This document discusses optimizing AWS costs through governance practices and metrics. It recommends encouraging teams to architect for cost, designating people responsible for optimization, and establishing an approval process for resources. Key metrics for measuring optimization include rightsizing savings, RI coverage, utilization, savings, and elasticity. Putting the right governance practices in place, including training and incentives, enables ongoing optimization efforts to be measured through metrics.

1. AWS-Atlassian ANZ
Commercial Optimisation (CO)
Interest Group
ANZ Sydney Meetup 2
Sept 2017
© 2016, Amazon Web Services, Inc. or its Affiliates. All rights reserved.

2. Talk 1 – Governance & Optimisation Metrics
1. What does optimised look like?
2. Common governance practices to promote & enable optimisation
3. How to measure RI savings & potential
4. How to measure elasticity & elasticity savings (i.e. impact of on-off)
5. Rightsizing 101 & measures
6. Putting it all together

3. What does optimised look like?
Hard metrics: Degree to which
operational/financial optimisation
levers are being used
Soft factors/Governance:
Process, Policy,
Tools, & People

4. What does optimised look like?
Governance: Process, Policy, Tools, & People
• Note the items that are mentioned next applies
more to larger orgs
• Not applicable to everyone but they are commonly
observed across customers

5. 1. Encourage & enable teams to architect for cost
Incentive,
skills, time
investment
Speed to
customer
Performance
SecurityReliability
Cost &
Optimisation
effort

6. Few lessons to be learned from sports
Good coaches don’t just ask their teams
to win, they put in place & encourage
practices that lead to winning

7. Training resource to inspire your teams

8. What does this look like in practice?
Architecture review process
that considers cost
(incl. Serverless & Spot)
Cloud best practice
Onboarding & ongoing
training program
Gamification of results
(e.g. Linux leaderboard,
badges for training completion)

9. 2. There are people responsible for optimisation

10. 3. There’s an orchestration & approval process*
* Balance between agility vs. optimisation & control

11. 4. Agree mandatory (cost) tags with
stakeholders from the Business
Tagging -> Allocation -> Chargeback -> Ownership
Brings IT and business closer together

12. 5. Address improper tagging
???
App
BU
Owner
Warning about untagged resources or turning them off

13. You can address with missing or misspelt tags with
AWS tools or open source tools
https://github.com/capitalone/cloud-custodian
A feature rich open source solution to
monitor tagging compliance and
remediate issues
Capital One’s Cloud Custodian

14. • Involve the right people
(Engineering, Finance, Management)
• Review relevant, actionable information
• Engineers see daily spend rate
• Finance teams track changes in spend against budgets
• Managers see spend and optimisation by BU
• Set targets for optimisation
• Use tools to accelerate conversations (e.g. DIY,
CloudHealth, Cloudability, CloudCheckr, Cost Explorer)
6. Set metrics and targets and a review cycle

15. Please
make this
number
better
Here’s a basic example of a target metric

16. Time (months)
% of
Linux/Unix
(incl. CentOS)
instances
Time (months)
% of
non-prod
turned off
daily
Last month’s corresponding
daily burn rate = $1,600
Daily burn rate = $1,400
Last month’s tagging %
= 85%
Intermediate example of target metrics*
Custom dashboards can help focus engineering effort & show results
Tagging % = 89%
*Engineer relevant dashboard

17. Advanced example of target metrics
Time (months)
Cost per customer-
activity-time
by application
(normalizing by
month price inflation)
$ per
customer-activity-time
AWS re:Invent 2015 | (ISM309)
Efficient Innovation: High-Velocity Cost Management at Netflix
https://bit.ly/co17_video4

18. What does AWS Platform Cost Optimisation look like?
Hard Metrics
Hard Metrics: Degree to which operational/financial
optimisation levers are being used
• RI coverage and utilisation
• Elasticity savings
• RI savings realised and potential
• Rightsizing savings and potential

19. Metrics must have targets

20. Rightsizing

21. Rightsizing

22. Rightsizing

23. Rightsizing - Potential savings
SUM(Potential Savings (Use 3rd party tooling))

24. Rightsizing - Actual savings

25. Rightsizing - Target Wastage

26. Rightsizing - Potential savings percentage
SUM(Potential Savings (Use 3rd party tooling))

27. Rightsizing - Potential savings percentage
SUM(Potential Savings (Use 3rd party tooling))
———————————————————————
SUM(Service Costs)

