Managing AWS Costs


June 14, 2018
AWS Cloud

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Questions surrounding effective management of AWS spend land upon our desks more and more frequently.  As an increasing amount of workload is being migrated to the cloud and price competition is slowly driving costs downwards (good news), we find many of our clients have difficulty managing their growing AWS costs. “Do you have a firm grasp of all the instances that are currently running in your environment?” It’s a seemingly simple question – but the truth is that many clients can’t answer in the affirmative.

AWS talks around spend management by illustrating how to cost optimize the current spend through ‘Reserved Instance’ purchasing or participation in their ‘Private Pricing Term Sheet’ (formerly known as their Enterprise Discount Program – see below for more information).  But that assumes current spend does not have forgotten or orphaned instances littering the environment. AWS fails to offer a solution to help organizations identify and remove instances that serve no purpose, yet continue to accrue monthly charges.

A concerted effort by organizations should be made to frequently audit their own environments, identify and remove unused instances, and then evaluate optimization of the remaining spend.  Best in class outcomes require both ‘housekeeping’ AND top-notch negotiations to achieve maximum savings.

Reboot of Enterprise Discount Program – Will it Make Managing AWS Costs Easier or More Difficult?

AWS now offers enterprise discounts to its large dollar clients via a ‘Private Pricing Term Sheet’.  The program, formerly offered as an ‘Enterprise Discount Program’ or ‘EDP’, is fairly similar in nature, but removes some previous benefits that allowed ‘double-dipping’ with discounts.

Noteworthy changes include: lower annual spend commitments from $10M to $3M; offers increasingly larger discounts for both longer-termed and higher dollar commitments; requires an Enterprise Support contract; and allows ‘roll-over’ spending shortfalls to cascade into the following year in multi-year deals.  No longer allowed will be discounting upon an already discounted product, such as a Reserved Instance. As with all offers, terms and conditions can be negotiated but a clear organizational direction and target will yield the best successes in a ‘Private Pricing Term Sheet’ negotiation.

Part of AWS’s appeal is its overall transparency and “simplified” approach to sourcing its cloud services.  However, managing AWS spend is not without some opacity and its fair share of challenges. As AWS continues to dominate the marketplace by offering a myriad of new products for lower prices, the challenge to (cost) effectively manage spend becomes increasingly difficult.