Optimize your cloud spending: best practices for AWS cost reduction

While it is a wise choice to get on the Cloud, staying there can be pricy. Pepperdata says that more than one-third of companies overrun their estimated cloud budget by up to 40%. If you end up with idle cloud resources or the wrong server size, your cloud environment might become more costly than an on-premise one. That is why different cloud vendors offer cloud optimization solutions to help you benefit from your cloud investments the most. In this article, however, we will focus on the AWS cloud. 

So, what are the signs that you need AWS cost reduction? How to develop an AWS cost reduction strategy and perform it effectively? What businesses have already done it successfully? Discover in this article. 

Signs you need AWS cost reduction 

If you adopt an incorrect approach to reduce costs, it could potentially compromise other aspects. For example, eliminating a cloud service to lower expenses may jeopardize the overall performance of your solution. That is why you need an experienced vendor who offers technology consulting services. 

Also, remember that reducing costs in the cloud is not the ultimate goal. You should aim to reduce costs in relation to business outcomes. If a specific cloud spending brings business value, you shouldn't reduce associated cloud costs. 

Before you opt for AWS cloud cost reduction, you must clearly understand what this can affect. However, there are several clear signs that you need to implement an AWS cost-reduction strategy. They are:

• You adopted AWS cloud several years ago

Businesses that adopted AWS a long time ago typically have more complex projects, bigger budgets, and more employees involved. For such companies, it can be more difficult to ensure that all their resources are being properly allocated. Additionally, having a larger number of employees increases the risk of human error, which can result in substantial AWS expenses. For instance, employees may forget to turn off additional cloud resources used to complete a task.

• You have a non-consistent workload

Many companies have peak workload periods, for instance, Black Fridays and the holiday seasons for retail. To handle high workloads, one option is to acquire extra cloud resources and then turn them off later. However, if your workload frequently fluctuates, it's essential to monitor the cloud resources you do and do not need.

• You don’t have a clear understanding of your AWS cloud spendings

If your organization consistently exceeds its cloud budget, it's a clear indication that you need to fix that. It is crucial to have a clear understanding of the cloud services you are using and how they benefit your business. If you lack this understanding, it's time to find a reliable technology partner who can help you track all your AWS resources and optimize them.

• Your AWS budget can be used more effectively

Understanding your spending doesn't necessarily mean that you're utilizing your resources to their full potential. In such a scenario, your technology partner can assist you in identifying alternative and more effective methods for the processes you currently have in place.

If at least one of these points matches your business case, you should consider implementing an AWS cost reduction strategy. But how to do it correctly? Let’s find out together.  

3 major steps of successful AWS cost reduction strategy

1. Cloud audit

The audit phase is crucial for any infrastructure optimization, and the cloud is no different. During this stage, it's essential to identify the reasons why optimization is necessary, the potential consequences of optimization, and how your AWS infrastructure will perform in the long term. 

Trusted vendors typically have a separate team responsible for auditing each project. At N-iX, for instance, this audit is called Product Discovery and is performed by the Solution Group. Within this phase, our team defines the scope of your solution based on the goals of various stakeholders and the user journey map while also conducting market research. The team verifies the assumptions and hypotheses from different perspectives, including Business Analysis, UX, and IT Architecture, and creates all the necessary deliverables to start the implementation phase smoothly.

Also, during the cloud assessment stage, N-iX audits your business processes to identify the potential issues associated with cost management. 

During this stage, it's crucial to:

•  Identify unused or unattached resources

The easiest way to optimize costs in the cloud is to search for unused resources. For instance, an employee may purchase a temporary server to complete a specific task and forget to turn it off once the job is completed. Alternatively, someone may neglect to remove storage connected to terminated instances. These common errors can result in charges for resources that are no longer being used and, as a result, should be optimized.

• Find and consolidate idle resources

Idle resources can result in significant costs for your organization. A resource is considered idle if it's not being fully utilized—for example, if you're using only 20% of a particular instance, it's 80% idle. However, your cloud vendor will still charge you 100%. So, it's essential to have your tech partner identify idle resources to address them properly.

• Validate resource right-sizing

Right-sizing is among the key mechanisms for AWS cloud cost reduction, but it is often overseen by businesses. It is a common problem that when adopting the cloud, companies just lift and shift their environments. Speed and performance are often prioritized over cost, which results in oversized instances and a lot of unnecessary spending on unused resources.

• Validate resource purchase options

For certain AWS services like EC2 and RDS, you can invest in reserved capacity. It means that you pay a more significant sum at first and get a discount afterward. The larger the upfront payment, the greater the discount you can get. To maximize your savings, you can pay all up-front and receive the largest discount.

2. Planning

Once the audit is complete and you've identified areas for optimization in your AWS cloud, it's time to move on to the planning stage. Your team will need to determine which optimization approach is the best fit for your business.

For example, a tried and tested N-iX approach to optimizing cloud infrastructure is creating Kubernetes clusters or Docker containers. With this approach, we can set up a system of five virtual machines and run ten applications on them. This enables our clients to reduce their hosting costs while avoiding problems if one of the machines fails. If a machine does fail, the system automatically transfers the services hosted on it to other machines. When the failed machine becomes operational again, the services will return to their original location.

3. Implementation

Once your team has a clear understanding and vision of the cloud optimization process, it's time to move on to the implementation stage. Skilled DevOps experts can help you with the following tasks: 

• Reduce infrastructure usage;
• Automate the CI/CD process and provision cloud infrastructure;
• Delete underused instances;
• Rightsize your workloads;
• Re-size resources if they are not being used;
• Leverage autoscaling to your benefit;
• Set alert notifications for crossing predetermined spending thresholds;
• Use spot instances for serverless and low-availability workloads;
• Invest in reserved instances;
• Host your resources in a different region;
• Use discounts offered by AWS.

