Whether you’re a cash-strapped startup or an enterprise optimizing spend, it pays to run cost-efficient architectures on AWS. This session reviews a wide range of cost planning, monitoring, and optimization strategies, featuring real-world experience from AWS customers. We’ll cover how you can effectively combine EC2 On-Demand, Reserved, and Spot instances to handle different use cases, leveraging auto scaling to match capacity to workload, choosing the most optimal instance type through load testing, taking advantage of multi-AZ support, and using CloudWatch to monitor usage and automatically shut off resources when not in use. We'll discuss taking advantage of tiered storage and caching, offloading content to Amazon CloudFront to reduce back-end load, and getting rid of your back end entirely, by leveraging AWS high-level services. We will also showcase simple tools to help track and manage costs, including the AWS Cost Explorer, Billing Alerts, and Trusted Advisor. This session will be your pocket guide for running cost effectively in the Amazon cloud.

1. © 2016, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Paul Yung
Head of Territory Development – Hong Kong & Taiwan
pyung@amazon.com
19th Jan, 2017
Running Lean Architectures
How to Optimize for Cost Efficiency
ARC313

2. What you’ll get out of this session
• Best practices on how to lower your AWS bill
• Real-world customer examples
• Useful tips to get started

3. Pay as you go
Pay less by using more
Pay less when you reserve
Pay less when AWS grows
No up-front investment
Pay per use
How do customers lower their TCO with AWS
Pricing Principles?

4. Analysts have shown AWS reduces cost over the long term
Source: IDC, Quantifying the Business Value of Amazon Web Services (May, 2015)

5. Saved 52% total cost of ownership
reduction
10’s of millions of $ saved with
first 12 apps migrated to AWS
40% reduction in fixed cost of
launching a software products
82% savings in initial stages of the
startup versus on-premise deployment
70% lower 5 year TCO per app
Source: IDC Whitepaper “ The Business Value of Amazon Web
Services Accelerates Over Time” July 2012
And we’ve heard it from our customers…

6. So you’re feeling pretty good moving to cloud…

7. Until your CFO shows up with the bill.

8. Even when your bill is going up?
How do you ensure that you’re
realizing those benefits…

9. When does efficiency matter?
0.00
0.50
1.00
1.50
2.00
2.50
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16
Usage Total Cost Unit Cost
Develop New Products Grow Scale

10. Best Practice Framework for Architecting on AWS
Performance
Ensure a system delivers maximum
performance for a set of resources.
Cost Optimization
Achieve the lowest price for a workload
taking into account fluctuating needs.
Reliability
Ensuring a given system is architected to
meet operational thresholds during a
specific period of time.
Security
Review definitions and compliance best
practices.

11. Cost optimization is…
Going from…
Pay for what you Use
To…
Pay for what you Need

12. Lowering TCO Through cost optimization
On-
Premises
Lift & Shift Instance Right-
Sizing
Improved
Elasticity
Measure,
Monitor,
Improve
Optimized EC2 Storage
Optimization
Serverless
Architecture
Managed
Services
True AWS
Optimized
Traditional TCO Comparisons

13. Where do you start?

14. The Five Pillars of Cost Optimization
Right-sizing your
instances
Pick the right
pricing model
Increase elasticity
Measuring,
monitoring &
Improve
Match usage to
storage class

15. Pillar 1: Right-Sizing
Right-sizing
• Selecting the cheapest instance available
while meeting performance requirements
• Looking at CPU, RAM, storage, and network
utilization to identify potential instances that
can be downsized
• Deploy EC2 Right Sizing Solution
Rule of thumb: Right size, then reserve.
(But if you’re in a pinch, reserve first and then modify later)

16. EC2 Right Sizing Solution
• Analyze two weeks of utilization
data from CloudWatch
• Provide detailed recommendations
for EC2 right sizing
• Auto deploy by CloudFormation
template
• Download: Cost Optimization: EC2
Right Sizing (EC2 Right Sizing)
solution Implementation Guide
• https://s3.amazonaws.com/solutions-reference/cost-optimization/latest/cost-optimization-ec2-right-sizing.pdf

17. EC2 Instance Growth
2007 2008 201120102009 20162013 2014 2015
3
60+
Increasing customer choice through accelerating
Instance innovation
Instances Launched in 2016:
• Accelerated Computing: p2
• Memory Optimized: x1.16xl
• General purpose: m4.16xl
5
7
11
12
23
42
52

18. Decoupled Architecture
1 * c4.8xlarge
36 x vCPU
60 GB
$1.848 Per Hour
2 * c4.4xlarge
16 x vCPU
30 GB
2* $0.924 = $1.848
≈
4 * c4.2xlarge
8 x vCPU
15 GB
4*$0.462 = $1.848
≈
8 * c4.xlarge
2 x vCPU
3.75 GB
8*0.231 = $1.848
≈

