Best Practices and Resources to Effectively Manage and Optimize Your AWS Costs

1. © 2022, Amazon Web Services, Inc. or its affiliates.
© 2022, Amazon Web Services, Inc. or its affiliates.
Best Practices and Resources to Effectively
Manage and Optimize Your AWS Costs
Luis Garcia, AWS Solutions Architect
Josue Martinez, AWS Solutions Architect
7/12/2022

2. © 2022, Amazon Web Services, Inc. or its affiliates.
Agenda
• Challenges and AWS Approach
• Cost Optimization Pillars
• Cost Financial Management Pillars
• Tools and Services - Demo

3. © 2022, Amazon Web Services, Inc. or its affiliates.
Glossary of Acronyms
• EC2 – Elastic Cloud Compute – (Virtual Machine)
• RI – Reserved Instance
• SP – Savings Plan
• EBS – Elastic Block Storage – (Virtual Hard Drive, Volume)
• AZ – Availability Zone
• OS – Operating System
• IOPs – Input/Output Operations per second
• CFM – Cloud Financial Management
• LOB – Line of Business
• CUDOS – An AWS Cloud Intelligence Dashboard

4. © 2022, Amazon Web Services, Inc. or its affiliates.
© 2022, Amazon Web Services, Inc. or its affiliates.
Challenges
and How AWS Approaches Them

5. © 2022, Amazon Web Services, Inc. or its affiliates.
Customer Challenges
“Why is my AWS bill so high? I thought I should be spending less in the cloud.”
“How can I reduce AWS costs for Dev/QA environments?”
“What options do I have to bring down my AWS cost?”
“Can TAMs help in cost optimization activity?”

6. © 2022, Amazon Web Services, Inc. or its affiliates.
AWS Approach
• AWS works relentlessly to reduce our own costs and
has passed the resulting savings to you 115 times
through price reductions
• Provided Tools: Trusted Advisor, Cost Explorer,
Compute Optimizer, Well-Architected Cost Labs, etc.

7. © 2022, Amazon Web Services, Inc. or its affiliates.

8. © 2022, Amazon Web Services, Inc. or its affiliates.
© 2022, Amazon Web Services, Inc. or its affiliates.
Pillars of Cost Optimization

9. © 2022, Amazon Web Services, Inc. or its affiliates.
The Five Pillars of Cost Optimization
Rightsize your
resources
Pick the right
pricing model
Increase
elasticity
Measure,
monitor and
improve
Optimize
storage

10. © 2022, Amazon Web Services, Inc. or its affiliates.
Rightsizing example
m5.large
$0.096 per hr
3. Rightsize
87.5%
Saving
5. Save!
4. Review Performance
2. Check (CPU, RAM,
network, disc)
1. Migrate/provision &
Run
m5.4xlarge
$0.768 per hr

11. © 2022, Amazon Web Services, Inc. or its affiliates.
The Five Pillars of Cost Optimization
Rightsize your
resources
Pick the right
pricing model
Increase
elasticity
Measure,
monitor and
improve
Optimize
storage

12. © 2022, Amazon Web Services, Inc. or its affiliates.
Approaches to Capacity Management
Build to peak load Build to average load
Build with Elasticity

13. © 2022, Amazon Web Services, Inc. or its affiliates.
The Five Pillars of Cost Optimization
Rightsize your
resources
Pick the right
pricing model
Increase
elasticity
Measure,
monitor and
improve
Optimize
storage

14. © 2022, Amazon Web Services, Inc. or its affiliates.
• NON-EC2 reservations:
- Billing discount only (no capacity reservation)
- Most* RDS platforms are size-flexible
- Apply to accounts within AWS Organizations in a same
way
Services that benefit from different discount types
- Flexible pricing model
- Commit to an hourly spend rate
- Recommended for EC2 if first time buyer, or
upon expiration of previous RIs
*MySQL, MariaDB, PostgreSQL, Amazon Aurora and Oracle BYOL
Reserved Instances Savings Plans
Amazon EC2 Amazon RDS Amazon EC2
Amazon Redshift Amazon Opensearch
Amazon ElastiCache Amazon DynamoDB AWS Elemental
MediaConvert
AWS Fargate AWS Lambda Amazon
SageMaker

15. © 2022, Amazon Web Services, Inc. or its affiliates.
Attributes Standard Convertible
Term Commitment 1yr and 3yr 1yr and 3yr
Payment options: No Upfront, Partial Upfront, All Upfront All three All three
Can be size-flexible: Yes Yes
Modify: AZ or Scope (Zonal vs Regional) Yes Yes
Modify: Instance size within family Linux/UNIX All
Exchange: Instance families, OS, tenancy, and payment
option
No
Yes (to equal or higher
cost)
Modify/split/merge reservations: Partially Yes
Purchase/sell on AWS RI Marketplace*: Yes No
* To sell on AWS Marketplace, US bank account is needed
EC2 RI Types – Comparison

16. © 2022, Amazon Web Services, Inc. or its affiliates.
Greatest
flexibility & up to
66% discount
Types of Savings Plans
Compute
Savings Plans
EC2 Instance
Savings Plans
SageMaker
Savings Plans
Up to 72% off the
instance family
within AWS region
Up to 64% cost
savings compared
to on-demand
FLEXIBLE
ACROSS
FLEXIBLE
ACROSS
FLEXIBLE
ACROSS
✓ Instance families
✓ Regions
✓ OS
✓ Tenancy
✓ EC2, Fargate, Lambda
✓ Size
✓ OS
✓ Tenancy
✓ Regions
✓ Instance families
✓ Component

