To budding entrepreneurs, one of the most surprising things about a growing business is that success can often bring more problems than it solves. Indeed, one of the most common reasons for the failure of new ventures is that their costs increase faster than their income does — sometimes even leading to the frustrating and confusing experience of a business facing collapse while the order book is bursting at the seams. In this article we’ll explore a few ways that you can reduce your cloud costs and delve deeper into finding ways to make sure that they’re always optimized.
Cost Drivers in the AWS Cloud
Now, how do we do this? Before we look at the practical steps that you can take to reduce your spending, it’s a very good idea to understand which are the main areas of cloud usage that can lead to higher bills:
- Compute costs in the AWS Cloud are related to the expenses of running virtual machines and server instances, with various pricing options like On-Demand Instances, Reserved Instances, and Spot Instances playing a role in determining the costs.
- Storage costs involve the charges for storing your data in AWS, including services like Amazon S3, EBS volumes, and Glacier, each with its own pricing structure.
- Data transfer costs refer to the fees incurred when your data moves between AWS services, regions, or the Internet, depending on the volume of data transferred.
- Network costs encompass the expenses associated with data transfer across AWS networking components like Virtual Private Cloud (VPC), NAT Gateway, and Elastic Load Balancer (ELB).
- Other cost factors include additional expenses beyond the primary cost drivers, such as AWS Support Plans, data backup services, and domain registration, all contributing to the overall AWS expenditure.
Implementing Cost-Optimisation Strategies
Faced with potentially soaring expenses from all these sources, there are a few obvious steps that you can take to reduce your outgoings, along with several ready-made cost management tools.
Practical Steps for Cost Savings
1. Right-sizing Resources
Right-sizing resources involves making informed decisions about instance types and storage solutions to optimize efficiency and cost-effectiveness. This includes carefully selecting appropriate instance types and fine-tuning storage solutions to ensure they align perfectly with the specific requirements of the workload, maximizing resource utilization and minimizing unnecessary expenses.
2. AWS Cost Management Tools
Leveraging AWS Cost Management Tools offers valuable insights and control over expenses to optimize cost efficiency. AWS provides several powerful tools for this purpose:
- AWS Cost Explorer allows users to analyse and visualize their spending patterns, enabling better decision-making and cost forecasting.
- AWS Budgets empowers users to set custom cost and usage budgets, receiving alerts when thresholds are approached or exceeded, ensuring better cost control and preventing unexpected overruns.
- AWS Trusted Advisor offers personalized recommendations and checks for cost optimisation, security, and performance improvements, ensuring that users can proactively address potential cost inefficiencies and maximize the value of their AWS investments.
3. Cost-Optimisation by Design
Whilst each of these tips and tricks are very useful ways to get your spending down, there’s only so much you can do at a late stage in a project with what is essentially a reactive strategy. Many of the excessive costs in a project are often the consequence of decisions taken early in the design process and, if we’re to talk seriously about cost optimisation, it’s vital to integrate good practices into both business and technical decisions and to design your processes accordingly.
But how can you optimize the cost of something that doesn’t exist yet? The answer to that, as with many things in life, lies in the benefits of experience and well-tested methodologies.
The AWS Well-Architected Framework
The AWS Well-Architected Framework (WAF) is a perfect example of a methodology based on extensive expertise and testing, and is a set of best practices to design, build, and operate secure and efficient cloud applications. It comprises six pillars: Operational Excellence ensures reliability and scalability, Security protects against threats and breaches, Reliability ensures continuous performance, Performance Efficiency optimizes resource usage, and Sustainability minimizes environmental impact. Adhering to these practices enables the creation of reliable, secure, and sustainable cloud applications.
This leads us inevitably to the Cost Optimisation Pillar, which is dedicated to optimizing AWS workload expenses. It involves such measures as selecting appropriate AWS services, resource utilization, and using cost-saving features like Reserved Instances and Spot Instances. By following these practices, users can reduce AWS costs without compromising performance or reliability.
The Cost Optimisation Pillar
Design Principles
Alongside a detailed process for analysing your workflows, the WAF proposes a number of general design principles that can help guide your process:
- Implement cloud financial management: Invest in building capability through knowledge, programs, and resources dedicated to Cloud Financial Management.
- Adopt a consumption model: Adjust usage based on business needs, such as stopping non-essential resources during idle periods.
- Measure overall efficiency: Evaluate the business output and associated delivery costs.
- Stop spending on undifferentiated heavy lifting: Leverage AWS's managed services to offload data centre operations and focus on customer-centric projects.
- Analyse and attribute expenditure: Utilize the cloud's cost transparency to identify workload costs, attribute expenses to revenue streams and individual owners, enabling better resource optimisation and cost reduction opportunities.
These principles emphasize strategic approaches to managing cloud resources effectively, allowing organisation to significantly enhance their cost-efficiency. Additionally, integrating automation into these principles can further streamline processes, reduce manual errors, and optimize resource utilization.
GTM & Cost
A Go-To-Market (GTM) strategy aligned with these principles can also ensure that the cost-optimisation efforts are in sync with business objectives, leading to a more sustainable and profitable cloud journey. This holistic approach not only minimizes costs but also maximizes the value derived from cloud investments, ensuring a competitive edge in the rapidly evolving digital landscape.
Cost Optimisation Case Studies
Now that we’ve looked at the theory and read the details of some best practices, it’s a good time to consider some real-world examples to see what kind of practical solutions were by the systematic analysis made possible by the Well-Architected Framework.
Bokborsen: Reduced AWS costs and a better email system
For Bokbörsen, a leading Swedish online marketplace, cost optimization centered on revamping their email system. The original system struggled with high email volumes, prompting PCG to replace the SMTP server with Amazon's Simple Email Service (SES), enhancing speed and scalability. This shift to AWS SES, a pay-as-you-go service, enabled precise billing, eliminating waste and reducing costs.
Introducing AWS Lambda functions further improved system performance with a consumption-based pricing model, leading to significant savings. This streamlined approach resulted in a highly optimized cost scenario for Bokbörsen.
Teevolution: Cost and flow optimizations with AWS Mobile Services
In our collaboration with Teevolution, a prominent Swedish tech company focused on golf-related products, we optimised costs for a sizable mobile app project using AWS Mobile Services. Facing escalating expenses and an inefficient architecture, we initiated a re-architecture with AWS Lambda for consumption-based pricing and AWS Step Functions for workflow efficiency.
In the second phase, we implemented smart throttling and AWS Auto Scaling for dynamic resource adjustments, resulting in a cost-efficient, scalable, and high-performance mobile app architecture.
Conclusions
As you can see, cost optimisation in the AWS Cloud is essential for long-term business success. By understanding cost drivers and implementing practical steps with AWS Cost Management Tools, businesses can achieve savings without compromising performance. Integrating the AWS Well-Architected Framework, including the Cost Optimisation Pillar, ensures cost-effective, secure, and sustainable cloud applications. Embracing cost optimisation as a core strategy maximizes AWS investments for a competitive edge.
Resources & Further Reading
- What is the Well-Architected Framework [Insight]
- Cost Optimisation Pillar - AWS Well-Architected Framework
- A Beginner’s Guide to AWS Cost Management
- AWS Well-Architected Framework Review (WAFR) [Service]
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