19. Pillar 2: Increase Elasticity
Turn off non-production instances
• Look for dev/test, non-production instances that
are running always-on and turn them off.
• Lambda + CloudWatch = Automated Scheduling*
Autoscale production
• Decoupled Architecture
• Use Auto Scaling to scale up and down based on
demand and usage (for example, spikes).
* https://aws.amazon.com/premiumsupport/knowledge-center/start-stop-lambda-cloudwatch/

20. Scaling on a Schedule Elastic Load
Balancing
Auto Scaling group
cron-like syntax for
recurring scaling
events
Schedule
individual events
(up to 135 events
per group)
Set min / max / desired capacity
Elastic Load
Balancing

21. Scaling on a Dynamic Policies
Trigger scaling events based on demand:
- Demand is measured based on metrics
- Changes in metrics can be mapped to scaling
policies
Auto Scaling group
Collect metrics
Alarm fires when
threshold is crossed
Auto Scaling
Scaling event is triggered
Elastic Load
Balancing

22. Customer Example
Monday Friday End of Vacation Season
35% saved

23. Automate, Automate, Automate
• AWS SDKs
• AWS CLI
• AWS Lambda
• AWS CloudFormation
• AWS OpsWorks
• Netflix Janitor Monkey
• Cloudlytics EC2 Scheduler
• Auto Scaling

24. Pillar 3:
Leveraging the Right
Pricing Model
Reserved Instances
Spot Instances
On-Demand

25. On-Demand
Pay for compute capacity
by the hour with no long-
term commitments
For spiky workloads, or to
define needs
Reserved
Make a 1 or 3 Year
Commitment and receive
a significant discount
over on-demand
For committed or
baseline utilization
Spot
Bid for unused capacity,
charged at a Spot Price
which fluctuates based on
supply and demand
For fault tolerant, time-
insensitive or transient
workloads
AWS EC2 Purchasing Options

26. EC2 On-Demand Pricing
Short-term, Spiky and
unpredictable
Low cost and
flexible
Develop and test

27. EC2 Reserved Instances Pricing
Upfront payments to
reduce costs
Steady State Reserved Capacity

28. Reserved Instances for Always-On Instances
Payment Options
• no upfront
• partial upfront
• all upfront
Commitment level
• 1 year
• 3 year
• RI Marketplace
* Dependent on specific AWS service, size/type, and region
Up to 75%+ savings*
(and capacity
reservation)

29. What’s New?
Introducing New Benefits to
Reserved Instances

30. How to take advantage of
Reserved Instances while
maximizing flexibility?

31. Introducing Convertible Reserved Instances
With a Convertible Reserved Instance, you can modify
your existing reservation across:
Instance families
Instance sizes
Operating systems
Tenancy

32. Standard vs. convertible RIs
Standard RI
Max Savings
Convertible RI
Max Flexibility

33. Standard vs. convertible RIs
1 Year, Standard 3 Year, Convertible 3 Year, Standard
No Upfront
31%
$0.164
38%
$0.148
N/A
Partial Upfront
41%
$0.140
47%
$0.126
60%
$0.096
All Upfront
42%
$0.138
48%
$0.124
63%
$0.089
 24% 
$0.030
 28% 
$0.035
Price of
flexibility
$306.60/yr
m4.xlarge on-demand pricing: $0.239/hr, $2,093.64/yr

34. Reserved Instances Best Practices
Step 1: Determine Business Priorities:
• Savings, flexibility, capacity
Step 2: Reserved Instance Coverage
• Cover always-on resources with standard or convertible
Reserved Instances
Step 3: Increase Reserved Instance Utilization
• Known architectures: Leverage Standard Reserved
Instance flexibility to increase utilization.
• Growing or changing architectures: Leverage Convertible
Reserved Instances across families, sizes, and OS.
• Regional Benefit: Consolidated billing to share Reserved
Instances benefits

35. EC2 Spot Pricing
Users with urgent
computing needs or
large amounts of
additional capacity
Time or instance
flexible
Experiment and/or
build cost sensitive
businesses

36. Spot Instances
• No need commitment
• Opportunity to save 80-90% cost
• Price based on supply/demand
• You choose your maximum price/hour
• Your instance is started if the Spot price is lower
• Your instance is terminated if
the Spot price is higher, with 2 minutes notice
• But: You did plan for fault tolerance, didn’t you?
90%
Savings!*
* Compared to On Demand price based on specific EC2 instance type, region and availability zone

37. Spot Rules
50% of OD
75% of OD
25% of OD
You pay the market price
87% discount!
• Markets where the price of compute changes based on supply and demand
• You’ll Never Pay More Than Your Bid

