AWS Cloud Financial Management

5 steps to establishing proactive cloud cost optimization

Cloud cost optimization is a top priority for our customers that is often implemented as a reactive activity instead of a proactive one. But, effective cost optimization is intrinsically proactive. It’s a continual process of refinement and improvement across your cloud deployments that maximizes resource utilization, achieves business outcomes at the lowest possible price point, and meets your functional requirements.

Your workloads may go through several stages starting from initial concept through production. So, it is key that you establish a cost optimization strategy that can proactively by applied throughout your cloud journey.

The 5 cost optimization pillars

We approach cost optimization through 5 pillars:

1. Rightsizing your resources: Understand the true performance needs of your resources, and right size them to be the most cost effective. You can do this by:

  • looking at CPU, RAM, storage, and network utilization to identify instances that could be downsized
  • getting rid of resources that are underutilized or not used at all
  • scheduling resources to start and stop at appropriate times

2. Increasing elasticity: Scale workloads to match the demand to ensure that you are paying for only what you are using. Autoscaling is a free service that allows your workloads to be sized dynamically around the capacity required at a given time. It will help reduce costs due to over provisioning and allows you to scale up when you know of anticipated growth. This way you only pay for the capacity that you need.

3. Picking the right pricing model: Choose pricing models that fit your business strategy, to facilitate payment for services on an as-needed basis, so you can focus on innovation and invention, reduce procurement complexity, and increase business agility and elasticity. Commitment-based purchase models, such as Savings Plans and Reserved Instances, can help you save up to 72% off regular On-Demand pricing. And Amazon EC2 Spot Instances is an excellent way to save up to 90% off On-Demand pricing with no need for commitment or upfront costs. You can also combine Spot Instances with On-Demand, RIs, and Savings Plans Instances to further optimize workload cost with performance.

4.  Matching the right storage class: Select storage solutions that optimizes space and performance for your workload based on characteristics and requirements such as: kind of access method (block, file, or object), frequency of access (online, offline, archival), latency, required throughput, and data availability. You can use multiple storage solutions and enable different features that improve performance and efficiency.

5.  Measuring, monitoring, and improving (consistent optimization): implement mechanisms, processes, and tools that facilitate the other four pillars like:

  • defining and enforcing tagging so that you can appropriately monitor and categorize all resources
  • defining metrics and KPIs to track so that you can define what success looks like in your cost optimization journey
  • enable teams to architect with cost efficiency in mind
  • assign responsibility to different teams to optimize costs and build a center of excellence around cost optimization to further educate the different lines of business

By implementing these cloud cost optimization best practices, you can maximize realized business value by taking advantage of the flexibility, agility, and scalability of cloud technologies and services.

Choosing the right tools to optimize AWS costs

AWS has multiple tools and solutions you can use to plan, understand, monitor, and optimize your cost and usage, such as AWS Pricing Calculator, AWS Cost Explorer, Cloud Intelligence Dashboards, AWS Compute Optimizer, Well-Architected Cost Labs, and so many more.

But how do you know when, where, and how to use them?

🧰Deep dive into optimization methods and tools by watching “Choosing the right tools to optimize your AWS costs“.