with auto-scaling database resources allows the company to pay only for the capacity they use, transitioning their high upfront physical hardware costs into variable operating expenses (OpEx) while automatically scaling down during off-peak times.

Step-by-Step Solution

1
Analyze the existing infrastructure challenges and requirements.
The retail company has high upfront capital expenses (hardware refresh every three years) and low utilization (under fifteen percent for ten months of the year) due to sizing hardware for peak demand.
Understanding the current financial and operational bottlenecks helps identify the relevant cloud economics solutions.
2
Identify the cloud economics principle that replaces upfront physical hardware purchasing.
Shifting from Capital Expenditures (CapEx) to Operating Expenditures (OpEx) allows paying only for resources used.
This shift addresses the high cost of the periodic physical hardware refresh cycles.
3
Determine the cloud capability needed to solve the low utilization issue.
Elasticity and auto-scaling dynamically match capacity to real-time demand.
Elasticity ensures the company does not pay for idle capacity during off-peak months.
4
Select the strategy that combines both CapEx-to-OpEx shift and elasticity.
Adopting a pay-as-you-go model with auto-scaling database resources.
This strategy eliminates upfront hardware refresh costs while dynamically scaling resources to match consumer demand, optimizing overall costs.

Key Concept

Understand concepts of cloud economics
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