how to optimize your aws cloud costs to maximize results image

The move to the cloud has been heralded by speculations and celebrations, and the companies that made their bold move have begun to reap results. But what is the kind of returns they were looking for? The two main reasons for investing the cloud are: accelerating the performance of the company and enjoy better ROI. These two reasons justify the move, followed by cost optimization. If your company has already moved to the cloud with Amazon Web Services, you are already on the journey of realizing your company goals, but you also need to ensure that you are moving along the right path. Is the path you have chosen giving you positive results? Are you able to cut costs and focus on fulfilling those business goals?

How do you optimize your AWS services so you can get the best results? This article aims to give you certain tips on that.

The Need for Optimization - How it Came About

Before the cloud, companies had to purchase hardware, so they were considered a capital expense. Companies had to procure resources and purchase enough servers so they can function smoothly during those most-trafficked days. However, on the days when traffic was low, these resources remained unused. This would be a huge waste of both money and resources. With the cloud, things are vastly different because you can scale on demand. You need to pay for only those resources that you use. True, the cost patterns will thus be variable, but during the off-peak season, you don’t have to pay for what you don’t use.

Cost optimization has involved not just the finance team anymore, but other people involved in the company, right from stakeholders to IT teams, marketers and so on. This has led to resource procurement and everyone in the company is aware of understanding and managing cost optimization.

Once you move to the cloud, business stability and business visibility increases, allowing you to scale as per the company’s workloads. When hardware infrastructure was installed at the company premises, the payment was done when the hardware was purchased or as quarterly, half-yearly or yearly payment schemes. With the cloud, the costs are managed and optimized in such a manner that you pay only for what you use and when you use it.

Different Ways in Which You can Optimize AWS Costs

There are some definitive ways in which you can cut down and use AWS resources optimally. Look them up:

Stop using unused AWS resources

Control costs by closing down all unused instances in the developer environments, especially at the end of each working day, on holidays and weekends. AWS Elastic Beanstalk and AWS OpWorks help developers to deploy their applications without any hitches, whenever required. Developers can easily shutdown and delete all the resources they are not using. Deleting an instance when you don’t need it anymore is called “terminating”. The moment you terminate an instance, you will not be billed for it, but only for the time you used it. You can start, stop or hibernate your instance depending on how often it is to be used.

Identify the different storage classes and use the right one

Amazon S3 object storage comes in five tiers: Amazon S3 Standard, Amazon S3 Intelligent-Tiering, Amazon S3 Standard-Infrequent Access (IA), Amazon S3 One Zone-Infrequent Access, Amazon Glacier. The cost of each of these tiers are broken down, depending on factors like: (a) actual storage amount, (b) the number of HTTP PUT requests, (c) the number of HTTP GET requests, and (d) volume of data transferred.

For general purposes and for data used frequently and various use cases, use Amazon S3 Standard, while Amazon S3 Standard-Infrequent Access can be used for less frequently used data. Similarly, the different storage classes are used for different purposes.

Use the most cost-effective instance

From the different instances mentioned above, you have to choose the right instance and ensure that you are using the most cost-effective instance based on your company’s requirement. Consider your application workload before selecting the instance. To do that successfully, you can consider aspects like amount of memory required, the processing unit and other determining factors. Once you choose a particular instance for your application workload, you need to analyze it once or twice a year, monitor it and ensure that it matches your workload requirement.

The developer team can optimize the cost of the instance by monitoring the running system and tagging the instance.

Assess workloads and scale instances

Amazon Trusted Advisor and CloudWatch are AWS services to help you manage the usage of resources. According to AWS, you can use “Amazon CloudWatch to create alarms on Trusted Advisor metrics for checking status changes, resource status changes, and service limit utilization”. Therefore, you can either shut down the resources or request limit increase with the help of alarms. Multiple alarms can be set at a time, so this helps you to understand your service limits as well. CloudWatch helps you keep tabs on the custom metrics of your applications to monitor their performance. This is done through a simple API and would be good for shutting down wasteful resources.

You can also look at the data, and scale your instances as per requirement. This would help you run configuration checks and thereby, cut down idle resources. This helps you to manage only efficient workloads.

Set up autoscaling

It is no secret that one of the main purposes of cloud services is that you can scale up and down according to demand. AutoScaling in AWS is an option that helps you add additional resources whenever required, and you can always shut them down when the peak times are over. AutoScaling is a very efficient way to cut down costs, but cost management isn’t the only advantage you get - you also get to shut down unhealthy instances and start a different one. Once you set up AutoScaling, you can also add the required resources that will be created when you configure more instances.

Invest in cost optimization tools

You can invest in cost optimization tools right from the beginning of your cloud journey. So, incorporate optimization techniques right at the planning stage. You need to check whether the designed architecture is in accordance with what you have planned, and whether the results are as expected. AWS comes up with resources and technologies that would aid in optimizing your infrastructure at regular intervals. Applying the best practices in cloud environment and searching for bottlenecks would also help with a smooth cloud journey.

AWS Cost Management Dashboard
AWS Cost Management Dashboard (Source: AWS)

AWS tools for cost optimization include Cost Explorer (to check for patterns in AWS spend over time, reserved instance utilization, reserved instance coverage, etc.), AWS Trusted Advisor (helps in identifying potential optimization spots in real time), AWS Budgets (custom budgets that trigger when usage exceeds a certain limit), Cost Optimization Monitor, Detailed Billing Report, AWS Cost and Usage Report and so on.