38. Consider Spot for Elastic Workloads
• “39 years of drug research re-processed, using over
80,000 cores, in just 9 hours for $4,232”
• “New infrastructure would have cost approximately $40
million to build”
• “Our business would not exist if it weren’t for Spot”
• “Spot let us compete with a billion dollar company
in AdTech”
• “With Amazon EC2 Spot instances, we save 85–90%
in costs. That, in turn, allows us to experiment with less
risk"

39. Have a balanced meal!
Why choose just one business model?

40. Strike a Balance
Finding balance between pricing options
Reserved
Instances
On-Demand Spot

41. Use a Combination of All Three!
1. Use Reserved Instances
for known/steady-state
workloads
2. Set-up multiple Scaling
groups
3. Scale using Spot, On-
Demand or both
0
2
4
6
8
10
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
/Spot
On Demand
Spot
Reserved Instance

42. Pillar 4:
Leveraging the Right
Storage Class
Block Storage
Object Storage

43. Object Storage is Foundational

44. And it’s even easier to get data
into S3

45. But are you optimizing your
object storage?

46. Object Storage Classes on Amazon S3
Active data Archive dataInfrequently accessed data
Standard
Hot
Standard - Infrequent Access
Warm
Amazon Glacier
Cold

47. Running the Numbers: S3 or S3-IA
Comparing 1 PB of object storage*
1PB Monthly
S3 S3-IA Savings %
$24,117 $14,116 41%
Rule of thumb: Breakeven = 105% Retrieved per Month
Content Accessed
per Month
10%
$24,117 $18,350 24%50%1PB Monthly
$24,117 $23,593 2%100%1PB Monthly
* Based on US-East Prices

48. Case Study: Putting it Together

49. A Technology Company
In three months…

50. A Technology Company
Doubled CPU and
traffic used by its
Web servers

51. A Technology Company
While reducing
EC2 spend by
33%
$72k saving per month!

52. How did they do it?

53. Solving the growth challenge

54. Step 1: Right-size and update instances
m1 on demand
$0.07 per ECU
c4 on demand
$0.02 per ECU

55. The impact of right-sizing
70% reduction
in unit cost

56. Step 2: Reserve

57. The impact of reservations
30% reduction
In unit cost

58. Putting it together
85% reduction
in unit cost!

60. “AWS has been a great
business partner for Beat
as we've grown rapidly
during the last year.
While the number of
Beat users has grown
rapidly, the total cost of
using AWS has not.
Through continuous cost
optimizations, the cost
per user has decreased
by 97% since we
launched the service.”
-THE BEATPACKING
COMPANY
Su-man Park, CEO-

61. Sounds pretty easy, right?
Not really.
In reality, it is very complex.
• Scale
• Behavioral change
• Visibility
• Ownership

62. Pillar 5:
Measuring, Monitoring &
Improve

63. Automation.
1. Identify always on instances.
2. Identify instances to downsize.
3. Identify warm / cold storage.
4. Recommend Reserved
Instances to purchase.
5. Dashboard our status.
6. Report on savings.

64. Tools for Measuring &
Monitoring

65. Option 1: DIY
Build your own custom dashboard

66. We’ve helped customers set up their own
dashboards and tools.
Metric tracking
savings
Spend & metrics
by account
EC2 usage by
purchase option

67. Option 2: Use a Consulting Partner

68. And partners have been successful helping
customers monitor, manage and save cost
• Free Cost Optimization Assessment
• Consolidated Billing Discount Program
• Business Support Discount Program

69. Option 3: AWS Tools
Trusted Advisor

70. AWS Trusted Advisor
Helping customers automate best practices (checks) across
cost optimization, security, fault tolerance, and performance
improvement
Red (action recommended)
Orange (investigation recommended)
Green (no problem detected)

72. Idle Test Instances Running in us-west-1

73. Automating Trusted Advisor
with AWS Lambda
AWS Trusted
Advisor
AWS
Lambda
Actions on AWS resources
Amazon
CloudWatch
events
Notifications
http://docs.aws.amazon.com/awssupport/lates
t/user/cloudwatch-events-ta.html

76. Establish Clear Targets & Metrics

77. Metrics & Targets
% Instances turned off daily
% of Instances Right-Sized
% Always on Resources Covered by RIs
% RI Utilization
What KPI makes sense for this
workload?
✔ ✔
✔ ✔
✘
✘
✘
✘
Set up metrics to define success and track progress

78. Where to Start
Set up a Cloud
Competency Center
Bring in the right
tools
Use metrics to
reinforce behavior
Use partners to
accelerate!

79. Thank you!

80. Remember to complete
your evaluations!