Mastering the fundamentals of AWS billing 8-20-15

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AWS Billing Fundamentals

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A story of growth

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About Us

Cloud Cost Management & Analytics

$2B+ in tracked AWS costs

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Dashboards Spend Alerts

API Reports

Cloudwatch EC2 Usage API

Detailed Billing Report Files

We generate custom dashboards, reports, recommendations and alerts

We retrieve your data using read only IAM credentials

AWS provides complex billing and usage data

We organize & analyze your cost & usage data

How It Works

Visibility Allocation

Efficiency

Savings

Unit Cost

Cloud Cost Management Lifecyle

Stage I: Visibility (No Surprises)

Stage II: Allocation (Where are the dollars going?)

Stage III: Efficiency (Don’t run cloud like a datacenter)

Stage IV: Savings (Lower hourly rate with RIs)

Stage V: Unit Cost (Tying spending to margins)

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How does AWS charge?

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cost = usage x rate

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cost = usage x rate

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cost = usage x ratePay for instances “by _________” Instance Hour … data transfer per “GB”

Pay for EBS per “_______” GB Month … IO per “I/O requests” …Snapshots per “GB Month”

Pay for S3 storage per “________” Byte (GB) Hour … put, copy, post, list per “request” … data transfer per “GB”

Requires Engineering/Ops work

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EC2 (compute) spending generally accounts for80%+ of the bill…

(Followed by EBS, S3, RDS, etc.)

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cost = usage x rate

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EC2 Pricing Options

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cost = usage x ratePay as you go with On-demand or “BoxUsage”

Commit to lower rates with Reserved Instances “HeavyUsage” Architect for instability with Spot Instances “SpotUsage”

Single tenancy with Dedicated Instances “DedicatedUsage” etc

Can be autonomously controlled by Finance without engineering work

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Let’s look under the hood at the Detailed Billing Report (DBR)…

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Originating account for the charges

Linked Account

Data Sources

AWS Product Name e.g. Amazon Elastic Compute Cloud

Product NameThe type of usage charge applied e.g. heavyusage:m3.large

Usage TypeA human readable field showing the resource type used as well as the rate applied

Item Description

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Key Dimensions in the DBR

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Total Blended Cost for the time period, represented in Cloudability as “Total Invoiced Cost”

Blended Cost

Data Sources

Total Unblended Cost for the time period

Unblended CostAmount of individual units used of that resource type

Usage QuantityUnblended rate for a single unit of the resource type

Unblended Rate

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Key Metrics in the DBR

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Data Sources

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Example report in Cloudability

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Data Sources

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More info on data sources:

1. http://blog.cloudability.com/aws-101-data-sources/

http://blog.cloudability.com/aws-101-data-sources/

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Data Sources

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More info on unblended rates:

1. https://support.cloudability.com/hc/en-us/articles/206972637-Vlog-How-to-calculate-AWS-blended-and-unblended-rates

https://support.cloudability.com/hc/en-us/articles/206972637-Vlog-How-to-calculate-AWS-blended-and-unblended-rates

Visibility

Allocation Efficiency

Savings

Unit Cost

I. Cost visibility

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Transaction Types in Your BillStage I: Basic Cost Visibility

Usage On-demand instances Storage Data Transfer

Recurring Charges Prepaid Monthly RI Hours Support Charges

One-Time Charges RI Sign-Up Charges Direct Connect

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Cost Visibility

Create custom dashboards and alerts

Visibility


Savings

Unit Cost

II. Allocation

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Tools for splitting costs

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1. Tags are key value pairs (key = value) 2. You can apply up to 10 tags per resource 3. Tag keys and values are case sensitive

#1: TagsTools for splitting costs

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#2: Linked AccountsUse linked accounts to split up things that really matter

Tools for splitting costs

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Cost Allocation

Spending segmented by tags and accounts

Customize report columns

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Cost Allocation

Segment spending by tags and accounts

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Tag everything you can

Visibility


Savings

Unit Cost

III. Efficiency

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hours in a week

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nights & weekends

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Don’t run the cloud like a data center: 65% of the hours in a month

are nights and weekends

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Usage Optimization

Find unused and underutilized instances

Visibility


Savings

Unit Cost

IV. Savings

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Reserved Instances “Reservations” require no engineering work, enabling finance to autonomously reduce costs by 30-60% over on-demand


Cost Savings Capacity Reservation

Reservations have two parts


An RI gives you 744 coupons that can be applied a relevant instance in any given hour

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RI Mechanics

What Makes Up a Reservation?

InstanceRI Term RI Type

Instance Family Size OS Location (AZ)

m1 large Linux us-east-1a 1 year No upfront

r3 8xlarge RHEL us-west-2b 3 years Partial upfront

m3 medium Windows ap-northeast-1b 1 year All upfront

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RI Mechanics

The difference is in the payment structure

Upfront Fee Monthly Fee Savings

No upfront NO YES 28.6%

Partial upfront YES YES 38.1%

All upfront YES NO 39.4%

m3.medium:us-east:linux


All RI types are a commitment to pay for full utilization (even if you don’t use it)

Reservations Infrastructure

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RI Portfolio Management

Reserved Instance recommendations and analysis

Visibility


Savings

Unit Cost

V. Unit Cost

Why does unit cost matter?

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An increasing bill isn’t necessarily a bad thing

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The bill still goes up!

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RIs

Unit cost is cost per X

cost per subscribercost per pageview cost per customer cost per API call

Focus on reducing unit cost, even at total cost grows

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Unit cost Total cost

Unit cost =total cost / business metric

$1000 / 1000 customers =$1 unit cost

Visibility Allocation

Efficiency

Savings

Unit Cost

Cloud Cost Management Lifecyle

Stage I: Visibility (No Surprises)

Stage II: Allocation (Where are the dollars going?)

Stage III: Efficiency (Don’t run cloud like a datacenter)

Stage IV: Savings (Lower hourly rate with RIs)

Stage V: Unit Cost (Tying spending to margins)

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The Road Ahead

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1) AWS data is complex. Get your hands on your DBR file to start understanding what’s in it.

2) Tagging is hard. Sit down with key stakeholders and agree a basic taxonomy (3-5 required tags), consider linked accounts for most important items.

3) Instances are easy to spin up. Start sharing reports of underutilized instances to spark a conversation about potential waste.

4) RIs are frequently misunderstood. Educate yourself then make a small, uncontroversial purchase. Buy, Measure, Learn each month.

5) The bill going up may not be a bad thing. Start setting expectations with your team that more apps & more traffic mean more dollars. That may be OK in the context of margins.

Things to remember (and do) after this webinar


Mastering the fundamentals of AWS billing 8-20-15

Technology