Optimizing AWS Cloud Costs and Lowering Total Cost of ...

Optimizing AWS Cloud Costs and Lowering Total Cost of Ownership

(TCO)

AWS Services and Best Practices for Managing AWS Usage and Costs

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

NoticesThis document is for informational purposes only. It represents Amazon Web Services’ (AWS) current product offerings and practices as of the date of issue of this document, which are subject to change without notice. Customers are responsible for making their own independent assessment of the information in this document and any use of AWS’s products or services, each of which is provided “as is” without warranty of any kind whether express or implied. This document does not create any warranties, representations, contractual commitments, conditions, or assurances from AWS, its affiliates, suppliers, or licensors. The responsibilities and liabilities of AWS to its customers are controlled by AWS agreements, and this document is not part of, nor does it modify, any agreement between AWS and its customers.

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

Table of Contents

Introduction 4

Common Cost Optimization Challenges 5

AWS Cost Optimization and TCO Services 7

TCO and Migration Planning 9

Software and Integration Partners 12

Conclusion 14

Further Reading and Key Resources 15

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

Introduction

While moving to the cloud saves money as compared to on-premises IT delivery models, organizations can make common mistakes that lead to unplanned cloud costs. According to the 2019 State of the Cloud Report, managing cloud spending is a challenge for 76 percent of the survey respondents and an average of 35 percent of cloud spend is wasted. In this guide, you will learn how you can avoid some of the most common pitfalls that can drive up cloud spending waste. Then, you will review the latest AWS tools and suite of cost optimization services and solutions to help new customers plan a TCO business case and predict their future state with AWS.

This guide details the cost optimization tools customers can use with the AWS Cloud, to scale usage up and down based on demand, track usage, and lower the TCO of their AWS cloud deployments. By using the best practices, tools and services, and approaches outlined in this guide, customers can achieve cost optimization and invest their savings in greater innovation. Explore the embedded assets throughout this guide to get deeper insights, customer testimonials, and additional guidance.

Learn More View The Webinar

Wade’s webinar: Best Practices in Cloud CostOptimization and Financial Management

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

Common Cost Optimization Challenges

Cloud cost optimization is the process of reducing overall cloud spending by identifying mismanaged resources, eliminating waste, reserving capacity for higher discounts, and “right sizing” services to scale. The easiest way to optimize cloud costs is to look for unused or unattached resources. For example, often an administrator might “spin up” a temporary compute instance to perform a function and forget to turn it off when the job is complete. AWS estimates that by using automated instance scheduling customers can lower costs by up to 70 percent by shutting down non-production instances outside of work hours. Below are some of the most common oversights customers make, that drive up their cloud costs.

1. Orphaned resources – Customers mistakenly avoid a pay-as-you-go model and setup compute or storage instances without using AWS Auto Scaling or other AWS automation and monitoring tools. This is quite common with application testing and development environments given their temporary nature. However, it is common for customers to have large storage pools or database workloads database orphaned and consuming valuable financial resources. Without the proper monitoring tools, these rogue instances can live on indefinitely, negatively affecting your bottom line.

2. Misconfiguredstorageresources – Storage can cause a few pitfalls for customers. Customers forget to release their storage resources from their compute instances, and their storage costs continue even if they terminate the compute instances. Another common mistake is the association of data types and storage class. Often customers allocate warm or cold storage into local or pools of higher-performing data storage. Right sizing storage by data type and usage can reduce your associated costs by up to 50 percent.

Learn More Read The Case Study

Safeguarding Oxford University’sGlobal Heritage Collections with AWS

Learn More View the partner webinar

Mastering AWS Cloud Cost Optimization in Six Steps

“We had a customer that had a huge number of unattached

Amazon EBS volumes. When I say huge, we’re talking volumes

costing $20,000 to $30,000 per month that nobody was using.

That’s where Onica’s Cloud Optimizer™ comes in, it helps you

identify idle and unused resources.”

