Managing Amazon AWS Costs

Cloudy Mondays Joe Kinsella, VP of Engineering, Sonian Twitter: @joekinsella, Blog: HighTechInTheHub.com November 2011 Managing AWS Costs

Agenda
Overview of AWS Bill
Available Tools
Top Reasons For Excessive Bill
5 Steps To Reducing Bill
Cloud vs. Physical
Metrics To Manage
Cloud Control Demo

Early Warning Sign: Cloud Dropouts
Each month we see more cloud dropouts
E.g.
Company: Mixpanel
Real-time analytics platform launched in 2009
Funded by Sequoia & Y Combinator
Started using Rackspace cloud
Low initial cost
Fast deployment times
Consumption-based pricing
Cheap CPU performance
Issues as cloud usage scaled
One size fits all
Lack of access to high-end hardware
At mercy of neighbors
Costs
Solution
Rebuilt on dedicated infrastructure hosted at SoftLayer
Dropouts are early warning sign not everyone successful in the cloud

Amazon AWS Bill Is Complex
AWS bill details costs by
Service – e.g. EC2, S3, RDS
Region – e.g. US East, US West
Service item – Linux m1.large compute hours
Each service has multiple components to pricing
All pricing consumption-based
Pricing model very complex
Pricing changes periodically

Example: EC2 Pricing
EC2 Compute
Pay per compute hour by instance type and OS
List and reserved pricing
Spot pricing
Data transfer out or within regions
EC2 Block Store
Per GB of provisioned storage
I/O requests
EC2 Other
Elastic IP addresses by hour/remap
CloudWatch by metric per month
http://aws.amazon.com/ec2/pricing/

Limited AWS Tools For Managing Costs
Four primary tools available from AWS
Activity Report
Usage Report
Cost Calculator
Cloud Watch
Tools provide useful raw data that can be used in managing costs – but not complete solution
Tools sufficient for managing small deployments
Medium to large deployments require more than AWS currently provides

AWS Activity & Usage Reports
Activity report
Details costs by service
By service and account
Current and historical
Usage report
Export of usage by hour or day
Allows filtering on usage type
Minimal documentation on how to decipher usage information
Using reports with accounts
AWS supports designating single account for consolidated bill
Common practice to designate empty account for consolidated bill
Multiple accounts often used to work around lack of sub-accounts
Activity Report Usage Report

Other AWS Tools
Monthly calculator
Simple calculator to project costs based on usage
Good for getting back of napkin estimates on costs
CloudWatch
Real-time and trended metrics on usage of provisioned infrastructure
Basic metrics provided for free
Allows understanding of actual consumption of provisioned infrastructure

3 rd Party Tools
New and emerging market for cloud asset & cost management
Dominated by early stage startups
Products immature and take very different approach to managing costs
E.g.
Ylastic, Cloudability, CloudVertical, Sensible Cloud, RaveId, Cloud Cruiser

Top Reasons For High AWS Bills
Lack of understanding of what software actually costs to operate
Lack of understanding of infrastructure & its usage
Over optimism on infrastructure lifespan
Not taking advantage of all available AWS options to manage costs
Lack of infrastructure standardization
Inattention to the pricing outliers
Human error

5 Step Process To Managing Your Bill
Gain visibility
Define blueprint
Manage capacity
Rightsize
Optimize
http://www.hightechinthehub.com/2011/09/5-steps-to-managing-cloud-costs/

Step 1: Gain Visibility
Decide on tool to provide near real-time visibility into your infrastructure, e.g.
E.g. AWS console, custom application, Ylastic, Excel spreadsheet
Ensure tool supports correlating infrastructure and application
Cannot understand costs without knowing how application uses infrastructure
Adopt tool that allows customization

Step 2: Define Blueprint
Define reference architecture for application(s)
Goal: use as close to 100% of provisioned infrastructure without impacting availability & performance
Reference architecture should capture all required infrastructure by functional cluster
E.g. node sizes, attached storage, production vs. non-production
Create cost model for reference architecture
Perform R&D to optimize cost model
Sample Reference Architecture

Step 3: Manage Capacity
Define capacity management policy for each functional clusters
Identify all metrics for scale (e.g. # concurrent users, # transactions per second)
Identify thresholds for capacity alarms (warning, critical) for both under and over-capacity
Identify “run book” for handling capacity constraints
Automate alarms through proactive monitoring
Iteratively tune policy to use as close to 100% of provisioned infrastructure as possible

Step 4: Rightsize
Start to standardize all infrastructure to reference architecture
Target infrastructure for rightsizing
Non-standard – infrastructure that deviates from reference architecture
Underutilized – infrastructure that can be consolidated based on capacity management policy
Unused infrastructure – infrastructure that is used infrequently or not at all
Implement iteratively over time to minimize disruption

Step 5: Optimize
Optimize costs through use of reserved & spot instances
Reserved instances
Purchase reserved instances based on reference architecture & growth projections
Reserved instances are limited by region - don’t paint yourself in corner
Can purchase for 1 or 3 years
Cost savings: 40% cost reduction on compute
Spots
Great for managing capacity bursts
Requires architecture that support idempotence
Cost savings: 20% reduction on compute
True “gaming the cloud” requires right software architecture

Identify Metrics To Manage
Cloud suffering from lack of standard metrics to measure
Most metrics over focus on costs
Identify & trend metrics that matter to your organization
Some to consider:
Infrastructure Cost of Goods Sold (ICOGS) = current infrastructure costs / revenue
Infrastructure Utilization (IU) = utilization of metric / maximum available quantity
Cloud Elasticity (CE) = (ICOGS at projected 12 month maximum revenue – current ICOGS) / current ICOGS
Infrastructure Hourly Rate (IHR) = cost for all infrastructure in hour
Cloud Moneyball

Comparing Costs: Cloud vs. Physical
Cloud is more expensive than physical infrastructure for always-on
Cloud wins year 1, physical wins year 2+
Cloud optimized for
Sometimes-on infrastructure
Always-on where physical alternative underutilized
Typical reasons for underutilization
Incorrect growth projections
Building for peak utilization
Building ahead of growth
Building for temporary utilization

Demo: Sonian CloudControl (internal app)

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Managing Amazon AWS Costs

by Joe Kinsella

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