Unlocking Cloud Value: The Myths, Missteps, and Mastery of AWS Cost Optimisation

Is your cloud bill scaling faster than your innovation? AWS provides a wealth of tools to optimise costs, but they’re not a simple switch you flip. Success requires choices: activating, configuring, and using these tools effectively.

True optimisation isn’t automatic. It’s about aligning AWS capabilities with your business objectives while embedding a culture of continuous improvement and collaborative cost management. This article explores actionable strategies, Savings Plan choices, and how FinOps concepts can drive better outcomes for your cloud investments.

The Cost Optimisation Challenge

AWS enables unmatched scalability and flexibility, but that power comes with complexity. As organisations expand their workloads, cloud costs often grow faster than anticipated.

Yet, cost optimisation isn’t just about cutting expenses; It’s about ensuring your cloud investments drive innovation. Whether you’re managing a seven-figure bill or just starting your AWS journey, proactive optimisation is key.

Myths About AWS Cost Optimisation

Even experienced teams fall for common misconceptions that derail optimisation efforts. Let’s break them down:

1. “Reserved Instances are always the cheapest option.” Not anymore. With the introduction of Savings Plans, AWS offers flexible ways to reduce costs across instance families, sizes, and regions.
2. “Cost optimisation only matters when the bill is too high.” Waiting is costly. Tools like Compute Optimizer, AWS Trusted Advisor, Cost Explorer, and Cloud Intelligence Dashboards provide insights to reduce waste and optimise resources from day one.
3. “Cost reviews can be handled once a year.” Cost optimisation is an ongoing process. One-off budget reviews miss opportunities to manage evolving resource needs, especially for Savings Plans and other commitment-based savings models.

FinOps: A Framework for Better Cost Outcomes

Cost optimisation isn’t just a technical task; It’s a cultural shift requiring collaboration across engineering, finance, and business teams. Enter FinOps:

Key FinOps Concepts

1. Collaborative Budgeting: Move beyond static budgets to an ongoing conversation between teams. Align spending with business goals to prevent overprovisioning or underutilisation.
2. Informed Decision-Making: Use tools like Cost Explorer, Cloud Intelligence Dashboards, and Trusted Advisor to visualise spending trends and make data-driven decisions.
3. Operational Excellence: Embed cost optimisation into your processes. Regularly review resource configurations, automate where possible, and monitor adherence to governance policies like tagging.

By adopting FinOps principles, organisations can transform cost optimisation from a reactive effort into a strategic advantage.

Strategies for Optimising Savings Plans

AWS Savings Plans are among the most effective tools for controlling compute costs. However, choosing the right plan and strategy requires careful consideration of workloads and business needs.

1. Understanding Savings Plans Options

• Compute Savings Plans:The most flexible option, applying savings across instance families, regions, and operating systems. Ideal for dynamic or evolving workloads.
• EC2 Instance Savings Plans:Offer deeper discounts but are limited to specific instance families and regions. Best for stable, predictable workloads.

2. Choosing the Right Option for Workloads

Consider these factors when selecting a Savings Plan:

• Workload Stability: Stable workloads benefit from EC2 Instance Savings Plans, while dynamic or changing workloads align better with Compute Savings Plans.
• Lifespan of Workloads: Temporary projects or seasonal demands may not justify long-term commitments.
• Flexibility Requirements: Multi-region or variable workloads often require the adaptability of Compute Savings Plans.

3. Optimisation Details that matter

• Commitment Period: Choose between 1-year and 3-year commitments based on growth trajectory. While 3-year plans offer higher savings, they reduce flexibility.
• Upfront Payment Options: Assess your cash flow needs and select from No Upfront, Partial Upfront, or All Upfront payment models.
• Regular Reviews: Use tools like Cost Explorer and Cloud Intelligence Dashboards to ensure your commitments remain aligned with usage patterns.

Governance, Guardrails, and Continuous Processes

Governance ensures cost optimisation efforts are sustainable and aligned with organisational goals.

1. Service Control Policies (SCPs)

AWS Organisations allows you to enforce guardrails, such as:

• Requiring resource tagging for cost allocation.
• Blocking deployment of high-cost instance types or resources in restricted regions.

2. Continuous FinOps Reviews

Governance isn’t a one-time setup. Conduct regular reviews to ensure:

• Savings Plans align with current workload demands.
• Resources are right-sized for performance and cost.
• Teams are adhering to policies like tagging and budget thresholds.

3. Continuous Optimisation

Optimisation is not a “set and forget” exercise. Commit to regular evaluations of cost-related decisions for:

• Savings Plans and Reserved Instances.
• Lifecycle policies for S3 and unused EBS volumes.
• Idle resources in non-production environments.

Leveraging AWS Cost Optimisation Tools

AWS provides a powerful set of tools to support your optimisation efforts. The key is using them effectively.

1. Cloud Intelligence Dashboards

• These open-source dashboards, built on Cost and Usage Reports (CUR), provide FinOps-ready insights into spending patterns, trends, and anomalies.
• Why they’re invaluable: Pre-built with deep expertise, they offer a robust foundation for expanding their functionality to meet your unique needs.They’re fully customisable, making them ideal for scaling beyond the default insights into tailored solutions for your organisation. (in full transparency: My favourite set of tools)

2. Compute Optimizer

• Provides recommendations to right-size EC2 instances, EBS volumes, and Lambda functions based on performance and cost metrics.

3. AWS Trusted Advisor

• Identifies cost-saving opportunities like unused Elastic IPs, underutilised instances, and misconfigured resources.

4. Automation Tools

• Instance Scheduler: Automate shutting down non-critical environments during off-hours.
• AWS Lambda: Custom scripts for tagging, resource cleanup, and scaling based on usage patterns.

Conclusion

AWS cost optimisation is a strategic capability that transforms cloud spending from a utility cost to an enabler of innovation and growth. By adopting FinOps practices, leveraging tools like Cloud Intelligence Dashboards and Compute Optimizer, and committing to a culture of continuous optimisation, organisations can achieve operational excellence while staying within budget.

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