Amazon Web Service, popularly known as AWS, is a pioneer service provider in cloud computing. Cloud computing negates the need to have physical computing resources, IT infrastructure, and networking capabilities to conduct business.
With advances in technology and increasing scale of operations, organizations have no other choice but to go digital to ensure smooth operations. The cost associated with the investment in digital assets has gone down.
However, organizations still incur significant costs to pay cloud computing service providers. This makes the process of AWS cost optimization extremely important. Proper management of AWS costs ensures efficient utilization of resources.
To give a perspective on the importance of optimization of AWS cost, AWS hosts around 9 million live websites. Facebook, The BBC, and Netflix are a few of the many big websites that use AWS. Web Hosting is a small segment of the many products in cloud computing that AWS offers.
Listed below is a step by step guide on holistic AWS cost optimization strategy as a whole –
Step 1: Identify costs and formulate a strategy.
The foremost step of any activity is planning. This is achieved by analyzing existing costs and breaking them into avoidable and unavoidable. Usually, fixed costs like registration or license fee are unavoidable, whereas the storage cost depends on the amount of storage used.
An analysis of the costs would help determine which cost is essential for the smooth running of the business while others are just premium or add-on costs. Thus, costs that are not primary value add to the business can be avoided altogether, which means lesser overall cost.
This step presupposes the formulation of business strategy by the management. It is important to estimate costs that can be reviewed periodically as per budgetary control. Budgeting also helps in the prioritization of business initiatives and projects.
Step 2: Learn about different components of cost and their behavior with respect to factors affecting them.
The next step is to break down the AWS costs into its components based on the utility or other measurable basis. AWS cost is not a single item but a total of many costs associated with different utilities based on multiple variables.
E.g. cost for storage space differs with the type of data, the volume of data, importance (security required), frequency of access needed. Here, the storage costs billed effectively depend on the 4 factors or variables.
The costs can be optimized keeping in mind the business strategy. If the data is temporary, then it doesn’t require high-end security, and the cost in this regard can be optimized.
Step 3: Take advantage of freebies and tools available
AWS cost optimization could tend to be tricky to uninitiated. For example, tips such as resource scheduling, using spot instances and purchasing reserved instances, etc., would mean technical jargon that a business manager may not successfully implement.
Even if one learns the technical aspect of cost optimization, there is the risk of failure due to wrong actions. However, AWS knows this and has a suite of freebies, tools, and billing plans to help control costs. Some of the are –
- AWS Credits: These are similar to discount coupons redeemed at the cash counter in the grocery stores. AWS credits help to cover AWS bills. There are specific methods and eligibility criteria to avail them, such as being a start-up or a not-for-profit organization.
- AWS Free Tier: It is a set period of free service on one or many of the products offered by AWS. They include free service up to a certain threshold during the said period.
- AWS Cost Explorer and AWS Budgets: These are tools available within the AWS Console that gives one real-time access to their usage and billing data. It has features such as project creating and tagging, forecasting usage and billing, records up to 13 months of use, etc. The AWS Budgets tool lets one set a cap on expenses and alerts one when they are reached or exceeded.
- AWS Savings Plan: This Flexi pricing plan is only eligible for customers who declare a commitment towards minimum usage for a fixed period. E.g. $5 per hour worth of use for a year. If the plan opted is an AWS savings plan (there are sub-varieties), the user gets the service free on payment of an upfront fee for the committed usage.
With these simple strategic steps, one can reduce AWS costs. However, it is an ongoing and continuous activity and requires constant monitoring to fetch actual results.
The goods news is that there are dedicated software suites available that do all of this and more at the click of a button. That will be a wiser alternative if one is up for spending a few pennies on saving a lot of money in AWS costs.