This document discusses cost optimization strategies on AWS. It provides examples of cost savings achieved by companies that migrated applications to AWS including a 14 million dollar annual savings for GE. It outlines approaches for architecting efficiently for cost, optimizing usage costs over time, and taking advantage of AWS pricing benefits like reserved instances, spot instances, and different storage options. The document emphasizes optimizing through proactive monitoring and billing tools, leveraging the various EC2 pricing plans, and combining options for further savings.

1. Bas de Natris
Cost Optimization on AWS

2. A Couple Assumptions…
1. You’re using AWS…
2. You like it!!
3. But probably want to
spend less

3. 16MM Ledger Saving Velocity = 50 apps/qtr.
Operational CostsWorkforce ProductivityCost AvoidanceOperational ResilienceBusiness Agility
• 98% reduction in
P1/P0’s
• 77% faster to deliver
business applications
• 52% average
TCO savings
• 35% reduction in
compute assets (792)
• 15 automated bots
developed
• 80% cloud first
adoption
• 15 cloud services
created
• 50 applications
decommissioned
• 8 cloud migration
parties
• Improved security
posture
• Shift to self-service
culture
• Rapid
experimentation
• Reduced technical
debt
• 14M YOY Savings
• Improved
Performance
• Streamlined M&A
Activity
• DevOps in Practice
Progress as of May 2016
14.2M
Investment
Focus
18
Months
311 Apps
in Cloud &
14M YOY
Savings
Sample outcome – GE
http://www.slideshare.net/AmazonWebServices/demystifying-cloud-economics-how-to-build-an-investment-case-for-scale-migration-to-the-cloud-business

4. AWS Pricing Philosophy
More AWS
Usage
More
Infrastructure
Economies
of Scale
Lower
Infrastructure
Costs
Reduced
Prices
More
Customers Ecosystem
Global Footprint
New Features
New Services
Infrastructure
Innovation
We pass the savings along to our
customers in the form of low
prices and continuous reductions
51+

5. 1.
Architect for
Cost Efficiency
„Pay for what You
think you need“
2.
Optimize Usage
Costs
„Pay for what you use“
3.
Take
Advantage
of Benefits
over Time
„Pay for what
you really need“
Cost Optimization with AWS

6. Proactively Monitor Your Account Billing Usage…

7. By Using Detailed Billing Reports and
Enabling Billing Alerts…

8. …Alongside Cost Explorer
http://amzn.to/1zHE2Fj

9. Fit your payment model to your business model: EC2 pricing plans
On-Demand
Instances
Reserved
Instances
Spot
Instances
Pay as you go for computing
power
Flat hourly rate, no up-front
commitments
Pay an up-front fee for a
capacity reservation and a lower
hourly rate (up to 72% savings)
1-year or 3-year terms
RI Marketplace: Buy RIs with
short remaining terms
Pay what you want for spare EC2
capacity: your instances run if
your bid exceeds the Spot price
Potential for large scale at low
cost: When they’re available,
take advantage of 1,000s of Spot
Instances at up to 90% savings
10:00
10:05
10:10
10:15

10. Standard Reserved Instances
• You commit to pay for an instance for one or three years
• We reserve the capacity, and offer you considerable savings over On Demand during the
term
• You decide how you pay:
• No Upfront (Just hourly charges for all hours of the term)
• Partial Upfont (Upfront Payment, plus hourly charges for all hours of the term)
• All Upfront (Upfront Payment only)

11. Self Service Reserved Instance Utilization Reports
RI „Bucket“
On Demand
-
(Usage
+ amortized
upfront fee)
More Information: http://docs.aws.amazon.com/AWSEC2/latest/UserGuide/usage-reports.html

12. • Base Price - On Demand: No Commitment, Pay only what you
use, no capacity reservation but once started no interruption
• 10% less - Scheduled Reserved Instances: Commit to
Schedule of at least 1200 hours for one year, capacity
reservation
• 30-60% less - Standard Reserved Instances: Commit to one or
three years, capacity reservation
• 40-60% less - Spot Blocks: Bid for 2-6 hours blocks of
uninterrupted time
• Up to 85% less - Spot: Bid for instances, interrupted if market
price higher than your bid price, 2mins advanced notice
An EC2 Cost Optimization Option for every Need

13. Combine all the Options!
1. Start by using RIs for
known/steady-state
workloads
2. Set-up multiple autoscaling
groups
3. Autoscale first using Spot first
4. If Spot instances are
unavailable (or priced too
high), use On-Demand
0
2
4
6
8
10
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
/Spot
On Demand
Spot
Reserved Instance

14. Trusted Advisor: Enterprise Strength Monitoring and Optimization
• Monitors and recommends
optimizations for:
– Cost
– Security
– Fault Tolerance
– Performance
• Available to customers with
Business and Enterprise-
level support
• Now four checks available
as free tier! http://aws.amazon.com/premiumsupport/trustedadvisor/
“Over the last couple years, we’ve sent more than 2.6 million Trusted Advisor
notifications that have saved customers over US$350 million dollars.”

