IT'S NOT WHAT YOU KNOW;

IT'S WHAT YOU DO.

A Practical Approach to Cost Optimization
AIT

WWW.SAXONGLOBAL.COM
TABLE OF CONTENTS
1
RESEARCH FINDINGS

2
TOP CLOUD INITIATIVES FOR 2020

3
BUSINESS VALUE

4
COST ANALYSIS APPROACH

5
ARCHITECT FOR EFFICIENCY

6
HOW DO CUSTOMERS
LOWER TCO WITH AWS?

7
TID-BITS
 As enterprises race to adopt cloud due to COVID-19, most of them expect to increase cloud
spending by almost 50 percent this year. But they still struggle to forecast accurately, given the
fact most cloud implementations significantly exceed their cloud budgets. As a result, optimizing
existing cloud use remains at the top of companies’ 2020 priority list for the fourth year in a row,
followed by migrating more workloads to the cloud.

At times, the cost optimization considerations at all layers of cloud viz. at Compute, Storage,
Network, or Database layers are overlooked either fully or partially, which might end up with
greater challenges.

In this ebook, we attempt to explain the alignment of Architecture with cost savings to help
customers, and their businesses get prepared to take advantage of optimization.
The interesting aspect with appropriate cost optimization transformation strategy is

“PAY FOR WHAT YOU THINK YOU NEED”

“PAY FOR WHAT YOU USE”

“PAY FOR WHAT YOU REALLY NEED”

Research Findings
The emergence of COVID-19 during the survey prompted Flexera to add a question that gauges how the
pandemic might affect cloud plans. Virtually all countries have implemented stay-at-home policies for
consumers, work-from-home policies for employees and shutdowns of nonessential businesses. Some
industries are experiencing massive economic impacts as a result of the pandemic. Cloud demand will
undoubtedly shift due to these events. More than half said cloud usage will be higher than initially
planned. Some of the increase resulted from the extra capacity needed for current cloud-based
applications to meet increased demand as online usage grows. Other organizations may accelerate
migration from data centers to cloud in response to reduced headcount, difficulties in accessing data
center facilities and delays in hardware supply chains. As the pandemic runs its course, some
organizations may also find that public cloud providers offer a more reliable option for business
continuity.
Organizations are continuing to increase their cloud spend rapidly. In doing so, they struggle to forecast
their fast-growing cloud costs accurately. Respondents reported their public cloud spend was over budget
by an average of 23 percent. Moreover, respondents expect their cloud spend to further increase by 47
percent in the next 12 months. This trend means it’s more critical than ever to get a handle on forecasting
and cost optimization.

Top Cloud Initiatives of 2020

For the fourth year in a row, optimizing the existing use of cloud (cost savings) is the top initiative for the
year ahead, followed by migrating more workloads to cloud and expanding use of containers.
Business Value
The effective cost management helps identify opportunities to reduce usage waste and match the
technology capacity with customer’s true business and organizational demand. As per the latest
survey, most of the enterprises saved 56% of their cloud costs as a result of applying Cloud Financial
Management practices in their organization. It reinforces the significance of even small changes can make
big impact and encourages to establish a culture of cost accountability by embracing these best practices
to grow savings over time.

It is recommended that organizations to track and allocate cloud costs back to specific business
initiatives, such as improvement of web sites, new product initiatives, and create KPIs that can allow
them to calculate the actual value created by their cloud investment. Developers and operation teams
can focus more on their primary responsibilities instead of finding ways to squeeze costs.

From a business resilience perspective, Research study found that 63% of the respondents said cost
optimization practices have helped reduce business risks.

From a business agility perspective, 67% of survey respondents have used cost optimization practices
to grow revenue, and 64% stated that they improved their profitability.

When adopting these best practices, customers start to reinvest efforts

in making applications better
innovate more
think beyond maintenance or basic cost accounting.

Cost Analysis Approach

It is extremely important to have deep dive discussions with all the stakeholders to gather the information
related to :
Architect for Efficiency
The AWS Well-Architected Framework helps you understand the pros and cons of decisions you make
while building systems on AWS. By using the Framework you will learn architectural best practices for
designing and operating reliable, secure, efficient, and cost-effective systems in the cloud. It provides a
way to consistently measure your architectures against best practices and identify areas for
improvement. We believe that having well-architected systems greatly increases the likelihood of
business success.
Cost optimization in the cloud is composed of four areas:
Cost-effective resources
Matching supply with demand
Expenditure awareness
Optimizing over time
As with any Well-Architected Framework, there are trade-offs to consider, for example, whether to
optimize for speed-to-market or for cost. In some cases, it’s best to optimize for speed—going to market
quickly, shipping new features, or simply meeting a deadline—rather than investing in
up-front cost optimization.

