The document discusses how to manage costs and spend budgets on AWS. It introduces AWS cloud economics and outlines strategies for cost efficiency, including rightsizing resources, using reserved instances, scheduling non-production resources to turn off outside work hours, and designing infrastructure for cost optimization. It also discusses how more mature AWS customers approach cloud financial management through partnerships between technology and finance teams and by leveraging AWS cost tools to monitor and optimize spending. The overall goals are understanding AWS cloud costs, managing costs efficiently, and achieving greater cloud financial maturity to stay within budgets.

1. P U B L I C S E C T O R
S U M M I T
SINGAPORE

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Making Friends with Finance:
How to Manage Cost Efficiency
and Spend to Budget on AWS
Peter Shi
Cloud Financial Management Lead
Amazon Web Services

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Agenda
• Introduction to AWS Cloud Economics
• Managing cost efficiency
• Cloud financial maturity and spending to budget

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AWS lets you avoid waste and
meet peak organisation and customer demand
Traditional hardware spend
Demand
for IT
AWS
Cloud
Peak
demand
met
Avoided
waste
Avoided
waste
Large
capex

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Beyond taking action to optimise spend, customers
achieve cost savings on AWS in other ways as well
73 price
reductions
Economies of scale allow AWS
to continually lower costs
Save more as you use
more
1 2
Tiered pricing,
credits, discount programs
Lower the cost of
experiments
3
Pre-existing templates
turn off experiments that
don’t add enough value

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Customers have realised value beyond cost savings
Staff
productivity
Business
agility
Operational
resilience
Scaled by 1,000% in one year
and reduced dev project time
by months (iTrueMart)
Significantly more reliable,
99.999% availability
(SUSS)
Deploys SAP 93%
faster (Visy)
Efficiency improvement;
reduced wait times and
downtime
Better SLAs, reduced
outages and MTTR,
and security
Faster application
deployment, global reach, and
lower cost of experimentation

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We should care about cost efficiency because we
want to keep our promises

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The technical pillars of cost optimisation
Right-size and
decommission
unused resources
Use reserved
instances
Turn off resources
outside of work
hours
Design for
cost

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You can pick the cheapest type of resource you need to get
the job done
General Purpose
Compute Optimised
Memory Optimised
Accelerated Computing
Storage Optimised

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Find unused resources using tools like AWS
Trusted Advisor (available via business support)
Unattached
Elastic IPs
Unattached
Amazon EBS
Old snapshots
Idle or unattached
load balancers
AWS Trusted
Advisor
Idle Amazon EC2,
Amazon RDS
instances

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Manage this with your first efficiency metric
1) Right-sizing and unused %
(Right-sizing savings +
Trusted Advisor savings) /
Total spend
Are my resources fit to need?

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AmazonEC2hours
Dev/test off out
of business hours
Turning off non-production resources outside of work hours can
save 70% or more of your non-production spend

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AmazonEC2hours
Dev/test off out
of business hours
Dev/test off by
default
Turning off non-production resources outside of work hours can
save 70% or more of your non-production spend

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Add a second efficiency metric
1) Right-sizing and unused %
(Right-sizing savings +
Trusted Advisor savings) /
Total spend
Are my resources fit to need?
2) On-off scheduling %
1 – (average weekday spend /
average weekend spend)
Is non-production turning on-off as
expected outside of work hours?

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RI
coverage
Total $
Key
Reserved Instances (RIs) for one customer
resulted in a 39% decrease in unit cost
Reserved Instance
purchase

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RIs are most often used for always-on instances
(can still be used to save for non-always on)
Commitment level
One year (approx. payback 7-10 months)
Three year (approx. payback 10-20 months)
AWS services offering RIs
Amazon EC2 & Amazon EC2 Hosts
Amazon RDS
Amazon Redshift
Amazon ElastiCache
Amazon ES
Amazon DynamoDB*
Amazon CloudFront*
*Discount for commitment, but not an RI

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Add a third efficiency metric
1) Right-sizing and unused %
(Right-sizing savings +
Trusted Advisor savings) /
Total spend
Are my resources fit to need?
2) On-off scheduling %
1 – (average weekday spend /
average weekend spend)
Is non-production turning on-off as
expected outside of work hours?
3) RI Efficiency %
% RI coverage and % RI utilisation
Am I paying less for the same
capacity and am I using the
capacity I paid for?