15. Trusted Advisor: Cost Optimization Tips

16. Leverage The Right Storage Classes…
AWS Cloud
Amazon
Glacier
Gateway Appliance/ AWS
Storage Gateway
Amazon S3
Block File
On-premises Data Center
Archive Backup Disaster
Recovery
Amazon
EBS
• Amazon S3 Reduced Redundancy
‒ 99.99% durability vs. 99.999999999%
• Amazon S3 Infrequent Access
‒ For data accessed less than two times a
month
• Amazon Glacier
‒ Same durability as S3
‒ 3 to 5 hours restore time
‒ Up to 65% savings
‒ Great for archiving, long-term backups
and old data
• Amazon EBS
‒ SSD, general or provisioned IOPS
‒ HDD, throughput opt. or cold
Amazon EFS

17. 1.
Architect for
Cost Efficiency
„Pay for what You
think you need“
2.
Optimize Usage
Costs
„Pay for what you use“
3.
Take
Advantage
of Benefits
over Time
„Pay for what
you really need“
Summary: Cost Optimization with AWS

18. Intro toAmazon EC2 Dedicated Infrastructure
Comparing Dedicated Hosts to Standard EC2 Instances
 Multi-tenant servers host instances for multiple
customers’ workloads
 AWS determines which hosts instances run on
 You pay per instance
 Single-tenant servers host instances for one
customer’s workloads
 You can determine which hosts instances run
on
 You pay per host
Standard Amazon EC2 Instances Amazon EC2 Dedicated Hosts
EC2 Instance
Customer 1
Customer 3
Customer 5
Customer 2
Customer 4
Customer 6
Customer X
Amazon EC2
Dedicated Hosts
Comparing Dedicated
Hosts to Standard EC2
Instances
Dedicated Hosts give
you license flexibility
Amazon EC2 Dedicated
Instances
Dedicated Infrastructure
payment options
Dedicated Hosts
On-Demand Pricing
Dedicated Reserved
Instances Pricing
Leveraging the power of
the cloud compliantly

19. Intro toAmazon EC2 Dedicated Infrastructure
Dedicated Hosts give you license flexibility
When running Microsoft Workloads, for example:
 Instance-host affinity allows you to comply with the 90 day rule
 Per-core and per-socket visibility enables reporting at the physical level
 Placement controls ensure that instances run on the server you want them to,
helping you meet stringent compliance and regulatory requirements
 AWS Config allows you to record when instances start, stop, or are terminated
for license reporting and true-ups
Amazon EC2
Dedicated Hosts
Comparing Dedicated
Hosts to Standard EC2
Instances
Dedicated Hosts give
you license flexibility
Amazon EC2 Dedicated
Instances
Dedicated Infrastructure
payment options
Dedicated Hosts
On-Demand Pricing
Dedicated Reserved
Instances Pricing
Leveraging the power of
the cloud compliantly

20. 1.
Architect for
Cost Efficiency
2.
Optimize Usage
Costs
3.
Take
Advantage
of Benefits
over Time

21. How do customers lower their TCO with AWS?
1
Source: IDC Whitepaper, sponsored
by Amazon, “Quantifying the
Business Value of Amazon Web
Services” May 2015
“Average of 400
servers replaced per
customer”
Replace up-front
capital expense with
lower “pay for what
you use” variable
cost model
3
Periodic Price
Reductions
Economies of scale
allow AWS to
continually lower
costs
4
Save more money as
you grow bigger
Tiered Pricing
Volume
Discounts
2
Pricing model choice
to support variable &
stable workloads
On-Demand
Reserved
Spot
Dedicated

22. Analysts have shown AWS
reduces costs over long term
Source: IDC, Quantifying the Business Value of Amazon Web Services (May, 2015)

23. …and that these benefits increase over time
Source: IDC Business Value of AWS Accelerates over time
According to IDC, this relationship between length of time using AWS and return is due to customers leveraging the more optimized
environment to generate more applications along a learning curve.
$1 Investment in AWS
$8.40 in benefits
At 60 Months of using AWS
~8X
$3.50 in benefits
$1 Investment in AWS
At 36 Months of using AWS
~3X

24. Comparing TCO is not easy
(But We’re Going to Try)
≠

25. Elements of Infrastructure TCO
Diagram doesn’t include every cost item. E.g. software costs can include database, management, middle tier software
costs. Facilities cost can include costs associated with upgrades, maintenance, building security, taxes etc. IT labor costs
can include security admin and application admin costs.
Hardware – Server, Rack
Chassis PDUs, ToR
Switches (+Maintenance)
Hardware – Storage Disks,
SAN/FC Switches
Network Hardware – LAN
Switches, Load Balancer
Bandwidth costs
Server Admin Virtualization Admin
1
2
3
4
Server
Costs
Storage
Costs
Network
Costs
IT Labor
Costs
Software - OS, Virtualization
Licenses
(+Maintenance)
Storage Admin costs
Network Admin Costs
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling

26. AWS TCO Calculator: Example Cost Savings
http://awstcocalculator.com