TimothyFox,VPofManagedServices,Onica,anAWSPartner

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

3. Over-provisionedresources – Right sizing is the process of matching compute instance types and sizes to performance and capacity requirements at the lowest possible cost. A key cloud cost optimization priority includes identifying these instances and consolidating computing jobs into fewer or smaller instances. In the days of on-premises data centers, administrators often wanted to operate at low utilization rates or would over provision, so they would have capacity for a spike in traffic. Instead, AWS offers automatic scaling, load balancing, and on-demand capabilities (AWS Auto Scaling, Elastic Load Balancing, and On-Demand Instances) that allow customers to scale up or down, automatically, anytime, as needed. By right sizing workloads and using automation, AWS customers have seen up to 36 percent in cost savings. Here are two scenarios for consideration:

a. Horizontal over scaling: The use of too many resources when fewer would do the job.

b. Vertical over scaling: Running the right amount—but the wrong type—of resources. These are larger than what’s needed with regards to sizing.

4. Incorrectpricingplans - Many organizations do not use the cloud pricing plans that best align to their usage requirements. Often organizations are not aware of their specific usage requirements or their service provider’s unique pricing options. Without active management and the right tools, it is difficult to predict your usage requirements and understand what cloud resources you must purchase the correct pricing plan for your business. AWS offers many pricing models such as Spot Instances, which allow you to request spare Amazon EC2 computing capacity for up to 90 percent off the On-Demand price. Reserved Instances provide a significant discount (up to 40 percent savings for 1 year) compared to On-Demand pricing and are ideal for workloads with steady or predictable usage. Lastly, AWS Savings Plans is a flexible pricing model that provides savings of up to 72 percent on your AWS compute usage. Learn more about these, cost saving, pricing models.

Learn More Read The Case Study

ST Unitas is an EdTech company founded in 2010. The organization cut 60 percent of expenses thanks to the implementation of Reserved Instances.

Learn More Read The Case Study

ST Unitas is an EdTech company founded in 2010. The organization cut 60 percent of expenses thanks to the implementation of Reserved Instances.

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

5. Overlookingnewertechnologies – AWS frequently updates its services with new features or launches a new and innovative services. These new technologies enable greater productivity. However, they help reduce operational costs and cloud spend. For example, AWS recently previewed Amazon EC2 instances built on the AWS Graviton family of CPUs based on ARM technology and architectures. These new instances will deliver up to 40 percent better price performance over comparable current generation instances for a broad spectrum of workloads such as application servers, microservices, video encoding, high performance computing, electronic design automation, open source databases, in-memory caches, and CPU-based machine learning inference. If you are looking for improved compute economics built on a traditional x86 architecture, then AWS’s AMD-based solutions can reduce your compute and memory costs by up to 10 percent. Customers may also benefit from re-platforming their existing deployments with newer cloud services. For example, a customer could replace their hosted monitoring services with Amazon CloudWatch, a monitoring and observability service that provides you with data and actionable insights to monitor your applications, respond to system-wide performance changes, optimize resource utilization, and get a unified view of operational health. In the webinar below, hear from AWS solution architects on how re-platforming or implementing a cloud native architecture from the onset can help improve performance and reduce costs. View the webinar below to get deeper insights.

AWS Cost Optimization and TCO Services

AWS provides a set of out of the box cost management tools to help you manage, monitor, and, ultimately, optimize your costs. To get started, identify someone to set the standard for cloud excellence in your organization, begin using cost management tools, and define and track against a set of cost-related benchmarks for cost optimization. As your cost management capabilities grow, you can begin to use more advanced metrics, set budgets and alerts, and use advanced analytics to identify additional savings opportunities. Below is a summary of the key services and solutions offered by AWS to help you manage your cloud spend. Click on the service to learn more.

Learn More View The Webinar

Architecting for Cost Optimization on AWS

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

AWS Trusted Advisor

Since 2013, AWS customers have viewed over 2.6 million best-practice recommendations and realized over $300M by using AWS Cloud cost optimization tools. AWS Trusted Advisor is an online tool that provides you real time guidance to help you provision your resources following AWS best practices. Trusted Advisor helps optimize your entire AWS infrastructure to increase security and performance, reduce your overall costs, and monitor service limits.

