Managing cloud costs is top of mind for almost every public cloud customer. I know this because I speak with customers every day who are looking for ways to save on their AWS or public cloud costs.

Before diving into some specifics around reducing cloud spend, let’s talk briefly about governance. Almost all businesses implement governance in some form or another with security and compliance often serving as the most important components of a governance strategy. Cost management should be considered an equally important aspect of a well-rounded governance framework because if we can’t make the economics work, the rest is almost inconsequential.

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When focusing on cost management, a business can leverage several strategies to drive down costs. For instance, an organization can:

  • Develop a consistent and concise tagging strategy that everyone can adopt.
  • Deploy monitoring and alert tools.
  • Use the various purchasing options.
  • Re-evaluate infrastructure and application architecture.
  • Develop a process to continually evaluate and optimize cost.

Let’s explore each of these tactics in more depth.

1. Hone Your Tagging Strategy

The single biggest reason tagging strategies fail is that they tend to be overly complicated and burdensome, often because we’re trying to solve the requirements of multiple business units. A great tagging strategy may only need 5–10 tags to be effective. These 5–10 tags should be consistent across all lines of business. With consistent tagging, our monitoring, reporting and alerting tools immediately offer much higher value.

2. Deploy Monitoring and Alert Tools

Before you can resolve a potential cost or spending problem, you need to quantify how much you’re spending and what you’re spending on. AWS has built-in tools to help with this, and there are some excellent third-party tools such as CDW’s preferred solution: CloudHealth. These tools shine in aggregating data from your AWS account(s) to help you identify opportunities for optimization in several different forms, such as rightsizing, purchasing reserved instances or AWS Savings Plans, or even potentially leveraging spot instances.

3. Tap Different Purchasing Models

When it comes to purchasing models on AWS, it’s safe to say that most customers have heard of Reserved Instances. RIs have been around a long time on the AWS platform, and have been an effective way to realize significant savings. More recently, AWS introduced AWS Savings Plans, which offer more flexibility while still returning substantial savings opportunities. This is great but can lead to confusion about when and how to use each of the different purchasing models. Even so, in some cases, neither of these models may be the most optimal option.

4. Re-evaluate Infrastructure and Application Architecture

With some exceptions, most customers I have worked with have over-provisioned resources or are in need of a better overall architecture that would drive efficiency and reduce costs. Rightsizing can help solve these challenges by using data to ensure an instance is well-suited to a particular task. For example, when considering buying an RI, we should first make sure that the instance is rightsized and then purchase the RI. This practice maximizes potential savings more so than if we were to buy an RI on an excessively large instance without having rightsized first.

5. Continually Optimize Cost

A key piece to cloud optimization is to realize that your cloud environment is fluid and that things will constantly change thanks to increased levels of automation that help developers get products and services out the door faster. More subtle things change too, as over time, newer generation services become available from AWS. Take, for example, the venerable M family of EC2 instances. If you still have M3 instances running in your environment, you almost certainly can find savings just by changing to similarly sized M5 instances. This again also ties in with re-evaluating your infrastructure.

Managing spend in the cloud is fundamentally different from how we manage spend in data centers. Developing a consistent, repeatable and effective cost management strategy is key to unlocking the cloud’s promised value.

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