This document provides a summary of a presentation on cost optimization at scale when using AWS. The presentation covers building architectures with cost in mind, implementing and maintaining cost-optimized operations, and getting started with a cost optimization program. It discusses key drivers of cost optimization like right-sizing instances, increasing elasticity, leveraging the right pricing models and storage classes, and measuring and monitoring usage. The presentation provides case studies and examples of how customers have been able to significantly reduce their AWS costs through these techniques. It also discusses tools and programs available from AWS and partners to help customers implement cost optimization practices at scale.

1. © 2016, Amazon Web Services, Inc. or its Affiliates. All rights reserved.
Keith Jarrett, AWS Business Development Manager, Cloud Economics & Cost Optimization
November 29, 2016
ENT209
Cost Optimization at Scale

2. You’re using AWS
and you like it!

3. But maybe you are spending more
than you planned…

4. Or you’d just like to spend less

5. With the AWS
cloud, you only
pay for what you
use.

6. How do you
ensure that you
only pay for what
you need?

7. 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 from our most
successful customers.
And leave you with actionable ideas to take
back to the office to implement
immediately.

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

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

10. And we’ve heard it from our customers…
“We’ve seen a 52% total cost of
ownership reduction.”
Ben Wilson
CTO GE Oil & Gas

11. But it doesn’t just happen.

12. 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.

13. Limit
Provisioning
Target
Setting
Automation
Periodic
Review
Charge-
backs
Pricing
Model
Autoscaling
Turn off
unused
Cost
Optimized
Direct
Inputs
Indirect
Inputs
Key Cost
Optimization
Drivers at
Scale

14. Where do you start?

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

16. 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.)

17. 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/

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

20. 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

21. What’s New?
Introducing New Benefits to
Reserved Instances

22. 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

23. How to take advantage of
Reserved Instances while
maximizing flexibility?

24. Introducing Convertible Reserved Instances
With a Convertible Reserved Instance, you can modify
your existing reservation across:
Instance families
Instance sizes
Operating systems
Tenancy

25. Using Convertible Reserved
Instances to Unlock Savings

26. 6x
increase
17%
M-1
15%
M0
91%
M1
92%
M2
RI
OD
SPOT
Key
16%
M-2
93%
M3
Improving EC2 RI Usage with Convertible Reserved Instances
(Bar: EC2 Instances by Purchase Option [count])

27. 39%
Unit Cost
Decrease
17%
M-1
15%
M0
91%
M1
92%
M2
RI
OD
SPOT
Key
16%
M-2
93%
M3
Improving EC2 RI Usage with Convertible Reserved Instances
(Bar: EC2 Instances by Purchase Option [count])
(Line: Cost per Normalized Instance Hour [usd])
Unit Cost*
*Upfront portion amortized
over life of RI

28. 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

29. 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
Consider Spot for Elastic Workloads

30. 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

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

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

33. Object Storage is Foundational

34. And it’s even easier to get data
into S3

35. But are you optimizing your
object storage?

36. Object Storage Classes on Amazon S3
Active data Archive dataInfrequently accessed data
Standard
Hot
Standard - Infrequent Access
Warm
Amazon Glacier
Cold

37. 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

38. Case Study: Putting it Together

39. A Technology Company
In three months…

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

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

42. How did they do it?

43. Solving the growth challenge

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

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

46. Step 2: Reserve

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

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

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

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

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

52. Pillar 5: Measure & Monitor

53. 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.

54. Enabling Cost Transparency

55. Enabling Cost Transparency
Must have tagging:
• Cost center
• Application or workload
• User
• Expiration date
• Automation support
http://ape.gs/AWSAutoTag

56. Tools for Measuring &
Monitoring

57. Option 1: DIY
Build your own custom dashboard

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

59. Option 2: Use a Partner

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

61. Leveraging Partners to Drive Optimization
21%
Savings
Automated policies and tasks for:
• Termination of unused volumes
• Termination of non-compliant resources
• Notifications of possible budget overages
• Reserved Instance modifications
• And weekend lights-out rules

62. Option 3: AWS Tools
Trusted Advisor

63. 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)

64. “We estimate an average
33% monthly savings on our
total AWS spend.”
Amit Vora, CTO for Hungama

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

67. 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/lates
t/user/cloudwatch-events-ta.html

70. Creating a Culture of Cost
Accountability
People & Process

71. Solving the
“Principle-Agent Problem”

72. If you were going to buy a car
tomorrow, what kind of car
would you buy?

73. Now imagine that someone else
was footing the bill.

74. Does your answer change?

75. Bridging the Gap Between Agents & Principles
Principles Agents
CoE

76. Questions your COE Should be Asking
1. How much of our workloads are “steady state”?
2. What’s keeping us from reserving capacity?
3. How are we currently handling our elasticity needs?
4. Have we had a Well Architected review with AWS?
5. How can I be more involved in our process?

77. • Aligning Incentives (Carrots & Sticks)
• Automation
• Reporting
• Control & Governance
• Metrics / KPIs
Cloud Center of Excellence

78. Establish Clear Targets & Metrics

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

80. Value Based Optimization Metrics
A company’s overall AWS cost should be evaluated as a unit cost ratio with
respect to another defined metric:
𝑈𝑛𝑖𝑡 𝐶𝑜𝑠𝑡 =
𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡
𝐼𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙 𝑜𝑟 𝐵𝑢𝑠𝑖𝑛𝑒𝑠𝑠 𝑀𝑒𝑡𝑟𝑖𝑐
Examples
• Unit cost per customer or active subscriber
• Unit cost per revenue generated
• Unit cost per product or business unit
• Unit cost per internal user
• Unit cost per experiment
• Unit cost per FTE
Align to
Value Drivers

81. Chapter III: Getting Started
(We can help)

82. Where to start
Set up a Cloud
Competency Center
Bring in the right
tools
Use metrics to
reinforce behavior
Use partners to
accelerate!

83. Cycle of cost optimization
✔
✔
✔
✔✘
✘
✘
✘
$
$
$
$
$

84. How to start your Cost
Optimization Program:
Learnings from Intuit’s cloud journey
Time: Thursday December 1st 1pm
Room: Titan 2202
Session: ENT 314

85. Support Programs
Well Architected Bootcamp:
Wednesday @ 1 - 5 pm
Cost Optimization Whitepaper:
We’re Here to Help
http://aws.amazon.com/well-architected

86. Trusted Advisor Free Trial
Everyone attending today’s session will get
free access to Trusted Advisor for 30 days.
How it works:
• Trial begins December 6, 2016
• Runs 30 days
• Full suite of checks and best practices available for
those not already on Enterprise & Business Level
Support plans
• No action required – Just log in and start using!
https://aws.amazon.com/premiumsupport/trustedadvisor/Learn more @

87. Thank you!

88. Remember to complete
your evaluations!