The following illustration provides an idea of cloud cost management and optimization without
compromising its security and performance.

Compute Services
AWS offers a comprehensive portfolio of compute services allowing you to develop, deploy, run, and
scale your applications and workloads in the world’s most powerful, secure and innovative compute
cloud. Elastic Compute Cloud(EC2)is a secure and resizable compute capacity (virtual servers) in the
cloud. Some more popular compute services are Lightsail, Lambda, Elastic Beanstalk etc.
Storage Services
AWS offers a complete range of services for you to store, access, govern, and analyze your data to reduce
costs, increase agility, and accelerate innovation. Select from object storage, file storage, and block
storage services, backup, and data migration options to build the foundation of your cloud IT
environment. Amazon Simple Storage Service (S3) is object storage built to store and retrieve any
amount of data from anywhere. Similarly we have few other storage services viz. EFS (Elastic File
System), Amazon Fsx for Windows, FSx for Lustre , EBS (Elastic Block storage) etc.

Networking Services
AWS provides the Networking tools and resources that enable you to securely connect to the cloud and
then isolate, control, and distribute your applications across EC2 compute resources and all other
relevant services in AWS. We have various Networking services viz. Virtual Private Cloud (VPC),
CloudFront, Route53,AWS PrivateLink, Direct connect, Global Accelerator, API Gateway, Transit
Gateway etc.
Database Services
AWS Database Services is a set of databases offered by AWS on the cloud. It provides a wide range of
fully managed, purpose-built and both relational and non-relational database services specially
designed to handle any kind of application requirements. Some of Database services are RDS, Aurora,
Redshift , DynamoDB, Neptune etc.

Other important services

Lambda – AWS Lambda is an event-driven, serverless computing platform provided by Amazon as a part
of Amazon Web Services. It is a computing service that runs code in response to events and
automatically manages the computing resources required by that code.
Elastic Search – This service lets you store up to 3 PB of data in a single cluster, enabling you to run
large log analytics workloads via a single Kibana interface. You can easily scale your cluster up or down
via a single API call or a few clicks in the AWS console.
ECS - Amazon Elastic Container Service (Amazon ECS) allows you to easily run, scale, and secure Docker
container applications on AWS.
Lower your TCO
TCO (Total cost of ownership) is a calculation that reveals the cost of owning a product or service for a
given period. It determines the direct and indirect costs of a product or system. Customers often find
multiple benefits from moving to the cloud, including agility, cost savings, and flexibility. So, prior
taking a major decision to move to cloud, it is imperative for the customers to have deep level of
understanding of the relative costs . Amazon has a powerful tool “AWS Total Cost of Ownership (TCO)
Calculator” through which we can compare the cost of your applications in an on-premises or
traditional hosting environment to AWS cloud on various cost parameters as below

It is extremely important for the cloud architects to do TCO analysis to evaluate the existing data
center IT costs and generate a projection of customer’s future cloud costs. This can later turn out to be
the business case for cloud migration planning.

By focusing on Right sized pricing options, License planning, Application discovery, Prioritization of
workloads and their dependencies, storage requirements it will help you achieve TCO optimization.

The art of cost optimization involves choosing the fastest things first. You can balance the
optimization techniques based on the implementation time and commitment level as showcased
below.
Tid Bits
Many cost-optimization practices can be easy to implement but tricky when it must evolve as per
the business demands. 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. It requires dedicated cloud architects to
support customers’ cloud journey 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. By leveraging appropriate cost solutions, we can simplify these efforts, but the key is
continuous monitoring and commitment to the best practices and follow the process for
success. Although we have shared multiple practical ways to reduce your cost, there are number of
self- service options in your cost optimization journey. It is always a best practice to consult with an
AWS expert before implementation.

Author
SRIDEVI EDUPUGANTI is a creative & results driven technology
leader, with over 21 years of experience in driving vision across IT
Infrastructure, Cloud Migration, Security, Strategy Implementation,
Project Management, Service Delivery, Pre-sales and People
Management across various verticals. She has several certifications,
accolades and awards to her credit.