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Top six best practices to optimize costs on AWS

Originally published in April 2020, at

The cloud holds the possibility of dramatically lower infrastructure costs, faster development and innovation cycles, and increased talent efficiency. Yet, according to Gartner®, most businesses are estimated to overspend in the cloud—by up to 70%.

Amazon Web Services® (AWS) Cloud Cost Optimization is not just a story about quick wins and tips and tricks, (although there are plenty of those, and some key ones are in this post). At root, cost optimization is about organization and technology strategy working in harmony to leverage the strengths of the cloud.

1. Improve transparency with the right reporting tools

Optimizing your cloud costs requires you to understand the sources and structure behind your monthly bills. AWS offers a large and ever-evolving group of services billed by the hour with prices unique to individual services, operations, or regions. A good cost dashboard solves most of the issues that billing presents.

AWS provides a good cost dashboard in AWS Cost Explorer. To level up your optimization through deeper analysis, Rackspace Onica recommends CloudHealth—a best-in-class platform that helps you view and track your expenses while offering recommendations and solutions to improve cost management. See how you can access CloudHealth and get started today.

As you adopt cloud technologies and monitor their costs over time, certain cost trends start to emerge. These trends reveal cloud architecture patterns that can lead to cost concerns. Being aware of such patterns beforehand can help you avoid long term cost consequences. We call the following common pattern The Shark’s Fin:

This pattern could suggest spikes in downstream consumer demand, or perhaps out-of-control resources driving up costs followed by periods of manual cost-reduction efforts. In any case, it’s important not only to scrutinize your trends but investigate and understand the causes.

You can learn more about common cost patterns and what they mean by downloading our Cost Optimization ebook](

3. Simplify costs and governance with accounts and tags

Delineating your costs by applications, owners, environments, and other dimensions is fundamental to managing your Cloud costs and governance. Determining when to use account separation and how to apply an effective (and enforceable) tagging strategy is key. Your strategy should give you the information you need to show back or chargeback costs across projects, help match product KPIs (like user growth or revenue) against AWS metrics, or even generally help you keep track of who’s doing what and how much it costs.

4. Match consumption with demand

The flexibility and scalability of the cloud allow you to provision resources closely in line with your downstream needs. This contrasts to on-prem environments where you invest in resources for maximal usage and often find periods of minimal utilization despite the cost. When rightsizing your resources to match demand, it is important to consider horizontal and vertical over-scaling as well as run-time on unused or old resources. By tracking your utilization and turning off old instances, you can save significantly on costs incurred from wasted resources. Learn how you can leverage the CloudHealth platform, which provides automated tools to identify waste and start saving today.

5. Use financial instruments where appropriate

For more persistent workloads, Savings Plans or Reserved Instances offer discounted AWS spend in exchange for committed use. The new Savings Plans feature offers dramatically more flexibility than reserved instances on EC2 without sacrificing discount rates. Reserved Instances, meanwhile, are still the tool of choice for AWS Relational Database Service RDS, Redshift, ElastiCache, Elasticsearch, and some other services.

Using these tools to the fullest without overcommitting requires understanding both the nature of your workloads and the nature of the financial instruments.

6. Invest in cloud-native technology

New technologies like AWS Lambda, Amazon SQS, and more enable you to set up cost-efficient workloads that use cloud resources most efficiently, matching consumption to demand. Serverless computing lets you to pay nominal fees only when using resources and to scale back when capacity is not necessary. Leveraging autoscaling, serverless, and managed services are key to leveraging the cost efficiency potential of AWS.

With these six tips, you’re well on your way to putting your IT budget to more efficient, innovative use. If you’re looking for a more comprehensive look at our key tips, download our Six Steps to Mastering Cloud Optimization on AWS ebook today.

If you’re ready to implement measures that can help you minimize cloud spend, get in touch with our Cloud Cost Optimization team today.

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Sean Anderson

Entrepreneurial, data-driven problem-solver with deep experience in strategy, marketing, analytics, and operations. At Onica, I advise Fortune 500 companies, Unicorn startups, and other industry-leading companies on AWS cloud adoption, cost efficiency, and tech-org management. Previously, I led business operations at MyTime, a rapid-growth enterprise SaaS startup, which I helped grow from 0 to 15,000 customers, scale from seven to 100+ FTEs, and close two rounds of funding.

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