Handout Cloud Cost Optimization Fundamentals

AWS Builders Online Series
Cloud cost optimization

fundamentals
Kunal Pansari (he/him)
Solutions Architect
Amazon Web Services
© 2023, Amazon Web Services, Inc. or its affiliates. All rights reserved.
Agenda
• Cost visibility
• Cost optimization
• Cost savings
• Continual cost review
• Next steps
Maximizing cost outcomes is a
shared responsibility
Provide tools for cost management & Provide guidance and facilitate
optimization information sharing
AWS
Innovate
Lowering prices over time e.g. Amazon Simple Storage Service (Amazon S3) Intelligent-
Tiering,
Amazon Elastic Block Store (Amazon EBS) gp3 volumes
Allocate budgets for Cloud Business Visibility, Accountability & Ownership of
Planning and Forecasting spend
Customer
Establish a Finance-Engineering Allocate resources to make spend more

Partnership efficient and predictable
Provide tools for cost management & Provide guidance and facilitate
optimization information sharing
AWS
Innovate
Lowering prices over time e.g. Amazon S3 Intelligent Tiering,
Amazon EBS gp3 volumes
Cost visibility
Why cost visibility?
KNOW YOUR CURRENT STATE TO ACHIEVE FUTURE STATE
• Understand who is spending on what
• Stay on top of large changes in spend
• Ability to break down the cost of shared resources
• Allows you to make strategic budgeting decisions
Improving Cost Visibility
Select a cost visibility tool

Enable AWS Cost Explorer and use AWS Cost & Usage Report for more details
Define Key Performance Indicators (KPIs)

Track KPIs using unit costs (e.g. Amazon Elastic Compute Cloud (Amazon EC2) hourly spend,
cost per transaction)
Set KPI goals and alarm on anomalies
Enable stakeholders
Provide access to data in appropriate format (e.g. executive summary)
Provide training to enable usage of visibility tools
AWS Billing Dashboards
AWS Cost and Usage Reports

Cost visibility
Enablers AWS Cost Explorer
Detective Controls
Detective Controls
DATA DRIVEN – INFORMED DECISION TOWARDS COSTS
AWS Cost Anomaly Detection

ML Driven tool to continuously monitor your cost and usage to detect unusual spends
Amazon CloudWatch Billing Alarm

Monitor your estimated AWS charges, Track KPIs using unit costs (e.g. Amazon EC2 hourly
spend, cost per transaction)
Cost optimization
Cost optimization strategies
Free Tier Storage Application Network
Analytics Databases Compute
AWS Free tier
Enjoy these offers for 12-months following

12 months free
your initial sign-up date to AWS
e.g. 750 hours per month of Linux, RHEL, SLES, Windows t2.micro or t3.micro instance dependent on region
Always free These free tier offers do not expire and are
available to all AWS customers
e.g. AWS Lambda1 Million free requests per month, Up to 3.2 million seconds of compute time per month
Trials Short-term free trial offers start from the

date you activate a particular service
e.g. 750 DC2.Large node hours per month for 2 months
https://aws.amazon.com/free/
• Intelligent Tiering
• Amazon EBS
Storage • Snapshot archive
• gp2 to gp3 migration
• Amazon EBS volume provisioning
• Data Compression
• Use Bulk APIs/Operations
Application • Elasticity and Auto Scaling
• Licensing Assessment
• VPC endpoints for AWS services
• Centralize NAT Gateways

Network • Data Transfer charges
• Amazon CloudFront
• Choose cost effective compute
• Storage
Analytics • Remove unused data & infrastructure
• Application
• Multi-AZ vs Read replica
• Identify idle DB instances
• Storage autoscaling
Databases • Go Serverless
• Review Amazon Relational Database
Service (Amazon RDS) backup lifecycle
policy
• Auto scaling
• Graviton Instances
Compute • Spot instances
• Schedule instances
Cost savings
Instance purchasing options
Reserved/Savings Plan On Demand
Instance purchasing options
Baseline Compute
Reserved/Savings Plan On Demand
SPs & RIs product overview
RESERVED INSTANCES
SAVINGS PLANS
Commitment based offerings with limited
AWS’s most flexible commitment flexibility on region, instance family, and
based offerings, available for instance size. Available for EC2, RDS,
Compute (EC2, Fargate, Lambda) Redshift, ElastiCache, OpenSearch and
and SageMaker usage DynamoDB.
23
Reserved Instance & Savings Plan
Reserved Savings
Instances Plans
(RIs) • Commitment for 1yr or 3yr term (SPs)
• Payment options: All/Partial/No Upfront
• In AWS Organizations discount is shared between all

accounts by default
Resource Financial
commitment commitment
SPs & RIs in an Organization
Member
Accounts When RIs or SPs are
purchased in a member
AWS account, the savings
Account 1 benefit will have priority
for that Member account
Payer AWS
Account Account 2
AWS
RI/SP can be purchased in the Payer Account 3
Account in consolidated family
If no resources are running on the Payer,
SPs will first apply to the usage that
offers highest discount
Memcber
Buying at the Payer Payer
Account 1
Account Member
Account 2
Pros Cons
• Hides details from linked accounts in billing

tooling
• Central management, operationally easy to
• No control over where the RI/SPs will apply
repurchase, report on savings etc.
within your organization
• Compute Savings Plans will maximize savings
• Difficult to confirm the root cause of any
due to their application rules
underutilization
• Hides details from linked accounts in billing
• If applicable, workloads in the payer account
tooling
will be first to receive the RI/SP benefit
• Difficulty managing chargebacks
Linked
Buying at the Linked Payer
Account 1
Account Linked
Account 2
Pros Cons
• Central management, more difficult to

