5 Essential AWS Cloud Cost Optimization Strategies

What is AWS Cloud Cost Management?

AWS Cloud Cost Management refers to the processes, tools, and practices used to plan, organize, report, analyze, and control the usage of Amazon Web Services (AWS) resources and their associated costs. Unlike simply categorizing its tools as cost management, AWS adopts the term "cloud financial management," encompassing a broader range of services and optimization techniques.

The AWS cost management process involves the following:

1. Cost Visibility: Continuously improving visibility into cloud expenditures to understand spending patterns and identify cost drivers.
2. Resource Optimization: Selecting and allocating just enough computing power, storage, and other cloud resources to ensure efficient task execution while minimizing waste.
3. Forecasting and Budgeting: Predicting future costs based on usage trends and establishing budgets to control spending.

AWS Cost Management is essential for organizations looking to optimize their cloud spending and enhance financial control. By implementing best practices for AWS Cost Management, companies can maximize their cloud investments, ensuring optimal performance while minimizing unnecessary expenses. 

Why is AWS Cloud Cost Management Important?

• Cost Optimization: AWS cost management enables enterprises to gain valuable insights into their costs and usage. This helps identify opportunities for cost savings by pinpointing underutilized resources, eliminating wasteful spending, and optimizing overall AWS expenses. For example, organizations can identify EC2 instances that are not fully utilized and either resize or shut them down to reduce costs. Additionally, examining unexpected data transfer costs can lead to better strategies.
• Predictability: Effective cost management tools can predict future AWS costs based on historical usage patterns. This predictability helps organizations budget more accurately, avoid cost overruns, and ensure that spending aligns with business objectives.
• Resource Optimization: With detailed insights into resource usage, AWS cost management practices allow organizations to optimize their resource allocation. This ensures that businesses maximize the value of their AWS investments by utilizing resources efficiently.
• Effective Governance: AWS cost management supports strong governance by enabling organizations to establish budgets, set alerts, and create policies around AWS usage and spending. This helps maintain control over costs and ensures compliance with financial goals.

AWS Cost Management Tools for Managing Cloud Costs

Amazon Web Services (AWS) offers a suite of free tools designed to help businesses monitor, analyze, and control their cloud costs. Below, we explore some of the key tools offered by AWS that can help you achieve better financial control over your cloud resources.

1. AWS Cost Management Console and Billing Console
   These two consoles serve as the primary interfaces for managing AWS costs. The AWS Cost Management Console provides a comprehensive view of spending, featuring a dashboard that summarizes costs and a detailed cost and usage report categorized by service, account, and region. The Billing Console offers in-depth billing reports and allows users to set up cost allocation tags for granular tracking of AWS expenses.
2. AWS Cost Explorer
   AWS Cost Explorer offers a visual interface to analyze AWS costs and usage. Users can review historical costs, forecast future expenses, and identify spending trends. This tool helps pinpoint which services, accounts, and regions are contributing most to AWS costs.
3. AWS Cost Anomaly Detection
   This tool leverages machine learning to monitor spending patterns continuously and detect unusual cost or usage activities. When an anomaly is identified, alerts are sent to users, allowing them to quickly address issues without the need for manual monitoring, ultimately saving time and preventing unnecessary costs.
4. AWS Budgets
   AWS Budgets allows organizations to set custom spending thresholds and receive notifications when costs exceed these limits. This tool ensures companies remain informed about their AWS spending, preventing unexpected overspending. Users can create budgets for specific services, accounts, or usage dimensions.

View the entire details here:  https://aws.amazon.com/aws-cost-management/

5 Strategies to Manage AWS Cloud Costs

1. Use Reserved Instances and Savings Plans

To help reduce cloud costs, AWS offers customers special discounted rates against on-demand costs. These discounts are mostly in the form of RIs (Reserved Instances) or SPs(Savings Plans).

• Reserved Instances: Reserved Instances are a pricing model offered by cloud service providers that allows customers to reserve and commit to a specific amount of computing capacity in advance for a term of one or three years. This commitment comes with a significant discount compared to on-demand pricing, making it a cost-effective option for workloads with predictable and sustained usage.
• Savings Plans: Savings Plans are a flexible pricing model introduced by cloud service providers that offer customers significant discounts on their usage in exchange for committing to a consistent amount of usage, measured in dollars per hour, for a one- or three-year term. Unlike Reserved Instances, Savings Plans offer more flexibility in terms of instance type, region, and operating system, making them suitable for workloads with variable usage patterns.

To maximize these benefits, analyze your usage patterns to determine which option best meets your needs. This proactive approach helps ensure that you are making cost-effective commitments. You can also use external tools to manage your commitments in the cloud.

2. Optimize Resource Utilization

Regularly reviewing and optimizing resource utilization is very important when it comes to AWS cloud cost management. Tools like AWS Trusted Advisor and AWS Compute Optimizer can identify underutilized or idle resources. You can also use external tools like Harness CCM to optimize the use of resources. Also, Right-sizing instances and implementing Auto Scaling will ensure that resource allocation matches the demand such that there is no wastage or any added costs. Striking the right balance between provisioning enough resources and avoiding overprovisioning will prevent any unnecessary expense.

3. Consolidate Accounts

For organizations with multiple AWS accounts, consolidating them into a single organization can simplify billing and AWS cost management. With consolidated billing, you can view combined AWS costs across all accounts, which will, in turn, provide a clearer understanding of overall spending. This way, you can also access the volume discounts offered by AWS.

4. Use Spot Instances

Spot Instances represent a cost-effective way to leverage spare Amazon EC2 compute capacity at significant discounts compared to On-Demand prices. Spot instances offer discounts of up to 90% for the same performance of On-Demand instances, which makes them a great option for cost savings and can help you achieve a good amount of savings. 

But, please note, that their availability is subject to Amazon's two-minute interruption notice. For Amazon EKS, to avoid this, Harness provides Cluster Orchestrator for EKS (currently in Beta). The Harness Cluster Orchestrator for Amazon Elastic Kubernetes Service (EKS), a component of the Harness Cloud Cost Management (CCM) module scales EKS cluster nodes according to actual workload requirements. Additionally, by leveraging CCM’s distributed Spot orchestration capability, you can save up to 90% on cloud costs with Amazon EC2 Spot Instances.

5. Use Tools Like Harness CCM

At Harness, we leverage the power of AI and machine learning to streamline cloud cost management. Harness Cloud Cost Management (CCM) provides comprehensive tracking of cloud spending, enabling optimized expenditure. From Recommendations that help you better manage and allocate resources to AutoStopping rules that automatically shut down idle resources when not in use, Harness ensures everything is automatically managed, allowing you to focus on your core business while significantly reducing costs. Learn more about Cloud Cost Management by Harness, or book a demo today.