AWS cost reduction best practices

There are many ways to implement AWS cost reduction strategies successfully. In this article, we will cover several examples to provide general information on what can be done. 

1. Utilize heat maps

Heat maps play a crucial role in AWS cloud cost reduction by providing valuable insights into computing demand. They help identify peak and off-peak times, enabling you to establish start and stop times and cut expenses accordingly. For example, heat maps can help determine whether development servers can safely shut down on weekends, reducing costs without compromising performance.

2. Right-size computing services

This refers to the process of examining and adjusting computing services to achieve the most efficient size possible. This optimization can extend beyond server sizes to memory, databases, computing power, graphics, storage capacity, throughput, and more. By working with an experienced AWS consulting provider, you can: 

• optimize EC2, Amazon ECS on AWS Fargate, Amazon EBS, and Lambda, and receive recommendations for Graviton migration with AWS Compute Optimizer; 
• realize better price performance for analytics databases with Amazon Redshift resize;
• reduce Amazon S3 storage cost by identifying cost optimization opportunities with Amazon S3 Storage Lens;
• automate data lifecycle management with Amazon S3 Intelligent Tiering.

3. Invest in cost-saving tools provided by AWS

In this article, we will only be able to cover some of the tools that AWS provides. However, keep in mind that AWS is the market leader when it comes to out-of-box services you can benefit from. So, by choosing AWS, you gain access to these services and thus don’t need to spend time and budget on custom solutions. And a trusted tech partner will help you choose the optimal AWS solution for your specific business case.  

Here are several examples of tools that can help you with AWS cloud cost reduction.

• AWS Consolidated Billing:

Amazon allows you to track the combined costs of all the AWS member accounts in your organization. So, if you have idle AWS services that don’t benefit your business, you will be able to identify and turn them off. 

• AWS Cost Explorer Resource Optimization:

This tool will identify Amazon EC2 instances with low utilization, reduce costs by stopping or rightsizing, and get a report of idle or hardly used EC2 instances. You can cut cloud spending by stopping or downsizing these instances. 

• AWS Instance Scheduler: 

It allows you to automatically stop or start instances based on demand. Additionally, you can use AWS Systems Manager Operations Center to automatically resize EC2 instances according to recommendations generated by AWS Cost Explorer. By automating these processes, you can ensure that your cloud resources are being used efficiently and cost-effectively.

4. Find a reliable technology partner

Partnering with a trusted vendor can be a great asset to your AWS cost-reduction strategy. Moreover, if you choose a vendor that has established AWS partnerships, you can access various benefits associated with that. For instance, N-iX is an AWS Advanced Consulting partner. This means that our clients can access the AWS funding for some services with us. Also, our professionals have access to AWS certifications training materials. 

AWS cost reduction in action: N-iX success stories

• Reducing infrastructure maintenance costs for a leading technology company

Our partner provides stock photography, footage, music, editing tools, and custom content tailored to a brand’s needs. They have a library of 300M+ images, with 200,000 more added daily. Our client needed to match the new needs that occurred as a result of fast business growth. To do this efficiently, they needed to modernize and replace some legacy systems they were using.

To address this issue, we opted for AWS, which simplifies the process of building, deploying, and scaling applications. This way, our client can concentrate on their business challenges rather than managing and updating the platform.

Our team has helped the client optimize and modernize a platform for companies that need custom media content: photos, videos, cinematography, etc. The solution gathers the requirements and delegates the work to the best-matching contributors from the connected network. 

We have implemented two-factor authentication using Google Authenticator. Our team has managed the entire infrastructure in AWS with infrastructure as a code approach using AWS CloudFormation and Hashicorp Terraform tools. 

We have also worked on cost optimization by conducting load testing of the system core and replacing EC2 instances with the best types/families suited for the particular type of load. This not only improved the performance of the system but also decreased the cost of the underlying infrastructure. 

• Gogo

Our client is a leading provider of in-flight connectivity with 20+ years of experience and over 1,000 employees. The business is growing and needs to support functions and decisions with analyzed and prepared data. Therefore, Gogo has decided to go for tech transformation and chose N-iX as a partner.  

The N-iX team has successfully migrated Gogo solutions to the AWS cloud and built a unified data platform. Our team has helped the client achieve the following objectives:

• Streamline operations for improved efficiency;
• Rebuild the solution using open-source technologies such as Spark;
• Develop a system from scratch for predicting failures and replacing devices;
• Build multiple high-performance analytics platforms.

As a result, we have helped the client to cut maintenance costs significantly.

Why choose N-iX for AWS cost reduction?

1. N-iX is Advanced Consulting Partner and has earned numerous AWS designations and competencies, so we can help you migrate virtually any workload, system, or solution to the Cloud.
2. With AWS, you can choose among a wide range of cost-reduction services, allowing you to control your budget, and N-iX 400 cloud experts will make sure that your cloud resources match your business demand at any moment.
3. N-iX AWS designations include AWS Data and Analytics Competency, Amazon RDS Designation, AWS Kinesis Designation, AWS Lambda Designation, Amazon API Gateway Designation, AWS DynamoDB Designation, and more.
4. With 21 years of market presence, N-iX has helped dozens of companies, including midsize businesses, large enterprises, and Fortune 500 leaders, achieve their goals with cloud transformation. During this time, we have completed over 200 cloud projects, including over 30 migration projects in manufacturing, telecom, fintech, automotive, and other industries.