A large part of any IT budget today is sent to cloud providers like Amazon Web Services (AWS.) Understanding your cloud bill and learning how to budget for the cloud is a vital concern for you. Discovering ways to become more cost-effective with your cloud bill is a constant activity for most.

With so many different services and products, AWS offers significant benefits. Yet, that same variety and scalability can cause companies to spend more than they need to, and costs can quickly spiral out of control.

AWS spending can be difficult to analyse without a strategy of identifying the source costs and how to manage them. Ignoring or not understanding them can quickly undermine your IT budget and profit margins.

It’s why Amazon has developed specialised tools, economic models, and cost-saving best practices customers can use to develop their own AWS cost optimisation strategy. Further, applying these tools to an internally-developed cost optimisation strategy will help streamline workloads, shed light on IT systems, and save costs at every stage of your IT lifecycle.

We’ve created this guide to AWS cost optimisation so you can lower your AWS bill without compromising app performance, redundancy preparedness, and company productivity, and attain the maximum return on your AWS investments

Why optimise costs for AWS?

There are three main reasons to optimise AWS costs:

1. Cost savings: Reduce costs by only paying for what you need. Identify data and resource which at certain points in time may no longer be required; Whilst sizing and adopting the most appropriate model for your essential workloads. Rightsizing workloads lets you take advantage of higher return pre-purchased discounts while ensuring productivity and performance are unaffected. Insights and attribution of costs across your workloads enable you to calculate ROI.
2. IT agility: Cost optimisation can free up resources to finance more projects that serve customer needs or improve existing workloads.
3. Streamline workloads and services: With all the services AWS offers, you may be paying for ones that aren’t needed or are redundant. AWS provides recommendations based on past customers and industry knowledge to help you choose the most suitable options for your business.

In the Flexera 2022 State of the Cloud Report, they estimated that 32% of their organisation’s cloud spend was wasted. If you don’t have an AWS cost optimisation strategy that helps you monitor costs, you might be in for regular expensive cost overruns.

What is cost optimisation in AWS?

Traditional cost optimisation relies on techniques that look at anything that reduces the overall budget or spend. It often only looked at ways to reduce overall costs and spending rather than analysing whether the chosen options were appropriate for your business. For example, some companies are obliged to take any discount a vendor offers even if it’s not relevant to the business need.

Amazon have developed a toolset that helps align IT and finance departments on AWS spending so everyone can make informed decisions that improve profitability without throttling resources and performance.

AWS cost management tools

AWS provides customers with a broad set of free cost management and optimisation tools. They help you gather and analyse data, make better decisions, and create automated rules that help you save money on AWS.

AWS Billing Console

The AWS Billing console provides access to your invoices, and summaries spend and trends. Tagging and cost allocation can be used to filter cost and usage reports by customer defined groups such as project or department. Consolidate AWS accounts to create one billing group for each project or budget within your company. Review free tier and carbon footprint data.

AWS Cost Explorer

AWS Cost Explorer provides flexible reporting and visual analysis of your AWS cost and usage over time. It offers various granular views, filters and forecasts to help you explore and understand your costs.

AWS Budgets

The AWS Budgets tool enables you set and track budgets for your AWS spend. Budgets can be set against a wide range of cost and usage metrics, and triggered on actual, forecast or dynamically adjusted cost. The tool enables a variety of setups from the course tracking overall monthly costs against company budget, to the finer grained monitoring EC2 running hours. Budgets enable a limited set of actions in response to breached thresholds; In addition to this they are integrated with Chatbot, notification service and email services.

AWS Trusted Advisor

For those on the Business Support tier or higher, AWS Trusted Advisor provides a set of cost optimisation checks. It might identify low EC2 instance usage, unassociated elastic IP addresses, idle load balancers, and more. Trusted Advisor then offers suggestions for fixing the issue, such as recommending you delete unused EC2 instances to reduce your monthly bill.

