This document discusses how to optimize costs when using AWS. It recommends: 1) Architecting for cost efficiency by "paying for what you think you need"; 2) Optimizing usage costs by "paying for what you use"; and 3) Taking advantage of benefits over time by "paying for what you really need". It provides examples of using the right instance types, reserved instances, spot instances, and services to reduce costs. It also recommends monitoring billing closely and using tools like Trusted Advisor and the TCO calculator to find additional savings.

1. Cost Optimization on AWS
Rolf Kersten
Business Development Manager

2. A Couple Assumptions…
1. You’re using AWS…
2. You like it!!
3. But probably want to
spend less

3. AWS Pricing Philosophy
More AWS
Usage
More
Infrastructure
Economies
of Scale
Lower
Infrastructure
Costs
Reduced
Prices
More
Customers Ecosystem
Global Footprint
New Features
New Services
Infrastructure
Innovation
We pass the savings along to our
customers in the form of low
prices and continuous reductions
51

4. 1.
Architect for
Cost Efficiency
„Pay for what You
think you need“
2.
Optimize Usage
Costs
„Pay for what you use“
3.
Take
Advantage
of Benefits
over Time
„Pay for what
you really need“
Cost Optimization with AWS

5. 1.
Architect for
Cost Efficiency
2.
Optimize Usage
Costs
3.
Take
Advantage
of Benefits
over Time

6. Proactively Monitor Your Account Billing Usage…

7. By Using Detailed Billing Reports and
Enabling Billing Alerts…

8. …Alongside Cost Explorer
http://amzn.to/1zHE2Fj

9. EC2 Instance Usage Reports
Cost per Instance Type per Hour,
Day or Month
..or…
Instance Hours per Instance Type
per Hour, Day or Month
All Data can be exported
More Information: http://docs.aws.amazon.com/AWSEC2/latest/UserGuide/usage-reports.html

10. Fit your payment model to your business model: EC2 pricing plans
On-Demand
Instances
Reserved
Instances
Spot
Instances
Pay as you go for computing
power
Flat hourly rate, no up-front
commitments
Pay an up-front fee for a
capacity reservation and a lower
hourly rate (up to 72% savings)
1-year or 3-year terms
RI Marketplace: Buy RIs with
short remaining terms
Pay what you want for spare EC2
capacity: your instances run if
your bid exceeds the Spot price
Potential for large scale at low
cost: When they’re available,
take advantage of 1,000s of Spot
Instances at up to 90% savings
10:00
10:05
10:10
10:15

11. Standard Reserved Instances
• You commit to pay for an instance for one or three years
• We reserve the capacity, and offer you considerable savings over On Demand during the
term
• You decide how you pay:
• No Upfront (Just hourly charges for all hours of the term)
• Partial Upfont (Upfront Payment, plus hourly charges for all hours of the term)
• All Upfront (Upfront Payment only)

12. Self Service Reserved Instance Utilization Reports
RI „Bucket“
On Demand
-
(Usage
+ amortized
upfront fee)
More Information: http://docs.aws.amazon.com/AWSEC2/latest/UserGuide/usage-reports.html

13. Spot Instance Use Case:
HPC Clusters On Demand
• Increase efficiency of solar panels by analysing 205.000 materials
• 156.314 computing cores used at AWS, all regions, for 18 hours
• Bill: $33.000
http://blog.cyclecomputing.com/2013/11/back-to-the-future-121-petaflopsrpeak-156000-core-cyclecloud-hpc-runs-264-years-of-materials-science.html

14. • Base Price - On Demand: No Commitment, Pay only what you
use, no capacity reservation but once started no interruption
• 10% less - Scheduled Reserved Instances: Commit to
Schedule of at least 1200 hours for one year, capacity
reservation
• 30-60% less - Standard Reserved Instances: Commit to one or
three years, capacity reservation
• 40-60% less - Spot Blocks: Bid for 2-6 hours blocks of
uninterrupted time
• Up to 85% less - Spot: Bid for instances, interrupted if market
price higher than your bid price, 2mins advanced notice
An EC2 Cost Optimization Option for every Need

15. Combine all the Options!
1. Start by using RIs for
known/steady-state
workloads
2. Set-up multiple autoscaling
groups
3. Autoscale first using Spot first
4. If Spot instances are
unavailable (or priced too
high), use On-Demand
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

16. Trusted Advisor: Enterprise Strength Monitoring and Optimization
• Monitors and recommends
optimizations for:
– Cost
– Security
– Fault Tolerance
– Performance
• Available to customers with
Business and Enterprise-
level support
• Now four checks available
as free tier! http://aws.amazon.com/premiumsupport/trustedadvisor/
“Over the last couple years, we’ve sent more than 2.6 million Trusted Advisor
notifications that have saved customers over US$350 million dollars.”

