Is the prospect of optimizing your AWS costs making you lose sleep at night?
Having been sold on the huge benefits of switching from large capital investments to pay-for-what-you-use OPEX, you may be disappointed when your new cloud provider (AWS, Azure, GCP etc) hits you with a surprisingly large bill to pay.
You might feel like you were misled, that the cloud isn’t cost-effective after all! The truth is it all depends on how you use the cloud. Use it in the same way as your traditional architecture, and it will cost you even more. If you understand how to use cloud resources, your AWS costs will fall, your resilience will increase and your capacity will grow.
Today Tecflair’s CEO Dave Phillips talks about exactly how you can overcome these AWS challenges and get to a place where you’re happy with your AWS bill.
What does an effective AWS cost-optimization practice look like?
Ultimately you want to get to a point where you don’t have to worry or think about AWS cost optimization. Imagine if all of your processes were in place, and your team understood how important it is. You’ve automated as much as you possibly can, and there’s an operational ethos in place where people consider the AWS pricing and cost elements as they’re executing the engineering aspects of building infrastructure, updating it, building software, and so forth.
Finance & Tech
Sometimes the finance teams and the engineering teams almost feel like they’re at loggerheads with each other, with the engineering team being really passionate about resilience and reliability and performance, and the finance team being really passionate about keeping the cost down. But of course, the two don’t have to conflict in any way.
You can keep the AWS cloud costs down while still having complete resilience and reliability, which is always the number one requirement. No finance person would want to see a platform crashing because they’ve skimped too much on the cost, because then they know they’re going to lose all their customers, and their revenue goes away in the front end. So, building that bridge between finance and engineering is critical, along with everyone understanding that it doesn’t have to be a compromise.
With this in mind it’s important to set out the goals and objectives for your AWS cost optimization efforts; where are the lines that you can or can’t cross? Setting a framework that everyone understands and agrees with, gives permission to everyone involved to do what is necessary to achieve the objectives that you agreed on together.
AWS Cloud can be a lot more expensive than running in a traditional infrastructure if you don’t set it up properly – taking advantage of the discounts that are available from AWS, and the flexible methods of pulling that infrastructure together.
So, what you need to do is build an AWS cost optimization strategy right from the beginning. If you haven’t built it in from the beginning, then now is the next best time to start. Set it up so that everything you do moving forward is fully optimized.
How to start optimizing your AWS costs
Understand Your Current State
The first step is to get a good discovery process in place. This doesn’t need to be a really long one. Don’t get bogged down in it. It doesn’t need to take weeks or days, just a few hours is a good start. As long as you’ve got some basic data in place already, then you can figure out where you are in your AWS cost optimization journey.
And also, what are your objectives? Where do you want to get to in the cost optimization process? The rest of the steps are to build a bridge between those two places: where you are now, and where you want to get to. That discovery step is essential at the beginning.
The next step is to look for quick wins. I’m passionate about 80/20, or the Pareto principle, because it’s really important in AWS cost optimization to look for the areas that are going to give you the biggest return quickly. It might be 80/20, it might be 90/10 in the fast moving internet world that we’re in.
So look for those opportunities to make savings that are going to take only 20% or 10% of the effort and deliver 80% or 90% of the returns.
One of the areas which is very easy to apply 80/20 to is your AWS discount strategy. Often companies are under-optimized in terms of the way they use the discounts (i.e. reserved instances & savings plans) that they purchase from AWS services. Some companies will have an enterprise discount program in place which layers on top of all of their reserved instances and savings plans, if their spend is high enough (usually over $500k per annum).
It’s not at all unusual that for a very small amount of work using optimization software and tools, that you can be up and running within a matter of a few days, and making huge additional savings.
One company we recently worked with made an additional hundred thousand dollars a month in savings on their AWS bill within the first three to four weeks, and half of that was achieved in the first week. They are now making almost double that a year later. Because the strategy improves over time you are effectively getting three year discounts with a much, much shorter time commitment.
Build a Strategy
Following these quick wins it’s really important to build your strategy out. Get some coaching if you need to, but have a clear strategy of how you’re going to get the AWS cost optimization process embedded in the business, working with all of your teams so there’s no conflict. This should give you a clear picture and plan of how you’re going to get to that ultimate point, the objectives we discussed as part of that discovery process, and then finally it’s about implementing that plan.
If you have a process in place where you’re looking to figure out where you are and where you want to get to, find the quick wins (savings plans & reserved instances), and then get a strategy in place for the longer tail and the longer term. Then you can’t go far wrong, you’ll have a pretty solid process in place.
The top three points for how to reduce your AWS costs
1. Get your discount strategy (savings plans & reserved instances) right and get those quick wins in place, this will have a massive impact.
2. Make sure you’ve got your dashboards in place so you understand the different AWS costs and the usage parameters around the services that you are running. That allows you to optimize that side of things. Data is really critical; you want to be able to measure how well you’ve been doing as well as what the opportunities are.
3. Look for that top 20% of the rightsizing opportunities, or top 10%, that are going to give you huge wins. This can be a really significant saving.
Implementing these steps will ensure you start seeing those promised benefits of cloud computing with AWS, and can sit back knowing that you’re not leaving money on the table.