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5 Cost Optimization Tips from the AWS Summit Online

Julie Elkins
Julie Elkins

Who attended the AWS Summit Online? I did! I was so excited that the summit was being offered online and not cancelled. It is important to remember that this is a learning conference to help us grow, learn, and build. The keynote was given by Werner Vogels, AWS CTO, and I was so happy to hear him talk about fundamentals and the AWS Well-Architected Framework.

The Summit sessions had a heavy focus on cost optimization and AWS has also added questions on cost optimization to the new updated AWS Certified Solutions Architect Associate exam SAA-C02.

So let’s cover my top 5 cost optimization tips from the AWS Summit Online.

Understand what cost optimization is

AWS cost optimization is defined as the ability to run systems to deliver business value at the lowest price point. So AWS focuses on the value that you deliver to your customers at that price point.  By using cost-effective resources and optimizing your environment, you can do more than you are doing now or that you were doing before AWS.  We have to look at the value that we are producing as well as the cost.

As Vogels reminded us in his keynote, it all starts with AWS fundamentals.  Do we have an account structure, defined metrics to track, policies and procedures for our environment?  Most organizations have a financial team, a security team, as well as an operations team to manage their IT resources.  But do you have a cost optimization team to make sure we are using the most cost-effective resources, sizes, and pricing models for our systems?

Make cost optimization in AWS everyone’s job

Your teams can now spin up resources without the financial team’s approval. There are no longer the traditional requests submitted for approval to the financial team. Engineers can now create new resources as they are needed, no more pre-planning and provisioning.

So how do we track this new freedom to create resources on demand? Well, we give the team’s responsibility for their costs. We can create a tagging strategy to go along with the account strategy so we can visually see where the costs are coming from.  When teams are aware of their costs, they have more responsibility to run more cost-effective systems.

Use the AWS Well-Architected Framework

I love the AWS Well-Architected Framework for designing and running systems.  There are tons of design principles, foundational principles, and best practices that you can use to make your systems more efficient, more reliable, and (yes) more cost-effective.

Master the Well-Architected Framework with this course from ACG’s Mark Nunnikhoven.

  • Expenditure Awareness is simply knowing who is spending what and why. Most organizations have multiple teams and being able to attribute the resource costs of individuals or teams will drive more efficient behavior and reduce that overspend.
  • Cost-Effective Resourcing includes using the appropriate instances and resources for your workloads.  Appropriate service and resource selection can reduce usage and costs.
  • Matching Supply and Demand is huge!  In AWS you can provision your resources to match your demand.  You can use auto scaling to match the changes in your demand. You no longer need to over-provision or have under-provisioned systems.
  • Optimizing Over Time is critical, because your cloud environment is always changing.  So we have to note those changes and make sure we are still using the best resources available to save money. And one thing that can truly help is to …

Create CFM and a CCoE

Cloud Financial Management (CFM) is a way to help your operations team and your financial team work closely together to manage costs and help create that needed balance between the agility of AWS and costs.  We have to define our metrics and goals and then track the progress of meeting those goals.

A Cloud Center of Excellence (CCoE) is a team in your organization that keeps current on AWS services to make sure you are using the correct and most cost effective resources to run systems.  Your CCoE can help make sure you are measuring, monitoring, and improving not only your system’s performance and optimization, but also choosing the appropriate sizes, pricing models, etc. for continual cost optimization.

And last but certainly not least…

Use the AWS Savings Plans

Savings plans are a commitment based discount. You make a commitment for 1 to 3 years and a certain level of spend and then you get a discount for making the commitment. This is very similar to Reserved Instances which can offer a 70% savings off the on-demand instance cost.

Let’s walk through the AWS discount history.

  • After Reserved Instances, AWS introduced Regional Reserved Instances which added flexibility to the Availability Zones.
  • Then AWS introduced Size Flexibility which gives us flexibility again around the availability zone but also the size of the instance with a discount of up to 72%.
  • Next AWS introduced Convertible Reserved Instances, which gave us even more flexibility and more features, but the cost was a bit more expensive. The flexibility was extended from the availability zone, size, and family to also include the operating systems and tenancy.  But these Convertible RIs require more effort; we have to update the changes and also have to be aware of the additional operational costs.
  • And now AWS has introduced Savings Plans, which offer the same flexibility of Convertible RIs but also have flexibility for region and services with a reduced cost.  And unlike Convertible RIs, there are no manual updates needed: the changes are automatic for us.

The Compute Savings Plans work on EC2 instances but also other compute services like Lambda. AWS recommends purchasing savings plans with AWS Organizations, specifically the master account that has no usage, or perhaps a separate dedicated account for savings plans.  Then the discounts flow down across the organization.

I really enjoyed the summit and especially the sessions!  I learned so much and loved the overall reminder that fundamentals and cost optimization are always the best place to start when you design your systems.

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