17. © 2022, Amazon Web Services, Inc. or its affiliates.
The Five Pillars of Cost Optimization
Rightsize your
resources
Pick the right
pricing model
Increase
elasticity
Measure,
monitor and
improve
Optimize
storage

18. © 2022, Amazon Web Services, Inc. or its affiliates.
Amazon Storage Classes/Platforms
• Object Storage
• Backup Target –
Snapshots,…
Object
Amazon Simple Storage
Service
Amazon S3 Glacier
• Distributed
Filesystem
Amazon Elastic File
System
File
• Server/Instance Storage
• Local Filesystems
• Network Volumes (EBS)
Amazon Elastic Block
Store
EC2 Instance Store
Block
How do you select your
storage solution?

19. © 2022, Amazon Web Services, Inc. or its affiliates.
Amazon Storage Classes/Platforms
… Examples
Example A
Volume Requirement – 300GB with 3000 IOPS
Option Breakdown:
• gp2 – 3TB Size, 3000 IOPS - $102.40
• gp3 – 300 GB Size, 3000 IOPS - $20.00
• io1 – 300 GB, 3000 IOPS - $226.25
80% savings between gp2 – gp3
91% savings between io1 – gp3
Example B
Image Storage Requirement – 300GB
Option Breakdown:
• EFS Standard – 300 GB, $90.00
• S3 Standard – 300 GB, $9.65
89% savings
All numbers were calculated using the AWS Pricing Calculator

20. © 2022, Amazon Web Services, Inc. or its affiliates.
The Five Pillars of Cost Optimization
Rightsize your
resources
Pick the right
pricing model
Increase
elasticity
Measure,
monitor and
improve
Optimize
storage

21. © 2022, Amazon Web Services, Inc. or its affiliates.
© 2022, Amazon Web Services, Inc. or its affiliates.
Pillars of Cloud Financial
Management

22. © 2022, Amazon Web Services, Inc. or its affiliates.
Cost management is more than just cost optimization
… and it requires evolving capabilities to embrace the cloud
Predicting the cost
associated with variable
usage
Awareness of resource
costs
Cost governance in a
continuous manner

23. © 2022, Amazon Web Services, Inc. or its affiliates.
Cloud Financial Management - CFM
Manage, optimize, and plan AWS cost and usage
Plan
Save Run
See
Planning and
forecasting
Cost
optimization
Cloud financial
operations
Measurement and
accountability

24. © 2022, Amazon Web Services, Inc. or its affiliates.
Cloud technology consumption
Model
Engineers and Finance acting as one
Spend is dynamic and less predictable
Procurement is instant
Low cost of failure
Deploy Operate
Optimize
Technology
teams
Finance
organization

25. © 2022, Amazon Web Services, Inc. or its affiliates.
Start your
Cloud Financial
Management journey 2. Partnership
Create a Finance/Technology partnership and establish a regular
communication cadence to create and maintain alignment
Education
Identify cloud-focused training offerings from AWS
Training and Certification to eliminate knowledge blind spots
for all stakeholders
1. Ownership
Identify a named owner (individual or team) responsible for driving
cloud financial management activities
3. Cost allocation enablement
Implement an account structure (using AWS Organizations), and
tagging strategy to enable allocation of cost to lines of business
4. Cost visibility
Establish efficiency KPIs and report cloud costs (using AWS Cost
Explorer) to Technology teams in order to raise cost awareness
6. Cost forecasting
Improve cost predictability (AWS Budgets)
5. Cost optimization
Leverage tools (AWS Cost Explorer) to identify and execute cost
optimization opportunities
AWS Cost Explorer
AWS Cost Allocations Tags
AWS Organizations
AWS Cost Explorer (EC2 Rightsizing Recommendations)
AWS Budgets

26. © 2022, Amazon Web Services, Inc. or its affiliates.
Tags provide a more granular
view of your organization's
consumption pattern
Cost allocation tags
Environment
Project
Team
Application ID
Cost Center
AWS Organizations – allocate cost by account
Start with the AWS Account, then use Tags
AWS Cloud
AWS Organizations
Master
Workloads OU
Retail-Prod
OUs
SCP
Retail-Dev
Retail-Staging
Eng-Prod
Eng-Dev
Eng-Staging

27. © 2022, Amazon Web Services, Inc. or its affiliates.
© 2022, Amazon Web Services, Inc. or its affiliates.
Demo Time
AWS Tools and Services

28. © 2022, Amazon Web Services, Inc. or its affiliates.
© 2022, Amazon Web Services, Inc. or its affiliates.
Thank You

29. © 2022, Amazon Web Services, Inc. or its affiliates.
© 2022, Amazon Web Services, Inc. or its affiliates.
Laying the Foundation: Setting Up Your Environment for Cost Optimization
Right Sizing: Provisioning Instances to Match Workloads
CUDOS - Demo
AWS Well Architected Labs – Cost Optimization
AWS Cost Management User Guide
AWS Pricing Calculator
Trusted Advisor
AWS Well Architected Framework
Tagging Best Practices