This document provides an overview of cost optimization strategies when using AWS. It discusses building cloud architectures with cost in mind by following best practices like right-sizing instances, using the appropriate pricing model, and matching usage to the proper storage class. It also covers implementing and maintaining cost optimization at scale through automation, measurement, and monitoring. Key recommendations include tagging resources, using tools like AWS Trusted Advisor, and potentially working with partners to help manage costs across accounts and metrics.

1. © 2017, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Heather Matson, Senior Account Executive Education
Randy Ridgley, Solutions Architect
February 2017
Cost Optimization at Scale

2. What to expect
We will introduce our framework for optimizing your
AWS bill by focusing on paying only for what you
need.
Share lessons learned based on examples from some
of our most successful customers.
And leave you with actionable ideas to take back to
the office to implement immediately.

3. Chapter I: Build With Cost In Mind
(Well Architected)

4. 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.

5. How do customers lower their TCO with AWS?
1
Source: IDC Whitepaper, sponsored
by Amazon, “The Business Value of
Amazon Web Services Accelerates
Over Time.” December 2013
“Average of 400
servers replaced per
customer”
Replace up-front
capital expense with
lower “pay for what
you use” variable cost
model
3
59 Price
Reductions
since 2006
Economies of scale
allow AWS to
continually lower costs
2
Pricing model choice to
support variable & stable
workloads
On-Demand
Reserved
Spot
Dedicated

6. Lowering TCO through cloud optimization
Lift and Shift Optimized for the Cloud Designed for the cloud
Micro-services & Serverless
Managed ServicesInfrastructure Services
TCO : up to 30%* TCO : up to 58%* TCO : up to 75%*
*https://aws.amazon.com/economics/learn-more/
Ex:
Amazon EC2, Amazon EBS,
Amazon EFS, Amazon VPC,
VM Import/export…
Ex:
Amazon RDS, Amazon Aurora,
Amazon Elasticache,
Amazon Redshift,
Amazon OpsWorks,
Amazon ElasticSearch,
Amazon EMR
Ex:
Amazon S3, Amazon SQS,
AWS Lambda, Amazon Kinesis,
Amazon DynamoDB,
Amazon Cognito,
AWS DMS, AWS WAF,
AWS IOT

7. Where do you start?

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

9. 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
• Leveraging Amazon CloudWatch metrics and
setting up custom RAM metrics
Rule of thumb: Right size, then reserve.
(But if you’re in a pinch, reserve first.)

10. Pillar 2: Increase Elasticity
Turn off nonproduction instances
• Look for dev/test, nonproduction instances that are
running always-on and turn them off.
• Lambda + CloudWatch = Automated Scheduling*
Autoscale production
• 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/

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

12. On-Demand Instances
Short-term, spiky and
unpredictable
Low cost and
flexible
Develop and test

13. Reserved Instances for Always-On Instances
Commitment level
• 1 year
• 3 year
AWS services offering Reserved
Instances
• Amazon EC2
• Amazon RDS
• Amazon DynamoDB
• Amazon Redshift
• Amazon ElastiCache
* Dependent on specific AWS service, size/type, and region

14. 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

15. …Convert Your Reserved Instances
With a Convertible Reserved Instance, you can modify your
existing reservation across:
Instance families
Instance sizes
Operating systems
Tenancy

16. Convertible Reserved Instance details
Commitment level
• 3 year
AWS services offering
Reserved Instances
• Amazon EC2
* Dependent on specific AWS service, size/type, and region

17. Reserved Instances
Step 1: Reserved Instance Coverage
• Cover always-on resources with standard or
convertible Reserved Instances
Step 2: 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, reservation
not critical

18. Spot Instances
Users with urgent
computing needs or
large amounts of
additional capacity
Time or instance
flexible
Experiment and/or build
cost-sensitive businesses

19. Consider Spot for Elastic Workloads
Options
• Spot Fleet to maintain instance
availability
• Spot Block durations (1-6 hours)
for workloads that must run
continuously
Commitment level
• None
* Compared to On Demand price based on specific EC2 instance type, region, and Availability Zone

20. Spot Rules
50% of OD
75% of OD
25% of OD
You pay the market price
87% discount!
You’ll Never Pay More Than Your Bid

21. Which EC2 purchasing model is right for me?

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

23. “But my applications are
too small
for Auto Scaling!”

