5 ways to optimize cloud costs in AWS

Nov 25, 2021
Rose Maria Pius

As an AWS Advanced Partner and managed service provider, we have collaborated with various clients to help set up their businesses in the cloud in a customized way. We've handled different workloads over the years, including migration to the AWS Cloud, hosting, and ‒ most importantly ‒ providing AWS managed services. Using cloud platforms to achieve business goals offers great flexibility, and significant cost savings over a traditional setup. With the advent of pay-as-you-go pricing, zero capital costs, and an extensive range of products and services, cloud-native business organizations have redefined their IT-based financial processes. Without sustainable financial planning and proactive cost management, the inherent scalability and elasticity of the cloud could result in unforeseen expenses. Hence cost optimization in cloud is crucial to reduce costs while maximizing the business value.

What is cost optimization in cloud?

Cost optimization is not just about reducing an organization's expenses to maximize profits. It is a persistent and focused approach aimed at leveraging the most suitable architectural designs to maximize business value. It is about planning and implementing processes and solutions that meet the business outcome with the lowest possible cost. At EPI-USE, we insist on a transparent and cost-conscious approach by highlighting cost savings and proactively addressing cost-related concerns. We ensure that our DevOps and Finance teams are equally involved in providing inputs when optimizing costs, without compromising the system performance.

Here are five ways to optimize cloud costs:

1. Right-sizing

Right-sizing is the process of regularly fine-tuning the size and type of resources to align with the workload capacity and performance at the lowest possible cost. Given the extensive scalability and elasticity of AWS Cloud, it is crucial to streamline your instances to minimize cloud wastage. This, in fact, should be a strategic and continuous process, which involves closely monitoring the performance and usage patterns of your resources. Our DevOps team takes extra efforts to ensure that the resources are well utilized to maximize the cost savings.

AWS offers several tools that help us monitor and make informed decisions on optimizing cloud costs.  AWS CloudWatch is a primary monitoring tool that integrates seamlessly with a wide range of AWS services. It provides actionable insights and helps optimize resource utilization. Basic CloudWatch metrics, like CPU utilization, network throughput, and disk I/O, can be extremely useful in knowing how your resources are being used on a day-to-day basis. You can also create custom metrics and alerts, according to your needs, to get notified when the values cross a certain threshold. For example, you can create a billing alarm using CloudWatch to receive alerts when the estimated AWS charges have crossed a specified threshold.

Compute Optimizer is an extremely useful tool that AWS provides at no additional cost. It analyses the configurations and utilization pattern of resources like EC2, EBS, and Lambda functions, providing right-sizing recommendations. This facility can help achieve substantial cost savings. Apart from this, you can also access Cost Explorer to receive EC2 right-sizing recommendations. AWS Trusted Advisor is yet another service that provides real-time insights into service usage. Accounts with active Business and Enterprise support plans can leverage all 14 Trusted Advisor cost optimization checks. It also alerts us when there are idle and underutilized resources so that we can modify the cloud environment to save costs.

2. Reservations and savings plan

Organizations can achieve significant cost savings through capacity reservations offering discounted hourly rates (up to 72 percent) compared to on-demand pricing. By committing to service usage for a term of one or three years, businesses can lower their service charges while improving their pace of innovation. To get started with monitoring your reservation usage, you can make use of Cost Explorer's RI utilization report. The report provides detailed insights into reservation-related savings, utilization information, and coverage, along with an indication of under-utilized reservations.

AWS has recently introduced 'savings plans'. These are more flexible than classic reserved instances. While savings plans offer discounts based on the committed spend, they have the same payment options and commitment terms as reservations. Compute savings plans can be applied automatically, regardless of the instance type, size, region, OS, or tenancy.

3. Leveraging Amazon EC2 Spot Instances

When it comes to fault-tolerant, stateless and flexible applications, Spot Instances are a great way to save costs. AWS Spot Instances offer a 90 percent cost reduction over on-demand pricing. Organizations can take advantage of the spot prices when they have flexible applications ‒ like big data, high-performance computing, data analysis, and other test and development workloads ‒ at just two minutes’ notice. By effectively leveraging a combination of spot and on-demand instances, businesses can achieve significant cost savings while optimizing workload availability and performance.

4. Migrating to latest generation instances

AWS offers a wide array of products and services, while continuously improving and releasing new versions to align with better price performance. As a managed service provider, we are on a constant lookout for the latest generation resources which offer better results at a lower price than their predecessors. Upgrading your cloud infrastructure with current generation resources ensures significant cost savings and improved application performance. Most recently, AWS has released Graviton processors, which achieve significant cost savings and better performance than AMD and Intel counterparts. We have recently upgraded many of our customer RDS database instances from current version to Graviton, to achieve better price performance.

5. Periodic and frequent auditing of accounts

We recommend that you monitor your cloud infrastructure periodically. This practice will identify and eliminate obsolete resources, and help to minimize costs. There can be instances when resources (like unattached EBS volumes or Elastic IPs) can contribute to significantly higher costs by the end of the month. These circumstances can certainly be avoided if we develop a cost-conscious culture in the cloud. Environments ‒ like sandbox, test and QA ‒ need to be closely monitored as they tend to be more user permissive. It is critical to set essential guard rails to achieve financial targets and gain greater business efficiencies.

Establishing an efficient financial management process is the key to optimizing cloud costs. This should be an ongoing process with constant efforts to build modern, cost-efficient, scalable, and highly available applications to meet your needs. The most important step in understanding your cloud costs is to have real-time visibility of your service costs and usage, allowing you to identify the major cost drivers. AWS provides a range of tools, including Cost Explorer and Cost, and usage reports to visualize and analyze your AWS spend better. You can leverage these tools to access detailed and granular billing information. Having access to these datasets helps organizations become more efficient by allowing them to make fact-based, timely decisions, leading to stronger business outcomes.

Author:

Rose Maria Pius: Finance Analyst, EPI-USE Services for AWS

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