AWS Cost Explorer

AWS Cost Explorer helps visualize, understand, and manage your AWS costs and usage over time. A set of default reports are included to help you quickly gain insight into your cost drivers and usage trends. Use forecasting to get a better idea of your what your costs and usage may look like in the future.

AWS Budgets

AWS Budgets gives you the ability to set custom budgets that alert you when your costs or usage exceed (or are forecasted to exceed) your budgeted amount. You can also use AWS Budgets to set reservation utilization or coverage targets and receive alerts when your utilization drops below the threshold you define. AWS Budgets supports alerts for Amazon EC2, Amazon RDS, Amazon Redshift, Amazon ElastiCache, and Amazon ElasticSearch reservations.

AWS Cost and UsageReport

The AWS Cost & Usage Report contains the most comprehensive set of AWS cost and usage data available, including additional metadata about AWS services, pricing, and reservations (e.g., Amazon EC2 Reserved Instances [RIs]). The AWS Cost and Usage Report lists AWS usage for each service category used by an account and its AWS Identity and Access Management (IAM) users in hourly or daily line items, as well as any tags that you have activated for cost allocation purposes. You can also customize the AWS Cost & Usage Report to aggregate your usage data to the daily or hourly level.

TSO Logic

To assist potential customers with planning a migration, TSO Logic (an AWS company) provides the industry’s most accurate data-driven TCO and cost modelling analysis, so customers can plan for their ideal future state on AWS. TSO Logic’s software ingests millions of data points from the customer’s existing IT environment, including system age, technical configurations of all hardware and software, compute and local storage utilization patterns, and even Windows licenses. By replacing guesswork with algorithmic analysis, any customer can get a data-backed blueprint as the foundation for their business case for AWS.

Cloud Chomp

AWS recommends CloudChomp to all customers looking for a third-party solution to help analyze their IT environment and produce an accurate TCO assessment. CloudChomp software dynamically connects to the AWS Pricing API and analyzes your IT systems, virtual machines, and software licenses for an accurate read of your utilization and spending patterns. CloudChomp is ideal for Microsoft, VMware, and bare-metal deployments.

r

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

How Trusted Advisor works

TCO and Migration Planning

Throughout this guide, we have discussed the importance of cost optimization with AWS to help reduce your cloud spending waste. However, the optimal outcome is for customers to migrate to AWS and put their best foot forward from the start. A TCO analysis helps evaluate your on-premises IT costs and generate a realistic projection of your future cloud costs. An in-depth TCO analysis will also provide you with a detailed report to build your evidence-based business case for cloud migration.

As an AWS customer, you want the most value from your

invesrment. Trusted Advisor can help.

AWS Trusted Advisor scans your AWS infrastructure, compares

it to AWS best practices in five categories, and provides

recommended actions.

CostOptimization

Performance

Security

Fault Tolerance

Service limits

Investigationrecommended

No problem detected

Action recommended

No problem detected

No problem detected

AWSTrustedAdvisor

Recommendations&actionlinks

Learn More Watch The Video

In this My Architecture video, discover how organizations can use AWS Cost and Usage Reports from Amazon S3, together with Amazon Redshift using Lambda, and run queries to create alerts and dashboards based on their spend. This allows for the real time identification of any operational anomalies and the ability to address them immediately.

Learn More View The Video

Optimize Your AWS Cloud Costs WithTrusted Advisor: A Technical WalkthroughOf The Service and Console

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

TSO Logic, an Amazon company, provides the industry’s most accurate data-driven analysis of TCO and cost modelling for your ideal future state. TSO Logic’s software ingests millions of data points from your current environment, including age, generation, and configuration of all hardware and software, in addition to each instance’s historical utilization. TSO Logic’s predictive analytics provide insights on an ongoing basis you are running each application in the best place with the right software and at the lowest TCO—even as your environment, cloud options, and prices change. TSO Logic will help you build a clear business case to accelerate your migration planning.