• Affinity to apply in the account they were
repurchase, report on savings etc.
purchased in
• Compute Savings Plans may limit savings due
• Easier to manage chargebacks
to their application rules
• Allows individual business units to take more
• If a business unit does not take ownership,
ownership
may be leavings savings on the table
Linked
Blended strategy Payer
Account 1
Account Linked
Account 2
Pros Cons
• Compute Savings Plans at the payer will

maximize savings due to their application • Central management, more difficult to
rules repurchase, report on savings etc. at the
• Central management, operationally easy to linked account level
repurchase, report on total savings etc. • Difficulty managing chargebacks for payer
• If a business unit does not take ownership, account level purchases
payer level purchase can cover savings
Key takeaways
• Understand the differences between SPs and Ris
• Which product(s) should you leverage? RI’s or SP’s?
• Account RI’s & SP’s have affinity to where they are purchased
• Tooling within AWS Cost Explorer
Continual cost reviews
Cost optimization blog
Cloud Financial Management Announcements
Summary
COST ANALYSIS – USE CASES
Use cases Description AWS Cost Management features AWS Billing Dashboard features
Organize Construct Cost Allocation & Governance AWS Cost Categories

foundation AWS Cost Allocation Tags
Report Accountability & insights of cloud spend AWS Cost Explorer AWS Cost and Usage Reports
Access Track billing information across the organization AWS Consolidated Billing
AWS Purchase Order Management
AWS Credits
Control Establish governance mechanisms with AWS Cost Anomaly Detection

guardrails
Forecast Estimate resource utilization & forecast AWS Cost Explorer
AWS Budgets
Budget Cost control, budgets threshold & notification AWS Budgets

AWS Budgets Actions
Rightsize Align resource pool to your actual demand Rightsizing Recommendations
Next steps
Cloud intelligence dashboards
WORKFLOW TO CREATE DASHBOARDS, DRIVEN BY THE COST & USAGE REPORT
• Multiple cost focused dashboards

Workshop
• CUDOS Dashboard (Cost analysis)
• Cloud Intelligence Dashboard (Summarized spend analysis)
• Trusted Advisor Organization (TAO) Dashboard (trusted advisor findings

analysis)
• Trends Dashboard (Usage insights)
• KPI Dashboard (Cost KPI tracking)
• Compute Optimizer Dashboard (COD)
• Automated deployment - CloudFormation

AWS TRAINING & CERTIFICATION
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Thank you for attending AWS Builders Online Series
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Let us know what you thought of today’s event and how we can improve the event
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Thank you!
Kunal Pansari
kunalpansari

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AWS Builders Online Series

Cloud cost optimization

• Continual cost review

Establish a Finance-Engineering Allocate resources to make spend more

• Understand who is spending on what

• Stay on top of large changes in spend

• Ability to break down the cost of shared resources

• Allows you to make strategic budgeting decisions

Select a cost visibility tool

Define Key Performance Indicators (KPIs)

AWS Cost and Usage Reports

AWS Cost Anomaly Detection

Amazon CloudWatch Billing Alarm

Free Tier Storage Application Network

Analytics Databases Compute

Enjoy these offers for 12-months following

Trials Short-term free trial offers start from the

• Amazon EBS volume provisioning

• Centralize NAT Gateways

Reserved/Savings Plan On Demand

Reserved/Savings Plan On Demand

• In AWS Organizations discount is shared between all

• Hides details from linked accounts in billing

• Central management, more difficult to

• Compute Savings Plans at the payer will

• Understand the differences between SPs and Ris

• Which product(s) should you leverage? RI’s or SP’s?

• Tooling within AWS Cost Explorer

Cloud Financial Management Announcements

Organize Construct Cost Allocation & Governance AWS Cost Categories

Control Establish governance mechanisms with AWS Cost Anomaly Detection

Budget Cost control, budgets threshold & notification AWS Budgets

Rightsize Align resource pool to your actual demand Rightsizing Recommendations

• Multiple cost focused dashboards

• Cloud Intelligence Dashboard (Summarized spend analysis)

• Trusted Advisor Organization (TAO) Dashboard (trusted advisor findings

• Trends Dashboard (Usage insights)

• KPI Dashboard (Cost KPI tracking)

• Compute Optimizer Dashboard (COD)

• Automated deployment - CloudFormation

Access 600+ free digital courses with AWS Skill Builder

LEARN YOUR WAY EXPLORE.SKILLBUILDER.AWS »

Validate your cloud expertise with an AWS Certification

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