Amazon CloudWatch

CloudWatch monitors your AWS apps and resources in real-time. It collects and displays data in the console, either in prebuilt views or in custom dashboards you can create for your own AWS environment. It monitors metrics and sends notifications or alerts based on rules you define. You can even configure it to automatically change monitored resources when thresholds are reached. For example, it can automatically launch additional instances when CPU usage reaches a certain threshold or stop underused instances if they remain idle for a certain length of time.

How does AWS help lower costs?

Most of the AWS cost optimisation tools send notifications and alerts to IT staff so they can address cost issues before they grow too big. They can use the built-in reporting to track AWS usage to better understand which services are used most and why. IT teams can use them to better report on AWS costs to finance and upper management, who use the information for forecasting and planning.

From a business perspective, a good AWS cost optimisation policy aligns cloud costs to the business metrics that mean the most for your company, such as cost per customer, feature/transaction, cost of goods sold (COGS,) and more. AWS cost optimisation also shows teams how each project affects the overall company’s bottom line, competitiveness, and the ability to fund future growth.

However, using AWS cost optimisation tools isn’t enough to lower costs. You also need action to ensure you’re keeping costs as low as possible without affecting performance and productivity.

Best practices for AWS cost optimisation

Here are some AWS cost optimisation practices you can incorporate into your overall IT cost optimisation strategy to reduce your spending.

1. Introducing policies, practices and tooling that enable you to attribute and control your cloud costs.
2. Rightsize resources to match your needs. Analyse utilisation metrics to move workloads to different resources that better suit their needs.
3. Schedule workload on/off times to better use AWS resources unless they need to run all the time.
4. Delete unattached EBS volumes automatically by selecting the “Delete on termination” box when launching the instance. Otherwise, the volume still exists and feeds the monthly AWS bill.
5. Release unattached Elastic IP addresses. Customers are typically only allowed a maximum of five Elastic IP addresses per account if they’re not attached to a running service. Those are free.
6. Do not remap Elastic IP addresses more than 100 times a month, as you will be charged once you go over that number.
7. Purchase Reserved Instances (RIs) to save on stable workloads and use on-demand and spot instances for the rest.
8. Save only the most recent backups and delete older ones since you’d probably restore data from the recent ones in the event of a disaster.
9. Terminate or delete any unused or “zombie” AWS asset. AWS Cloud includes so many different services and resources that it can be hard to track them all. Assets not already mentioned that fall into this category include Elastic Load Balancers and instance components that were activated even if an instance failed to launch.
10. Leverage AWS services to reduce costs where appropriate. AWS Cloud offers so many services and resources that they may have one that is more cost-effective than building and managing your own. E.g, Use AWS Lambda to save on cloud costs and operational overhead for apps or processes with short-lived runtimes or use AWS CloudFront instead of your own content delivery network (CDN).
11. Move infrequently-accessed data to lower-cost tiers. AWS offers multiple data storage tiers at different price points that are charged based on data access frequency and speed. For example, retrieval fees apply to lower pricing tiers, but not the higher ones and higher tiers offer faster data retrieval speeds.
12. Stay updated on any pricing changes for the AWS services you use. E.g., the AWS Redshift and ElastiCache services recently changed their up-front payment discount structure to mirror the RI fees.
13. Upgrade to the latest AWS instance generations to take advantage of improved performance and functionality.
14. Regular third-party well-architected reviews support by including cost optimisation suggestions on a per workload basis.

 

Cloud costs can eat up large portions of any IT budget today. AWS makes it a little easier to optimise costs with their free tools. However, a good AWS cost optimisation strategy ensures you’re doing everything possible to control costs and AWS spending.

We hope that this article will give you some great starters for optimising your AWS costs, whether you’re using automated tools to monitor and regulate EC2 instances or using CloudWatch to monitor your AWS infrastructure in real-time.

To level up your AWS cost optimisation, reach out to our AWS experts today. We can help you take your savings to the next level without extra effort or time, becoming an extension of your trusted team.