Updated: Aug 6, 2019
Public cloud services spending is set to skyrocket into the stratosphere in 2019.
The International Data Company (IDC) estimates public cloud services investments to reach $210 billion, a 23.8% growth from the past year. In 2022, public cloud spending is expected to be at $370 billion with professional services, manufacturing, and banking driving more than 30% of this total:
IDC customer insights and analysis program director Eileen Smith explains: "Most organizations have adopted the public cloud as a cost-effective platform for hosting enterprise applications and for developing and deploying customer-facing solutions. Over the next five years, IDC believes that cloud platforms and ecosystems will serve as the launchpad for an explosion in the scale and pace of digital innovation. The result will be 'multiplied innovation' with as many new applications deployed in the cloud as prior generations deployed over the previous four decades."
It’s difficult to imagine businesses across different industries operating without the public cloud. Instead of business driving public computing, it’s public computing that is driving business.
In 2018, it came as no surprise that AWS continued to lead the pack in terms of market share as it did in the years prior.
When Savings Turn to Wastage
One of the biggest reasons businesses use AWS, or any public computing services for that matter, is to save on IT infrastructure costs. In fact, if you’re an AWS customer or have considered it in the past, you’ve probably seen or used its cost-savings calculator.
At its core, cost-savings is one of the pillars of public cloud computing. When done right, businesses of all sizes are able to reap this benefit.
Of course, the operative term here is when done right.
And as it turns out, a lot of companies are doing it wrong. Every year, AWS customers overpay $6.4 billion. According to a whitepaper published by technology business management company Advocate: “CFOs and other executives are starting to see the results of unchecked cloud usage and spending: eye-popping monthly bills from AWS and cloud spending that is surging beyond what they previously spent on infrastructure—and well beyond any hoped-for cost savings. AWS enables anyone with a credit card to spin up a cloud server in seconds—this is “disaggregation of IT”—and in many organizations, this means cloud usage expands largely unchecked.”
Let’s take a closer look at the main budget-wasters that bloat AWS bills.
1. Underutilized and Unused Instances
Underutilized virtual machines account for 39% of AWS instance spend. These instances were below 20% utilization, for both CPU and memory. As for unused instances, Right Scale found out that there’s only a 31% variability between the highest and lowest instances in a month, well below the recommended level for optimized accounts.
To solve underutilization, going down one instance size can help AWS customers save 50% and going two sizes down leads to a 75% savings:
To address unused instances, production should be auto-scaled to just be enough with the actual requirements. Switching off development and test instances when not being used and terminating instances once the related-projects are done can save costs.
2. Undeleted Orphaned EC2 Snapshots
Deleted instances and EBS volumes leave snapshots that are stored in the Amazon Simple Storage Service (Amazon S3). These stored snapshots will continue to show in your AWS monthly bill. AWS itself recommends this step to save on storage costs: “If customers have a backup policy that takes EBS volume snapshots daily or weekly, customers will quickly accumulate snapshots. Check for “stale” snapshots—that is, ones that are more than 30 days old—and delete them to reduce storage costs.”
3. Outbound Data Transfer
Most of the time, inbound data transfer or moving data into your AWS EC2 is free. However, it’s a different story if you want to transfer data out of EC2. Unstrategic data transfer can easily pile up and inflate your AWS bill. Similar to the freight industry, the cost of moving data out of EC2 varies depending on where it’s coming from and where it’s going to. Your team needs to figure out what the most cost-effective way to transfer data (and if you even need to).
4. Other Unused Resources
Aside from EC2, there are three AWS resources that are often overprovisioned. These are EBS Volumes, Elastic IP Addresses, and Elastic Load Balancers.
As long as you’re backing up data before deleting, terminating EBS volumes that are not attached to EC2 instances is an effective way to shave off dollars from your AWS bill.
When it comes to Elastic IP Addresses or EIPs, AWS gives you a free EIP for every running EC2 instance. However, everything beyond that is charged on an hourly basis. Additionally, Amazon charges a relatively lower hourly rate for EIPs attached to terminated instances. Many assume that when they delete instances, the EIPs associated with those instances are automatically terminated, but this is not the case.
Lastly, unused Elastic Load Balancers (ELBs) which are used to manage incoming traffic, minimize running instances, and scale resources can easily accrue and add unutilized resources costs to your AWS bill. If you don’t want to delete ELBs because you might use them soon, consider attaching them to instances so at least they are being used. Otherwise, deleting unused ELBs is sensible to add to your cost savings.
Cost Optimization is a Continuous Process of Collaboration, Planning, Monitoring, and Execution
AWS cost optimization is not a one-time, big-time undertaking. It needs daily collaboration among everyone involved, rigorous cloud resources planning, regular monitoring of usage and leakage, and swift execution of cost-saving measures. Your team should be equipped with the necessary tools such as a visual AWS management platform to help them work together and find opportunities for cost-savings efficiently.
If need help optimizing your AWS costs, request a CloudiVize demo today. We are the only visually driven AWS management platform that allows businesses to see the cloud like they never had before and manage your assets. Our innovative solutions help our clients boost cloud productivity, optimize cloud usage, reduce cloud spending wastage, and make collaboration easier for a wide audience.