Value of TSO Logic Software and Microsoft Workload Migration to AWS:

36 percent cost savings by helping customers right size their workloads to AWS services

37%

88 percent cost savings when moving SQL Server with BYOL

88%

43 percent cost savings when moving Windows Server with BYOL

43%

22 percent cost savings with moving MSDN workloads with BYOL

22%

Learn More Read The Blog

Using TSO Logic Data Analytics and DataModeling to Demonstrate Cost Advantagesof AWS Cloud Migration

Learn More View The Video

Get Started On Your Migration Business Case

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

CloudChomp, a widely used third-party Migration Competency Partner, provides the fastest and most intuitive agentless financial analysis tool. In most cases there is no cost to the customer to use CloudChomp. Most manual work is eliminated and they are connected to the AWS Pricing API so you can count on your results to be accurate and up to date with your live data and AWS pricing. CloudChomp’s CC Analyzer combines TCO, SQL license planning, application discovery, deep dive storage, machine dependency mapping and VMC estimates into one discovery tool allowing you to gain insights into your utilization and create an efficient migration plan; all with a few clicks of a button. The interactive workspace allows customers, partners and AWS employees to collaborate on pre-migration planning business cases and create an unlimited number of dynamic scenarios. In many cases a complete TCO and price comparison estimates are available within 24 hours from the simple and agentless install. CloudChomp has analysed over 400 billion data points and shown customers how to save 41% on average over traditional lift and shift strategies. To learn more about CloudChomp, see the partner section and view their solution video below.

How CloudChomp Addresses Questions That Affect Your TCO

Learn More View The Video

Cloud Economics in a box

60 Min. Install 24 Hr Results* 41% Avg. Savings*In most cases

WhatdoesCloudChomphave?Agentless Pre-migration Transformation Tools

Whatdoesitcosttooperateon-premises?On-Premises TCO based on live assets and custom assumptions

WhatwillitcostonAWS?AWS RIght-Sized Pricing Options

WhataremySQLlicensingoptions?SQL License Planner

Whatapplicationsarerunningonwhichmachines?Application Discovery

WhatshouldImovetoAWSfirst?Machine Dependency Mapping that provides a complecityscore

Whatisthecosttomigrate?Migration Planner (SOW Calculator)

Whataremystorageoptions?Deep Dive Storage

Learn More Read The Solution Brief

CloudChomp Overview

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

Onicaisthecloudnativeservices company leading the most complex technology projects in the world.

At AWS we have our four-phase migration process, which we designed to help any organization, regardless of size or migration scope. While each phase is a common component of a successful migration, they are not discrete phases but rather an iterative process. As you migrate more workloads, you can drive repeatability and predictability in processes and procedures and find that the migration process accelerates. Our comprehensive portfolio of AWS migration tools and our mature third-party migration tooling ecosystem provides automation and intelligent recommendations based on Amazon Machine Learning (Amazon ML) to simplify and accelerate each step of the four-phase migration process.

AWS Migration Process

Start your journey today by taking a complimentary cloud adoption readiness assessment. The online AWS Cloud Adoption Readiness Tool (CART) lets organizations quickly assess their migration readiness by answering 16 questions across key perspectives: business, people, process, platform, operations, and security. Once you complete a CART survey, you receive a detailed report, which includes a heat map with detailed scoring information and resources to help you improve your migration readiness. This report will help you plan and communicate nextstepswith your stakeholders. You can review a sample CART report. As you progress through your journey, don’t forget that you can request assistance and guidance from AWS Professional Services, APN Partners, or AWS Cloud economics experts. Customers have unlocked costs savings between 33-58 percent by engaging with AWS cost-optimization experts. You can, too. Ask your AWS account manager to setup an introductory consultation.

Software and Integration Partners

Onica is the cloud native services company leading the most complex technology projects

in the world. They use the innovative capabilities of the cloud to help customers build new

revenue streams, increase efficiency, and deliver incredible experiences. Onica started with

the vision that cloud computing would change the world and AWS would power that change.

