© 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

You’re using AWS

and you like it!

But maybe you are spending more

than you planned…

Or you’d just like to spend less

With the AWS

cloud, you only

pay for what you

use.

How do you ensure that you

only pay for what you need?

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.

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

Analysts have shown AWS reduces cost over the long term

Source: IDC, Quantifying the Business Value of Amazon Web Services (May, 2015)

And we’ve heard it from our customers…

“We’ve seen a 52% total cost of

ownership reduction.”

Ben Wilson

CTO GE Oil & Gas

But it doesn’t just happen.

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.

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

Where do you start?

The Five Pillars of Cost Optimization

Right-sizing your

instances

Pick the right

pricing model

Increase elasticity

Measuring &

monitoring

Match usage to

storage class

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.)

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/

Pillar 3:

Leveraging the Right

Pricing ModelReserved Instances

Spot Instances

On-Demand

Reserved Instances for Always-On Instances

Commitment level1 year

3 year

AWS services offering Reserved InstancesAmazon EC2

Amazon RDS

Amazon DynamoDB

Amazon Redshift

Amazon ElastiCache

* Dependent on specific AWS service, size/type, and region

What’s New?

Introducing New Benefits to

Reserved Instances

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

57

1112

23

42

52

How to take advantage of

Reserved Instances while

maximizing flexibility?

Introducing Convertible Reserved Instances

With a Convertible Reserved Instance, you can modify

your existing reservation across:

Instance families

Instance sizes

Operating systems

Tenancy

Using Convertible Reserved

Instances to Unlock Savings

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])

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

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

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

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

Strike a Balance

Finding balance between pricing options

Reserved

InstancesOn-Demand Spot

Pillar 4:

Leveraging the Right

Storage ClassBlock Storage

Object Storage

Object Storage is Foundational

And it’s even easier to get data

into S3

But are you optimizing your

object storage?

Object Storage Classes on Amazon S3

Active data Archive dataInfrequently accessed data

Standard

Hot

Standard - Infrequent Access

Warm

Amazon Glacier

Cold

Running the Numbers: S3 or S3-IAComparing 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

Case Study: Putting it Together

A Technology Company

In three months…

A Technology Company

Doubled CPU and

traffic used by its

Web servers

A Technology Company

While reducing

EC2 spend by

33%

$72k saving per month!

How did they do it?

Solving the growth challenge

Step 1: Right-size and update instances

m1 on demand

$0.07 per ECU

c4 on demand

$0.02 per ECU

The impact of right-sizing

70% reduction

in unit cost

Step 2: Reserve

The impact of reservations

30% reduction

In unit cost

Putting it together

85% reduction

in unit cost!

Sounds pretty easy, right?

Not really.

In reality, it is very complex.

• Scale

• Behavioral change

• Visibility

• Ownership

Chapter II: Implement & Maintain(Well Operated)

How do you implement those

best practices at scale? (Spoiler Alert: Remember the 5th Pillar of Cost Optimization?)

Pillar 5: Measure & Monitor

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.

Enabling Cost Transparency

Enabling Cost Transparency

Must have tagging:

• Cost center

• Application or workload

• User

• Expiration date

• Automation support

http://ape.gs/AWSAutoTag

Tools for Measuring &

Monitoring

Option 1: DIYBuild your own custom dashboard

We’ve helped customers set up their own

dashboards and tools.

Metric tracking

savings

Spend & metrics

by account

EC2 usage by

purchase option

Option 2: Use a Partner

And partners have been successful helping

customers monitor & manage cost

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

Option 3: AWS ToolsTrusted Advisor

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)

“We estimate an average

33% monthly savings on our

total AWS spend.”

Amit Vora, CTO for Hungama

Idle Test Instances Running in us-west-1

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/latest/user/cloudwatch-events-ta.html

Creating a Culture of Cost

AccountabilityPeople & Process

Solving the

“Principle-Agent Problem”

If you were going to buy a car

tomorrow, what kind of car

would you buy?

Now imagine that someone else

was footing the bill.

Does your answer change?

Bridging the Gap Between Agents & Principles

Principles AgentsCoE

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?

• Aligning Incentives (Carrots & Sticks)

• Automation

• Reporting

• Control & Governance

• Metrics / KPIs

Cloud Center of Excellence

Establish Clear Targets & Metrics

Metrics and Targets

% instances turned off daily

% of instances right-sized

% always-on resources covered by Reserved

Instances

% Reserved Instance utilization

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Define success by establishing metrics and track progress

Cost-Based

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

Chapter III: Getting Started (We can help)

Where to start

Set up a Cloud

Competency Center

Bring in the right

tools

Use metrics to

reinforce behavior

Use partners to

accelerate!

Cycle of cost optimization

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✘

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$

$

$

$

$

How to start your Cost

Optimization Program:

Learnings from Intuit’s cloud journey

Time: Thursday December 1st 1pm

Room: Titan 2202

Session: ENT 314

Support Programs

Well Architected Bootcamp:

Wednesday @ 1 - 5 pm

Cost Optimization Whitepaper:We’re Here to Help

http://aws.amazon.com/well-architected

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 @

Thank you!

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