10 ways to reduce your AWS spend

There’s a lot that gets said about how 2020 changed the dynamics of cloud adoption the world over. After all, AWS adoption grew by a whopping 30% in just a year.

But something else happened that doesn’t get talked about as much.

Companies scrambled to panic-buy cloud services without much attention to usage, let alone optimization. Now that the dust has settled, it’s time for companies to take a long and hard look at their bloated spending on AWS. If 2020 was the year of cloud adoption, 2021 needs to be the year of cloud cost optimization.

In this guide, we show you how you can speed up your AWS cost optimization with a few trusted and recommended measures to reduce your AWS spend and maximize ROI. Before we do that, let’s take a minute to understand the major sources of wasted cloud expenditure.

5 major sources of wasted cloud spend

On average, organizations waste an average of about 35% of their cloud spend. Here are some of the most commons reasons why this happens:

1. Oversized resources: AWS offers many sizes for instance options. Most companies, choose to err on the side of caution, and choose the largest size available, to never re-evaluate their initial decision.
   

2. Underutilized resources: These could include assets in the form of virtual machines (VMs) or instances being paid for, but not being used. These include disassociated IP addresses, zombie assets, and non-production systems such as those used for testing, QA, staging, etc. Since AWS on-demand charges are based on the amount of time that resources are left running, you can see why this is a huge drain of cloud spending.
   

3. Inefficient storage: Currently, AWS provides 6 storage tiers with different price points but organizations have to carefully consider the tier that makes sense for their data needs by taking into account the frequency of data access, disaster recovery time, etc.
   

4. Ineffective coordination and decision-making: This is one of the lesser-known ways in which AWS costs creep on companies. Companies need to ensure that their engineering and DevOps teams collaborate regularly to minimize AWS Cost wastage. This includes prioritizing features and functionalities while making AWS cost a factor of consideration.
   

5. Lack of automation: As cloud adoption and applications grow, companies need to make the most of automation, at least at a policy level, to detect deviations and violations on spending. Unfortunately, automation is often an afterthought in the case of cloud spending with all the energy being spent on deployments with little to no attention to automation that can help companies optimize their cloud spending.

6 smart ways to reduce your AWS spend

1. Right-size your services

AWS Cost Explorer Resource Optimization can help you get visibility into low-utilization or idle EC2 instances. You can minimize costs by downsizing or stopping these instances. You can use AWS Instance Scheduler to automatically stop instances and AWS Operations Conductor to automatically resize the EC2 instances.

You can also apply start/stop schedules to non-production instances used for QA, testing, development, etc to save up to 60% of your spend

2. Delete unattached volumes

When you launch an EC2 instance, an Elastic Block Storage (EBS) volume is attached to act as the local block storage. Look into your EC2 dashboard to identify any unattached or unused Elastic Block Stores (EC2) volumes in your account and shut them down. These volumes exist because merely deleting an EC2 instance does not automatically terminate the associated volume.

3. Use Amazon EC2 spot instances

A Spot Instance uses available spare EC2 capacity at less than the On-Demand price. Deploying Amazon EC2 Spot Instances allows you to access spare computing capacity at 90% of the cost of on-demand pricing.

Here’s how it works: You can bid for Spot Instances. Once the bid exceeds the existing spot price (determined based on real-time demand and supply), your spot instance will be launched.

However, if the spot price becomes more than the bid price, you could lose the instance within 2 minutes of notice.

Spot instances are ideal to use when you have good-to-have tasks or flexible workloads.

4. Pick the right Amazon S3 storage class

While AWS offers six distinct tiers based on response times and uptimes, you need to do the work to understand what makes the most sense for you.

For instance, the Amazon S3 ‘Standard’ is used for data that needs to be accessed frequently as needed in cloud applications, data analytics, or web hosting. Since this tier is designed for 99.99% availability and durability, it comes at a premium price point.

However, you might find that options such as ‘Standard-infrequent Access’ work well for you since you need intermittent access and higher storage time, or that you could do with ‘One Zone-infrequent Access’ that stores your data in a single availability zone and can, therefore, save you up to 20% of your bills.

5. Try AWS Trusted Advisor

AWS Trusted Advisor includes a rich set of best practice checks and recommendations across five categories:

• Cost optimization
• Security
• Fault tolerance
• Performance
• Service limits
  

6. Consider using reserved pricing

With reserved pricing — where you rent an instance for a fixed duration —  you can save up to 70% on the AWS bill you’d run up if you used on-demand pricing. However, this needs you to know upfront your usage predictions for the said duration and you pay for 24/7 utilization regardless of your usage.

AWS offers two types of reserved instances:

• Standard: This does not allow you to convert to any other instance type though you’re permitted to sell instances on AWS Marketplace.
• Convertible: This lets you convert your instances to another type, but does not let you sell on AWS Marketplace.
  

As you can see, standard reserved instances are cheaper and more flexible unless of course you fully understand your instance requirements in advance.

7. Make the most of the AWS Marketplace

AWS Marketplace can be a lifesaver when you’ve made some overambitious decisions about your usage. It offers you a way to sell and monetize your unused services. Additionally, it is built to drive flexibility, so instead of sticking to a one-year or three-year engagement, you can purchase or sell services for timeframes that work for you and your buyer/seller.

It also helps that the billing process is simple and users can also make the most of free trials before they lock themselves down to a longer period.

8. Use the autoscaling feature

Auto-scaling is an automated feature that turns services on and off based on traffic spikes. It can help find unhealthy instances, terminate them, and save you money while optimizing your operations. You can opt for autoscaling and increase or decrease the number of  EC2 instances depending on pre-set conditions.  Auto Scaling automatically takes care of requesting for Spot instances and attempts to maintain the target capacity even if your Spot instances are interrupted.

You can analyze your DynamoDB usage and automatically scale your DynamoDB table using the “AutoScaling” feature. The on-demand option allows you to pay-per-request for read and write requests so you only pay for what’s been utilized, making it easy to balance costs and performance.

9. Consider reseller services

The AWS Solution Provider Program works with systems integrators, Managed Service Providers (MSPs), and Value-Added Resellers to offer end-customers differentiated solutions. These authorized providers can provide you discounts and customized offerings with options for zero switching costs and low transition times.

10. Use cost management tools

Tools like CloudHealth and ParkMyCloud can help you understand, manage, and optimize your cloud spends through features such as scheduling and right-sizing instances.

BONUS TIP:

AWS has a generous credit policy for new and exciting businesses. You can prepare a case for your product/service and earn up to $100,000 credit issued by Amazon. You can also request credits for any new AWS services you plan to implement. While there’s no assurance of credits and the credits will depend on the effectiveness of your POC and proposal, it’s surely worth a shot.

Even startup accelerators like YC or VC firms provide AWS credits as part of their programs, so if you’re a startup, we highly recommend applying to these programs.

Final thoughts

The future is on the cloud and as a result, the adoption of AWS is only going to grow. As things get bigger and more dynamic, you need to make sure that you invest the time and energy into setting up systems and tools that can help you manage your cloud spending and get maximum bang for your buck.

Spendflo can help you control costs and increase savings on your SaaS spends. To understand how you can save up to 30% on your SaaS spend, get in touch with us today.