Always keep an eye on the infrastructure costs

It is imperative to monitor the costs related to infrastructure throughout the cloud journey. There are tools that apply Artificial Intelligence for infrastructure management with the help of AWS spot pricing and taking advantage of regular ECS instances.

AWS CloudFormation enables you to define infrastructure as code so you can shut down and delete all unused AWS resources, through its basic concept of ephemeral workloads.

Right sizing your services

Right sizing your services helps you to meet the capacity requirements and meet the technical requirements of each workload separately. EC2 Right Sizing or Amazon Elastic Compute Cloud is a solution that helps enterprises optimize their costs and still meet their capacity requirements and maintain top performance. With the detailed usage data that it generates, they can right size instances, making it flexible enough for the customer.

Using the managed services provided by EC2 Right Sizing, you can perform right-sizing analysis and through that cost-effective instances.

Spot instances that come with discount

With Amazon EC2 Spot Instances, you can bid on spare Amazon EC2 computing capacity. Through Spot Instances, you can cut down the cost of running your application by about 90%, inculcate new kinds of cloud computing applications, grow your application’s compute capacity and throughput (all within the same budget). This is much more useful than on-demand pricing.

Reserved instances comes with discount as well

Leverage Reserved Instances because they come at a discount, about 75% of its equivalent on-demand capacity. There are three options in Reserved Instances - All up-front (AURI), partial up-front (PURI) or no upfront payments (NURI).

To avail a huge discount, you will have to pay a large upfront payment; but it definitely is worth the amount. With Reserved Instances, you can plan your budget in a better way and easily manage projects with long-term commitments and minimum risks. However, if you do not wish to pay a huge upfront fee, you can still enjoy a small discount.

Use Cost Explorer to analyze costs and usage

AWS comes with another option known as AWS Cost Explorer to help enterprises manage their costs and usage of resources intelligently. As the name suggests, you can dive deeper into your data, and know exactly where the costs are going, and what the cost drivers are. It would help you go through usage trends in different dimensions.

AWS Cost Explorer - Monthly Report
AWS Cost Explorer - Monthly Report (Source: AWS)

AWS also lets you use resource tags to group Cost Explorer so you can create different resource groups corresponding with your business structure. This would help you plan the costs appropriately and map your resources more efficiently.

Creating a cost-conscious culture is very important

Your cloud journey can be truly successful only when you follow the best practices for cloud cost management. You can perhaps plan your journey to be like this:

Being aware of the costs - Using AWS training resources, learning about best governance practices and participating in cloud based discussion forums would give you an idea of how to control costs. A person from your finance team or engineering team can indulge in this activity a few hours per week. This would keep you in the loop of what’s happening, including AWS reports and tools.

Indulge in cost management and optimization activities - The single individual in your enterprise can have more people helping him in identifying custom metrics, enforce cost location strategies and adopt advanced reporting methodologies. Now you have a team of 3-4 people who spend a few hours per week for optimization activities.

Spreading the word of cloud - As the systems get complex, it is imperative to get a larger, dedicated team with advanced skills. They would suggest methodologies on optimizing costs, and keep tabs on the various resources that help in cost control, and other key cloud topics.

Understanding current costs

Having an understanding of current costs would be greatly helpful in calculating cloud based costs. These are the areas where costs can apply with an on-premise solution:

(a) Labor - How many people are you planning to allocate for the team? What are you paying them to maintain an optimized playing ground?

(b) Network - What’s the present bandwidth that you possess? Are you planning to expand and scale?

(c) Capacity - Through capacity planning you will be able to analyze what systems are being used, how they are performing, what’s the usage demand, how the current capacity responds to the demand and what to do when demand peaks. You must have a resource that analyzes cloud computing demands including network capacity, storage, memory and the processor.

(d) Power - Before moving to the cloud, what was the power costs in utilizing hardware infrastructure? What are the costs in utilizing other tools that are used in maintaining the hardware - cooling, redundancy power, backup plan and so on.

(e) Services - Analyze server utilization. What do you do when there is peak load? How do you manage when the demand trickles down, especially during off-peak season.

Having a good engineer can also be a great boost to cost optimization

Hiring a cost optimization engineer is greatly helpful as they can help you derive more value out of your AWS move. They can also build code to make it possible for instances to spin up whenever needed, and spin down whenever the requirement is over. You don’t need to run all the resources during normal working hours, but they can always rise up to the occasion during peak hours and weekends. The engineers can also monitor the baseboard and the resources to turn off under-utilized resources.


In order to enjoy the full benefits of AWS Cloud, you will have to plan for the financial costs and time required in migrating the workloads. In order to enjoy cost savings from your cloud migration, you can follow the tips mentioned above. Pair it with the time of your infrastructure hardware retirement, maintenance requirements, license expiration, etc., so instead of continuing on-premises, you can shift to the cloud.

Once you have a clear picture of the existing infrastructure and migration costs, you can maximize the value of moving to AWS, earn ROI on your applications and projects.

And always remember to: (a) Use AutoScaling to scale up and down according to demand, (b) Select the right S3 storage class, (c) Choose the appropriate instance size for the workload, (d) Tone down under-utilized instances and (e) Use Cloudwatch and Trusted Advisor to keep tabs on the costs.

Want to optimize costs while leveraging all that AWS cloud services has to offer? We can help you!

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