With that belief, they assembled a team of passionate technologists that were big believers

in this new mindset and honed their skills. Today, Onica delivers technology services focused

on cloud adoption and cost optimization, data engineering and science, artificial intelligence,

serverless application development, application modernization, and the Internet of Things

(IoT). For more information, visit Onica’s website and download the guide: Mastering AWS

Cost Optimization in Six Steps.

Assessment Readiness and Planning

Migrations OperationsandOptimizations

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

CloudChomp,Inc.isacloudmigrationtools companyhelping organizations

take a bite out of 21st century

computing and IT costs.

CloudCheckrwasfoundedin2011 and has over 5,000 users

across the globe.

CloudChomp, Inc. is a cloud migration tools company helping organizations take a bite

out of 21st century computing and IT costs, turning bits and bytes into dollars and cents.

CloudChompwas founded with the mission of accelerating right-sized migration to AWS

and eliminating the waste associated with manual and expensive assessment processes.

They built the platform on and highly optimized for AWS. Two veteran software executives

who have built and created exits for four other software companies founded the company.

For more information, visit CloudChomp’s website.

CloudCheckr was founded in 2011 and has over 5,000 users across the globe, ranging

from hot startups and large Fortune 500 enterprises to government agencies and leading

managed service providers. They manage over $1 billion USD in annual AWS spend and

pride ourselves on helping our customers turbocharge their cloud adoption. CloudCheckr’s

cost management software generates the largest possible savings with predictive analytics

and actionable resource purchasing recommendations. Actionable insights pinpoint wasted

resources, provide resource re-sizing recommendations, and optimize every dollar across

AWS. For more information, visit CloudCheckr’s website.

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

ConclusionThe cloud offers tremendous opportunity for increased agility, faster innovation, and lower TCO. The organizations that are most successful in moving from on-premises environments to the cloud are those that establish a well-defined strategy for approaching this new IT operating model early in their journey. Moving from a model of large upfront investment in data centers to the consumption-based model of AWS requires changes to tools, processes, and mindsets to make sure your team effectively manages costs. The key to optimizing costs with AWS is to start early. Although many cost-optimization practices can be easy to implement in small environments, organizations need new operational best practices, automation, and organizational incentives to be successful at scale. Establishing these best practices early in the journey can help define the right processes and behaviors.

AWS is dedicated to supporting customers’ cloud journeys and empowering them to maximize value from their investments, improve forecasting accuracy and cost predictability, create a culture of ownership and cost transparency, and continuously measure optimization status. The potential of cost optimization in the cloud is ultimately unlocked through a cultural commitment to the involvement of cross-functional teams. AWS provides powerful tools to simplify these efforts, but organizational recognition and commitment to the process are critical for success.

To learn more about the solutions that AWS provides to help you access, understand, allocate, control, and optimize your AWS costs and usage, visit our new Cost Optimization Help Center landing page and AWS Cost Management home page.

© 2020, Amazon Web Services, Inc. or its affiliates. All rights reserved.

Further Reading and Key Resources

Further reading

• Cost Management in the AWS Cloud whitepaper

• Right Sizing: Provisioning Instances to Match Workloads whitepaper

• AWS Cost Optimization Blog home page

• Cost Optimization On AWS Summit presentation

• IDC TCO Research Report

• How to Terminate Instances whitepaper

• Automating Elasticity with AWS Lambda

• Application Auto Scaling home page

• Amazon DynamoDB Auto Scaling whitepaper

• Understanding Consolidated Billing whitepaper

Additional resources

• AWS Cost Optimization Help Center landing page

• AWS Cost Management Sessions at AWS re:Invent 2019

• AWS Cost Optimization home page

• AWS Cloud Economics home page

• AWS Cloud Adoption Readiness Tool (CART)

• TSO Logic home page

• CloudChomp home page

• AWS Total Cost of Ownership (TCO) Calculators

• AWS Simple Monthly Calculator

• Professional Services home page

• The AWS Cloud Adoption Framework (AWS CAF)

• AWS Migration Acceleration Program (MAP)

• AWS Well-Architected Framework

• AWS Migration Readiness Guide