28. RI coverage
Reserved
OnDemand

29. RI coverage - The Crude Method 1.0
Reserved Instance Hours / Total Instance Hours = Coverage

30. RI coverage - Coverage Comparison

31. RI coverage - Coverage Comparison
90%69%

32. RI coverage - Coverable Hours

33. RI coverage - The Crude Method 2.0
Reserved Instance Hours / Total Coverable Instance Hours = Coverage

34. RI coverage - The Crude Method 2.0
Reserved Instance Hours / Total Coverable Instance Hours = Coverage

35. RI coverage

36. RI coverage - Coverage Comparison
90%80%

37. RI coverage - Instance Hours
1h
1h
1h
1h
1h
1h
1h
1h

38. RI coverage

39. RI coverage - Instance Rate
$
$
$
$
$
$
$
$

40. RI coverage - Instance Rate
$
$
No Upfront
Partial Upfront
All Upfront
$
OnDemand

41. RI coverage - Instance Rate
$
OnDemand

42. RI coverage - Coverage Comparison
90%80%

43. RI coverage - Coverage Comparison

44. RI coverage - Coverage Comparison
Reservations

45. RI coverage - Coverage Comparison
By Instance Hour
90%80%

46. RI coverage - Coverage Comparison
By Instance Rate
68%99%

47. RI coverage - The Right Method 1.0
Reserved Instance Hours (By OD Rate)
—————————————————————
Total Coverable Instance Hours (By OD Rate)

48. Elasticity

49. Elasticity

50. Elasticity - Calculating Savings Crude Method
Actual Instance Hours (By OD Rate)
—————————————————————
Peak Instance Hours (By OD Rate)
1 -

51. Elasticity - Calculating Savings Crude Method
Actual Instance Hours (By OD Rate)
—————————————————————
Peak Instance Hours (By OD Rate)
1 -

52. RI Elasticity

53. RI Elasticity

54. RI Elasticity

55. Elasticity - Calculating Savings
Actual Instance Hours (By OD Rate)
—————————————————————
Peak (Per Class) Instance Hours (By OD Rate)
1 -

56. RI utilisation
Used
Unused

57. RI utilisation

58. RI utilisation

59. RI utilisation

60. RI utilisation

61. RI utilisation

62. RI utilisation

63. RI utilisation

64. RI utilisation - Crude Method
—————————————————
SUM(Used Reserved Instance Hours)
SUM(All Reserved Instance Hours)

65. RI utilisation - Reserved Instance Hours
1h
1h
1h
1h
1h
1h
1h
1h

66. RI coverage - Reserved Instance Rate
$
$
$
$
$
$
$
$

67. RI coverage - Reserved Instance Rate
$
$
No Upfront
Partial Upfront
All Upfront

68. RI coverage - Reserved Instance Rate
RI Type Upfront Hourly Amortised
No Upfront $0 $0.062 $0.062
Partial Upfront $258 $0.03 $0.059
All Upfront $507 $0 $0.058
m4.large amortised costs

69. RI utilisation - Utilisation
———————————————————————
Used Reserved Instance Hours (By Amortised Rate)
Total Reserved Instance Hours (By Amortised Rate)

70. RI savings

71. On Demand Rate - Amortised RI Rate = Savings Rate
RI savings

72. SUM(Used Reserved Instance Hours (by Savings Rate))
RI savings

73. SUM(Used Reserved Instance Hours (by Savings Rate)
Subtract(SUM(Unused Reserved Instance Hours (by Amortised Rate))
RI savings

74. RI potential savings

75. SUM(ALL Coverable Instance Hours (by Savings Rate))
RI potential savings

76. Metrics
RI Utilisation RI SavingsRI Coverage
ElasticityRightsizing

77. Putting it all together: Optimize then measure,
Enabled by Governance: Process, Policy, and People
Right-Sizing Your
Instances
Pick the Right
Pricing Model
Increase
Elasticity
Governance:
Process, Policy,
and People
Match usage to
storage class

78. Soft factors: Process, Policy, Tools, & People
3. Orchestration &
Approval
4. Agree Tagging with
Stakeholders
1. Enable Architecting
for Cost
5. Address
Improper Tagging
6. Metrics, Targets,
and review
?

79. Everyone has a role to play in enabling optimization
Driving Cloud strategy
& a lean culture
(better than good controls)
Reporting &
Cost allocation
for ownership
Learning, executing
and communicating
$ impact