As AWS usage accelerates, how can organisations control their cloud costs?

Cloud spending has proven highly resilient to the economic effects of the COVID-19 pandemic.

According to tech market research firm Canalys, worldwide spend on AWS and other cloud providers in Q2 2020 actually rose 11% quarter-over-quarter, and 34% year-over-year. This increase, over a time period when many industries struggled with diminished investment and revenue, makes sense in light of widespread demand for:

• Newly virtual workplaces: Per The New York Times, in some metro areas 10% or less of commercial office space had returned to pre-pandemic activity levels by September 2020, as workers relied instead on cloud-based collaboration tools.
• On-demand entertainment: From video streaming to online gaming, the defining entertainment experiences of 2020 all require robust, scalable cloud infrastructure. Accordingly, providers in this space have continually ramped up their cloud spend.
• More economical IT infrastructure: With people no longer coming to the office (or the cinema, or the gym, etc.) as often, existing investments like company data centers don’t make as much sense, and many are being migrated to AWS.

In other words, AWS usage in particular has risen sharply. Amazon CFO Brian Olsavsky specifically cited “videoconferencing, gaming, remote learning [and] entertainment” as strong sectors for the company during an earnings call.

But for AWS customers, this shift toward higher consumption can create more problems than it solves, if cloud costs are not properly controlled from the start. Speaking to The Register, a KPMG advisor described the common situation of a company spending more in the cloud than it anticipated, and furthermore identified several key challenges that must be addressed for economical cloud consumption:

• Cloud cost optimisation being pursued separately (siloed) from application development.
• Failing to take advantage of newer cloud services and savings opportunities.
• Being overwhelmed with possible options and not knowing where to begin.

Fortunately, there are some reliable strategies for optimising aws cloud costs without compromising performance or excessively burdening your team. Let’s look at a few tips.

1. Refactoring for AWS

A lift-and-shift migration can ultimately be costlier than taking the time to refactor an application for AWS. That’s because moving older infrastructure as-is, with no refactoring, to the cloud can actually increase costs, since it’s designed to run all the time and doesn’t match resources with changes in user demand.

AWS itself has documented how refactoring has helped organizations such as The New York Times reduce the cost of running their business-critical applications by as much as 70%. Moreover, AWS has created a guide to what is called “minimal viable refactoring” an approach to refactoring on a relatively short timetable (2 weeks) to make sure an app meets all performance, security and compliance requirements without slowing down momentum on other projects.

2. Combining Reserve Instances with Savings Plans

Savings Plans immediately became a staple of AWS cost optimisation strategies when they debuted in 2019. Savings Plans are much more practical than Standard Reserved Instances (RIs), offering significant discounts versus On-Demand pricing without the same commitments (e.g., instance type) required for RIs. Although bear in mind that RI’s can be sold on the Reserved Instance Marketplace if you over-commit, you can’t do that with Savings Plans, so there is still a case for Standard RI’s from a risk perspective in certain circumstances.

At the same time, Savings Plans haven't made Convertible RIs obsolete, and in most cases a combined Compute Savings Plan + Convertible RI strategy will be ideal. Tecflair has developed techniques for optimising Convertible RIs by term to provide even more value and flexibility and partners with ProsperOps to deliver a fully automated SP/RI optimisation service which delivers 68% increased savings for clients on average.

3. Upgrading AWS management tools

It’s time to expand beyond AWS Cost Explorer, as adding other tools can increase your visibility, streamline SP-RI management and identify additional opportunities for savings, whether through refactoring or other means.

Tecflair's offerings provide a launching pad for every organisation's AWS cost management, at a time when AWS usage continues to become more central to business survival. Learn more about how we can help you take your AWS cost management to the next level and save money quickly by scheduling a free discovery call, or follow us on LinkedIn!