24. Amazon EC2 Container Service
• Easily manage Docker containers
• Flexible container placement
• Designed for use with other AWS services
• Extensible
• Performance at Scale
• Secure

25. 10%
15%
7%
12%
20%
9%
Consolidate with Amazon ECS
App 1 App 2
App 3 App 4
App 5 App 6
6
12 34
5
Amazon ECS
cluster

26. Get rid of idle time with AWS Lambda
• Automatic scaling
• Automatic provisioning
• No need to manage infrastructure
• Just bring your code
• $0.20 per million requests, 1M free
• 100 ms payment granularity
• Never pay for idle
Less than 40% utilization?
Consider using AWS Lambda instead!

27. Use case: Serverless web apps
• Amazon S3 for serving static content
• AWS Lambda for dynamic content
• Amazon API Gateway for https access
• Amazon DynamoDB for NoSQL data storage
Dynamic content in
AWS Lambda
Data stored in
Amazon DynamoDB
API Gateway
Static content in
Amazon S3
Browser

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

29. AWS Import/Export Snowball
• Accelerate PBs with AWS-provided
appliances
• 80 TB model, global availability
AWS Storage Gateway
• Instant hybrid cloud
• Up to 120 MB/s cloud upload rate
(4x improvement), and
Data ingestion into AWS storage services
Amazon Kinesis Firehose
• Ingest device streams directly into
AWS data stores
AWS Direct Connect
• COLO to AWS
ISV Connectors
• CommVault
• Veritas
• etcetera
Amazon S3 Transfer Acceleration
• Move data up to 300% faster
using AWS’s private network

30. AWS Import/Export Snowball
• Accelerate PBs with AWS-provided
appliances
• 80 TB model, global availability
AWS Storage Gateway
• Instant hybrid cloud
• Up to 120 MB/s cloud upload rate
(4x improvement), and
Data ingestion into AWS storage services
Amazon Kinesis Firehose
• Ingest device streams directly into
AWS data stores
AWS Direct Connect
• COLO to AWS
ISV Connectors
• CommVault
• Veritas
• etcetera
Amazon S3 Transfer Acceleration
• Move data up to 300% faster
using AWS’s private network

31. But are you optimizing your object
storage?

32. Active data Archive dataInfrequently accessed data
Milliseconds Multiple Retrieval RatesMilliseconds
$0.023 / GB / mo* $0.004 / GB / mo$0.0125 / GB / mo
Object Storage Classes on Amazon S3
* First 50TB, Next 450TB $0.022 / GB, Over 500TB $0.021 / GB
Standard
Hot
Standard - Infrequent Access
Warm
Amazon Glacier
Cold

33. 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

34. Case Study: Putting it Together

35. A Technology Company
•In three months…

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

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

38. How did they do it?

39. Solving the growth challenge

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

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

42. Step 2: Reserve

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

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

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

46. Chapter II: Implement & Maintain
(Well Operated)

47. How do you implement those best
practices at scale?
(Spoiler Alert: Remember the 5th Pillar of Cost Optimization?)

48. Pillar 5: Measure & Monitor

49. 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.

50. Enabling Cost Transparency

51. Enabling Cost Transparency
Must have tagging:
• Cost center
• Application or workload
• User
• Expiration date
• Automation support

52. Tools for Measuring &
Monitoring

53. Option 1: DIY
Build your own custom dashboard

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

55. Option 2: Use a Partner

56. And partners have been successful helping
customers monitor & manage cost

57. Option 3: AWS Tools
Trusted Advisor

58. 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)

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

61. 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/latest/
user/cloudwatch-events-ta.html

64. AWS Billing alerts

65. AWS Billing console

66. Leverage managed services
• Use Amazon RDS, DynamoDB,
ElastiCache for Redis or
Amazon Redshift
• Instead of running your own database
• Amazon EMR, Elasticsearch Service
• Instead of running your own cluster
• Amazon SQS
• Amazon Kinesis,
Amazon Kinesis Firehose, Analytics,
Amazon SNS, and more …
AWS has experts for each service
RDS
Amazon Redshift
Amazon
Elasticsearch
Service
Amazon Kinesis
SQS

67. Establish Clear Targets & Metrics

68. Metrics and Targets
• % instances turned off daily
• % of instances right-sized
• % always-on resources covered by Reserved
Instances
• % Reserved Instance utilization
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Define success by establishing metrics and track progress
Cost-Based

69. Cycle of cost optimization
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70. Thank you!
Heather Matson – matsonh@amazon.com
Randy Ridgley – rridgley@amazon.com