According to surveys, more than 80 percent of people spend needlessly extra on cloud budgets. Among this large percentage, only 50-60 percent of people know that they have overspent. Moreover, a huge chunk of respondents lack the knowledge to assess the numbers that come in the bills.
Given the rapid growth of cloud computing and technology, such as the prevailing use of Amazon Web Services (AWS), it is quite surprising that many users are still unaware that they are overspending. And even if some of them acknowledge the fact, they still spend extra regardless.
But the fact remains that businesses need the cloud to flourish and get the edge over competitors. So, are companies going to continue spending more unnecessarily? Not really! The actual reason businesses became interested in using cloud technology was because of its cost-effectiveness. Moreover, there are ways to avoid AWS overspending with cost governance strategies.
Read on to learn how to optimize costs when using Amazon Web Services.
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An Analysis of the Cost-Effectiveness of Amazon Web Services (AWS)
Amazon Web Services is a valuable asset for companies and offers numerous benefits. However, its cost management is still complicated due to many factors that affect the bill you receive.
We conducted a detailed analysis of AWS with on-premises data centers. It will help you better understand where you might be overspending when using AWS cloud or saving some amount compared to the on-site data centers. But, of course, there are pros and cons to using both.
Let’s start with the most basic point. When using AWS cloud, you only need to pay for the resources or services utilized. On the other hand, when it comes to on-premises data centers, you must pay for the maintenance costs even when the resources are not in use.
If you look at the AWS EC2 model, you’ll find that it costs a lot less than any on-site data center. However, performance upgrades will likely affect the cost. In this case, you’re saving money by investing in the cloud, but upgrades can cost you more.
When it comes to maintenance costs, on-site premises are costlier as they need inspections, and problem reporting is done via equipment. Moreover, safety checks, humidity, and temperature maintenance are required for optimal performance. Whereas, with cloud computing, maintenance of the infrastructure is the responsibility of the AWS.
So, saying that AWS is cost-effective would not be wrong. But if you don’t implement the best cost governance strategies, you will still be spending extra money unknowingly.
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How to Avoid AWS Overspending with Cost Governance Strategies
There are two ways in which you can avoid overspending on AWS. The first way is to set up your account to optimize costs. The second method is to manage cloud assets to reduce waste effectively.
Setting Up AWS Account for Cost Optimization
- Amazon Web Services Organization and Consolidated Billing Feature: Consider setting up your account with automation by integrating AWS Organization. First, create groups of accounts and implement the Organization. Moreover, using the consolidated billing feature helps you manage your bill better by getting an overview of all the things your account was charged with.
- Different Accounts for Development and Production: Make sure you create separate accounts for production and development to view what each account was charged with explicitly.
- Incorporate Tags: Add tags to different segments of the AWS account to improve the readability for teams. It helps with identification and enables hassle-free searching and organizing of resources.
- Make AWS CUR: Keep your AWS Cost and Usage Report (CUR) ready. Consider making hourly reports as it is not a costly process.
- Integrated Visibility Tools for Cost Management: Tools such as the AWS Cost Explorer help plan and manage resources. Moreover, you can get more visibility into cost-generating activities.
Waste Reduction for AWS Cost Optimization
In the world of computing, there are multiple ways to define the term “waste.” Any unused resources or infrastructure is often categorized as waste, but choosing an unsuitable service plan is also considered the same.
Here are some of the waste reduction strategies that will help you in optimizing the costs:
- Planning and Management of Reserved Instances: Reduce your costs by identifying underutilized EC2 instances. You can reduce their size or choose a different model that has more use for your company.
- Use an Appropriate Savings Plan: If you don’t have to invest in Reserved Instances (RI), consider purchasing the AWS Savings Plan. Choose an appropriate plan that accommodates the workload requirements of your business as a means to reduce costs.
- Preset On/Off Times for Non-Productive Instances: Apply “on” time during working hours and an “off” time on the weekends to reduce costs by almost 60%. The on/off times should be implemented in the testing, staging, development, and other non-productive instances.
- Delete Disused Snapshots: Although snapshots are an excellent way to recover lost data, storing them for prolonged periods will only add extra cost. Accumulation of unnecessary snapshots can add thousands of dollars needlessly to your bill. You should only keep the latest snapshots for several weeks to recover data if needed. The cost of storing individual snapshots is inexpensive.
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Final Thoughts
AWS is an economical solution if you want it to be. And now you even know how to avoid AWS overspending with cost governing strategies.
However, you must be aware of all the things your account is charged with before you can implement these cost-reduction strategies. Once you have that clarity, you can take measures to eliminate wastage which can help you save thousands of dollars on your AWS bills.
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