AWS Cloud Cost Optimization — Benefits, Pricing, Strategies
Most businesses either have a cloud migration strategy or have already moved. Cloud is simply better than on-premises and not just because of lower costs.
Those who have already adopted the cloud have their own reasons for switching to the cloud, from security concerns and industry protocols to productivity demands and modernizing workspaces. The truth is that all companies can find real value in switching to the cloud.
And, if you are the one still pondering over “To move or not to move” on the cloud, there are a lot of factors you might want to take into account — from the benefits and the risks to the cloud service model, costing and type that is right for your business.
In this article, we’ll have a look at the high-level elements that you should consider as you contemplate a move to the cloud and those companies who have already adopted can discover how to optimize your cloud consumption cost.
Why is everyone moving to cloud?
Cloud-based businesses are reaping enormous benefits today in terms of cost savings, increased productivity, and enhanced security. In fact, according to Forbes, 74% of tech chief financial officers felt that cloud computing had the most measurable impact on their business.
Deloitte’s survey of more than 500 IT leaders and executives reveals that security and data protection is the top driver to initiate cloud migration. The №2 driver for cloud migration, data modernization, primarily involves moving data from legacy to modern databases. Cost and performance of IT operations have long been a significant driver for cloud adoption.
The exact drivers will vary according to the aims of the business, but cost savings is always one of the main drivers behind cloud migration, after all every organization is interested in cutting costs. More typically, the other drivers behind moving applications to the cloud are speed, agility, and innovation.
Benefits of cloud migration
There are many problems that moving to the cloud can solve like reduced costs with pay-as-go model, easier and improved collaboration, flexibility as cloud-based services are ideal for businesses with growing or fluctuating bandwidth demands, reduce operational costs, disaster recovery, security, scalability that allows you to purchase additional storage instantly at any time, and tracking and upgrading underlying server software.
These are just a handful of reasons why businesses migrate operations to cloud. No doubt, cloud is affordable, it is scalable, it creates a better end-user experience, and the cloud makes every company an innovative one.
Cloud Costing models — AWS Pricing Model
Amazon Web Services (AWS) provides a number of pricing models based on the needs of various types of IT needs. It offers a pricing model that operates on-demand and issues charges based on actual consumption and cloud usage.
To choose the best Amazon pricing model for your organization it is necessary to identify which services use which pricing models, especially when you’re first starting out.
Carefully consider the pros and cons of the Amazon pricing philosophy before starting any large-scale engagement. It is simply not enough to go by the pricing options listed on AWS’ website. Ask AWS to provide full transparency into pricing and discounting scenarios you are considering. Once you get clarity on the pricing models, you can start to optimize your infrastructure costs and get the most out of the Amazon Web Services platform.
Cloud Cost optimization
According to 451research, 90% of companies are on the cloud. This means the cloud is already in the mainstream. Businesses across the industries are increasingly moving towards cloud. Since the workloads are processed by cloud data centers, the enterprise cloud expenses are substantial and growing rapidly. Optimizing the costs of the cloud is therefore one of the top priorities for organizations.
The cloud helps companies to shift their resources in terms of assets, facilities, and labor. This shift allows a company to change its IT focus from maintenance to innovation. Companies partner with providers to manage their infrastructure while using SLAs as controls to ensure IT delivery. The resources previously managing the infrastructure are now shifted to utilize their expertise in innovative ways to help the company grow. Resources shift from reactive to proactive, from routine to creative, from cost center to growth center. This is how we define cloud cost optimization.
(Source — Atos)
As cloud continues to grow, Amazon Web Services (AWS) increased its investments offering technology and competitive pricing to attract more companies. Amazon Web Services is the leading cloud vendor with a 32% share.
AWS offers several services and pricing options that can give your organization the flexibility to manage both your costs and performance. And while it is relatively easy to optimize your costs in small environments, to scale successfully across large organizations you need to follow certain operational best practices and process automation.
So, if your last AWS bill left you feeling a bit strapped for cash, here are some ways to stay aware of the true cost of using Amazon’s services.
Cost optimization techniques — Take control of AWS Billing
According to Gartner, as much as 70% of cloud costs are wasted.
Let’s accept it — Cloud is a utility and therefore all your cloud services need to be optimized with appropriate cost allocation.
If your company uses AWS, chances are you’ve considered developing a cloud optimization strategy. Since AWS resources can infinitely scale, many organizations lose control of the costs if the cloud services are not effectively provisioned or properly governed and managed.
Rather than be surprised by your next AWS bill, a good cloud optimization strategy could potentially save an organization thousands, if not millions of dollars per year.