17. Trusted Advisor: Cost Optimization Tips

18. Leverage The Right Storage Classes…
AWS Cloud
Amazon
Glacier
Gateway Appliance/ AWS
Storage Gateway
Amazon S3
Block File
On-premises Data Center
Archive Backup Disaster
Recovery
Amazon
EBS
• Amazon S3 Reduced Redundancy
‒ 99.99% durability vs. 99.999999999%
• Amazon S3 Infrequent Access
‒ For data accessed less than two times a
month
• Amazon Glacier
‒ Same durability as S3
‒ 3 to 5 hours restore time
‒ Up to 65% savings
‒ Great for archiving, long-term backups
and old data
Amazon EFS
(Preview)

19. …Alongside AWS Managed or Application
Services…
Elastic Load
Balancing
(ELB)
Amazon Relational
Database Service
(RDS)
Amazon
ElastiCache
Amazon
DynamoDB
Amazon Simple
Queue Service
(SQS)
Amazon Simple
Email Service
(SES)
Amazon
Lambda
Amazon Elastic
MapReduce
(EMR)
Amazon Simple
Notification Service
(SNS)
Amazon
Kinesis
Amazon
Route 53
Amazon
Redshift

20. To Offload Your Architecture…
+
Standard Setup
• 4 x Medium Instances
$193
• AWS Data Transfer 1 TB
$92
• Total = $285
Optimized
• 1 x Medium Instance
$48
• CloudFront Data 1 TB
$87
• CloudFront Requests (10M)
$7.5
• Total = $142.5
50%
6X
Cheaper
Faster

21. Intro toAmazon EC2 Dedicated Infrastructure
Comparing Dedicated Hosts to Standard EC2 Instances
 Multi-tenant servers host instances for multiple
customers’ workloads
 AWS determines which hosts instances run on
 You pay per instance
 Single-tenant servers host instances for one
customer’s workloads
 You can determine which hosts instances run
on
 You pay per host
Standard Amazon EC2 Instances Amazon EC2 Dedicated Hosts
EC2 Instance
Customer 1
Customer 3
Customer 5
Customer 2
Customer 4
Customer 6
Customer X
Amazon EC2
Dedicated Hosts
Comparing Dedicated
Hosts to Standard EC2
Instances
Dedicated Hosts give
you license flexibility
Amazon EC2 Dedicated
Instances
Dedicated Infrastructure
payment options
Dedicated Hosts
On-Demand Pricing
Dedicated Reserved
Instances Pricing
Leveraging the power of
the cloud compliantly

22. Intro toAmazon EC2 Dedicated Infrastructure
Dedicated Hosts give you license flexibility
When running Microsoft Workloads, for example:
 Instance-host affinity allows you to comply with the 90 day rule
 Per-core and per-socket visibility enables reporting at the physical level
 Placement controls ensure that instances run on the server you want them to,
helping you meet stringent compliance and regulatory requirements
 AWS Config allows you to record when instances start, stop, or are terminated
for license reporting and true-ups
Amazon EC2
Dedicated Hosts
Comparing Dedicated
Hosts to Standard EC2
Instances
Dedicated Hosts give
you license flexibility
Amazon EC2 Dedicated
Instances
Dedicated Infrastructure
payment options
Dedicated Hosts
On-Demand Pricing
Dedicated Reserved
Instances Pricing
Leveraging the power of
the cloud compliantly

23. 1.
Architect for
Cost Efficiency
2.
Optimize Usage
Costs
3.
Take
Advantage
of Benefits
over Time

24. How do customers lower their TCO with AWS?
1
Source: IDC Whitepaper, sponsored
by Amazon, “Quantifying the
Business Value of Amazon Web
Services” May 2015
“Average of 400
servers replaced per
customer”
Replace up-front
capital expense with
lower “pay for what
you use” variable
cost model
3
Periodic Price
Reductions
Economies of scale
allow AWS to
continually lower
costs
4
Save more money as
you grow bigger
Tiered Pricing
Volume
Discounts
2
Pricing model choice
to support variable &
stable workloads
On-Demand
Reserved
Spot
Dedicated

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

26. …and that these benefits increase over time
Source: IDC Business Value of AWS Accelerates over time
According to IDC, this relationship between length of time using AWS and return is due to customers leveraging the more optimized
environment to generate more applications along a learning curve.
$1 Investment in AWS
$8.40 in benefits
At 60 Months of using AWS
~8X
$3.50 in benefits
$1 Investment in AWS
At 36 Months of using AWS
~3X

27. Comparing TCO is not easy
(But We’re Going to Try)
≠

28. Elements of Infrastructure TCO
Diagram doesn’t include every cost item. E.g. software costs can include database, management, middle tier software
costs. Facilities cost can include costs associated with upgrades, maintenance, building security, taxes etc. IT labor costs
can include security admin and application admin costs.
Hardware – Server, Rack
Chassis PDUs, ToR
Switches (+Maintenance)
Hardware – Storage Disks,
SAN/FC Switches
Network Hardware – LAN
Switches, Load Balancer
Bandwidth costs
Server Admin Virtualization Admin
1
2
3
4
Server
Costs
Storage
Costs
Network
Costs
IT Labor
Costs
Software - OS, Virtualization
Licenses
(+Maintenance)
Storage Admin costs
Network Admin Costs
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling
Facilities Cost
Space Power Cooling

29. AWS TCO Calculator: Example Cost Savings
http://awstcocalculator.com

30. 1.
Architect for
Cost Efficiency
„Pay for what You
think you need“
2.
Optimize Usage
Costs
„Pay for what you use“
3.
Take
Advantage
of Benefits
over Time
„Pay for what
you really need“
Summary: Cost Optimization with AWS

31. Rolf Kersten
Head of EMEA Platform Business Development
kerstenr@amazon.de