Top 6 Best Practices to Optimize Costs on AWS

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The cloud holds the possibility of dramatically lower infrastructure costs, faster development and innovation cycles, and increased talent efficiency. Yet, according to Gartner, most businesses are estimated to overspend in the cloud — by up to 70%.

AWS Cloud Cost Optimization is not just a story about quick wins and tips and tricks (although there are plenty of those, and some key ones are below!) — at root, cost optimization is about organization and technology strategy working in harmony to leverage the strengths of the Cloud.

Here are the six of the best things you can do to kickstart your organization’s journey towards more efficient AWS Cloud consumption.

1. Improve transparency with the right reporting tools

Optimizing your cloud costs requires you to understand the sources and structure behind your monthly bills. AWS offers a large and ever-evolving group of services that are billed by the hour with prices that are unique to individual services, operations or regions. This creates a great level of complexity that can only be deciphered, segregated and tracked by utilizing a good cost dashboard.

AWS provides a good cost dashboard in “AWS Cost Explorer.” To level up your optimization through deeper analysis, Onica recommends CloudHealth – a best-in-class platform that helps you view and track your expenses while offering recommendations and solutions to improve cost management. Click here to see how you can access CloudHealth and get started today.

2. Keep an eye on your cost trends

As you adopt cloud technologies and monitor their costs over time, certain cost trends start to emerge. These trends are indicators of cloud architecture patterns that can lead to cost concerns. Being aware of such patterns beforehand can help you avoid long term cost consequences. We call one common pattern The Shark’s Fin:

Top 6 Best Practices to Optimize Costs on AWS 1

This pattern could suggest spikes in downstream consumer demand, or perhaps out-of-control resources driving up costs followed by periods of manual cost reduction efforts. In any case, it’s important not only to scrutinize your trends but investigate and understand the causes.

You can learn more about common cost patterns and what they mean by downloading our Cost Optimization ebook.

3. Simplify costs and governance with Accounts and Tags

Delineating your costs by applications, owners, environments, and other dimensions is fundamental to managing your Cloud costs and governance. Determining when to use account separation and how to apply an effective (and enforceable!) tagging strategy is key. Your strategy should give you the information you need to showback or chargeback costs across projects, help match product KPIs (like user growth or revenue) against AWS metrics, or even generally help you keep track of who’s doing what — and how much it costs.

Related: Join us for our virtual event to learn how to optimize your AWS spend with organizational and technical strategies. Register now.

4. Match consumption with demand

The flexibility and scalability of the cloud allows you to provision resources closely in line with your downstream needs. This is in contrast to on-prem environments where you invest in resources for maximal usage and often find periods of minimal utilization despite the cost. When “rightsizing” your resources to match demand, it is important to consider horizontal and vertical overscaling as well as run-time on unused or old resources. By tracking your utilization and turning off old instances, you can save significantly on costs incurred from wasted resources. Click here to learn how you can leverage the CloudHealth platform which provides automated tools to identify waste and start saving today.

5. Use financial instruments where appropriate

For more persistent workloads, Savings Plans or Reserved Instances offer discounted AWS spend in exchange for committed use. The new Savings Plans feature offers dramatically more flexibility than Reserved Instances on EC2 without sacrificing on discount rates. Reserved Instances, meanwhile, are still the tool of choice for AWS Relational Database Service (RDS), Redshift, ElastiCache, Elasticsearch, and some other services.

Utilizing these tools to the fullest without overcommitting requires understanding both the nature of your workloads and the nature of the Financial Instruments.

6. Invest in cloud-native technology

New technologies like AWS Lambda, Amazon SQS, and more allow you to set up cost-efficient workloads that are designed to utilize cloud resources most efficiently, matching consumption to demand. Serverless computing allows you to pay nominal fees only while you’re using resources, and scaling back when capacity is not required. Leveraging autoscaling, serverless, and managed services is key to leveraging the cost efficiency potential of AWS.

With these six tips, you’re well on your way to putting your IT budget to more efficient, innovative use. If you’re looking for a more comprehensive look at our key tips, download our Six Steps to Mastering Cloud Optimization on AWS ebook today!

If you’re ready to get started with implementing measures that can help you minimize cloud spend, get in touch with our Cloud Cost Optimization team today!

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