Following are some ‘everyday-to-follow’ best practices for AWS cost optimization to ensure that you keep saving on AWS -
- Right-Sizing
If you have been deploying resources on AWS for a while, it might be time to consider EC2 right sizing. It is likely there will be a number of EC2 instances in your AWS account that you are paying for but not using to their full capacity. The cost benefits of the cloud cannot be fully realized unless your workload is accurately right-sized. It’s essential to continually perform in-depth right-sizing analyses to maximize your ROI. - Optimizing Amazon S3 Storage Classes
Many companies do not clean their data on S3. Storage is cheap and infinite, but it is not a valid reason to keep all your data there forever. It’s important to know why and when to use each class to optimize your costs. You can set up rules to automatically move data objects to cheaper S3 storage tiers as objects are accessed less frequently or to automatically delete objects after an expiration date. To manage storage data most effectively, you can use tagging to categorize your S3 objects and filter on these tags in your data lifecycle policies. - Purchase Reserved Instances
Purchasing Reserved Instances is an easy way to reduce AWS costs. Leverage Reserved Instances as it can save up to 75% of the total cost. With Reserved Instances, you can plan your budget in a better way and easily manage projects with long-term commitments and minimum risks. But with RI it can also lead to increased AWS costs if you don’t utilize the Reserved Instance as much as you expected to. Effective management of Reserved Instances as an AWS cost optimization is the best practice. Hence, it is very important to analyze the historical usage and accurately estimate the future requirements. - Strategic Use of Spot Instances
Spot Instances is another remarkable way to save money for unused workloads. Spot Instances allow AWS to allocate their unused capacity to users at reduced rates, with conditions surrounding their continued availability. Spot instances are bought using some sort of auction model. If your bid is above the spot market rate you will get the instance and you only pay the market price. The prices of Spot Instances vary on the basis of current demand. Spot Instances can be terminated with two minutes of notification and returned to AWS as the capacity is needed. - Set up AutoScaling
AutoScaling in AWS is an option that helps you add additional resources whenever required, and you can always shut them down when the peak times are over. Autoscaling also has a better fault tolerance and helps in better cost management. AutoScaling is a very efficient way to cut down costs, but this isn’t the only advantage you get — you also get to shut down unhealthy instances and start a different one. With autoscaling in the cloud environment, IT managers no longer need to worry about leaving space for spikes in traffic. - Turn off unused and idle Infrastructure
- Reduce EBS costs — Constantly check whether all the EBS (Elastic Block Store) volumes are being used and deleting unused EBS volumes can reduce a big amount from the monthly AWS bill.
- Detect unused elastic IPs regularly — Elastic IPs, when unused, cost money! Detect such unused EIPs that are attached to stopped instances across regions beforehand to use them effectively for optimal AWS cloud cost savings.
7. Build a Culture of Cloud Cost Awareness
Cloud cost is everyone’s responsibility. Consider making cloud cost optimization a cultural priority for your company. Implementing cloud cost culture empowers the whole company to take charge of their cloud spend. Take steps to instill in employees an awareness of best practices to follow for optimizing cloud costs
As stated in Amazon’s Creating a Culture of Cost Transparency and Accountability whitepaper -
Many variables affect cost, and different levers can be pulled to drive operational excellence. The following are examples of different teams that need to consider cost optimization:
- Engineering needs to know the cost of deploying resources and how to architect for cost optimization
- Finance needs cost data for accounting, reporting, and decision making
- Operations team makes large-scale decisions that affect IT costs
- Business decision-makers must track costs against budgets and understand ROI
- Executives need to understand the impact of cloud spending to help with divestitures, acquisitions, and organizational strategy
Get everyone involved. A culture of cloud cost optimization and cost management can give your company the fuel it needs to succeed in a changing marketplace. But these changes don’t happen overnight. It takes the right strategy and careful execution.
Cost Optimization with Cloudinspot
As organizations are leveraging public cloud infrastructure as a part of their “Go digital” or “Cloud-first” strategy, the operational expenses are increasing and causing an imbalance in IT capital (CapEx) and operational expenses(OpEx).
Scalex is introducing Cloudinspot — a scalable platform designed specifically for cloud cost monitoring and optimization, where you can manage your entire AWS cloud infrastructure, at a single place. Cloudinspot is built to help you understand, analyze, optimize, and track your daily cloud usage achieving significant cost savings while ensuring the highest level of compliance.
As AWS usage increases across multiple product teams, Cloudinspot can help you -
- Control and optimize your cloud spending
- Track your AWS services usage bills
- Get interactive custom reports
- Easy integration with AWS and Slack accounts
- Maintain your budget and avoid unexpected usage bills
It’s time to start taking control of your cloud costs! Integrate Cloudinpsot with your AWS and Slack account now — www.cloudinspot.com
Bringing it together!
That’s all — our future is in the cloud.
Reducing costs becomes imperative, but without clear insight into what drives your spend, strategic cost reduction is impossible. AWS cost optimization is an ongoing process. However, as long as cloud cost optimization strategies are followed, many unwanted infrastructure expenses can be easily avoided.
Remember, visibility and vigilance into the cloud are your best weapons to optimize your applications and services and ensure you protect your organization’s bottom line. Always ensure that your cloud spend is productive and efficient, without diminishing your users’ experience.
Until then, stay safe and keep the business rolling!