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Designing for cost
Containerisation (staff productivity
and compute utilisation)
Amazon EC2 Spot
AWS CloudFormation
(developer time saving)
Serverless and
AWS Lambda
ELB to Application Load
Balancer
Deliver content with
Amazon CloudFront and Caching
(lower compute and data transfer)
Open source platforms and
databases (reduced licensing cost)
AWS Auto Scaling up and
down to match peak demand
Running resources in a
cheaper region
Static web hosting on Amazon S3
and using Amazon S3 Select

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What savings can we realise
from these activities?

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A 10x difference can be achieved before using Spot
demonstrated via the Simple Monthly Calculator

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Firstly, mature customers understand that there is a shift in
how IT spend occurs and adapt to the change
Traditional IT spend
1. Large investment
2. Paid upfront
3. Largely static in BAU budget
4. Hard to undo or optimise
5. Costs may be hidden/quoted
based on size of customer
Cloud IT spend
1. Smaller investments
2. Paid on an ongoing basis
3. Can/should be dynamic in BAU
4. Easy to undo, can optimise
5. Costs are public

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Mature customers take advantage of the spend
transparency AWS provides to drive cost awareness

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Use AWS Cost Explorer, AWS Budget, and tags to be
aware of your spend
1. AWS Cost Explorer
Monthly
AWS invoice
2. AWS Budgets
Move towards tools
with greater speed to
insight
3. Use tags

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Add a fourth spend management metric
1) Right-sizing and unused %
(Right-sizing savings +
Trusted Advisor savings) /
Total spend
Are my resources fit to need?
2) On-off scheduling %
1 – (average weekday spend /
average weekend spend)
Is non-production turning on-off as
expected outside of work hours?
3) RI Efficiency %
% RI coverage and % RI utilisation
Am I paying less for the same
capacity and am I using that
capacity I paid for?
4) Spend against budgets
Split by BU, account, service,
etc, and % valid tagging
In which areas am I spending
the expected amount?

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Mature customers update their
deployment and budgeting process

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Cloud cost estimation, budget, and forecast cadence
5b) End experiment
due to insufficient
value or cost/value
1) Cost estimation
and design with
cost in mind
3) Compare
actual vs.
expected cost
4) Cost
Optimisation
5a) Operationalise and
update BAU forecast
Fail fast,
save time
and capital
2) Deploy
6) Periodically review
value

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Consider optimisation when estimating spend
• Design for cost upfront
• Include turn-off time
• Include reserved instances
2) AWS pricing calculator
1) Simple Monthly Calculator
Self-serve tools Supported options
3) Migration Acceleration
Program (MAP)
4) Contact AWS sales
(incl. for TSO Logic)
Tips for new workloads Tips for migrating workloads
New!
• Understand peak utilisation (i.e. peak CPU and RAM)
via tools like hypervisor monitoring or TSO Logic
• Understand usage pattern (e.g. % of time off)

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Mature customers strike a partnership
between technology and finance

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The finance + tech partnership combined with cost visibility enables
efficiency and informed allocation of resources
REA’s story
http://bit.ly/FinOpsAtREA
Expedia’s story
http://bit.ly/ExpediaCFM

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Summary of outcomes
• Understanding AWS Cloud Economics
• Understanding how to manage cost efficiency
• Greater cloud financial maturity and ability to spend to budget

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Takeaway infographic
The economics of AWS
Using AWS in a cost efficient way
How to manage your spend on AWS
Please reach out if you need any more info
http://bit.ly/cloudeconintro2019

37. Thank you!
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Peter Shi
https://www.linkedin.com/in/petershiaws/