What Is AWS Cost Management? A Comprehensive Overview

AWS cost management is key for meeting your business needs with the cloud while staying within your budget. Luckily, there are many tips and tricks for managing your expenditure. If you are looking to learn how to use AWS cost optimization tools, evaluate existing practices, and maintain performance and functionality over time (while paying less!), then you should check out our white paper, “AWS Cost Optimization: Effective Savings Tactics” as well as our on-demand webinar, “Considerations for Cutting Cloud Costs.” In the meantime, explore this blog to learn what AWS cost management is, and how you can get started.

AWS Cost Management Defined

The definition of AWS cost management is simple — leverage the tools provided by AWS to ensure that your data is stored securely, aligned to your business needs, and your spending stays within your teams’ budget. An estimated 28% of cloud spending is wasted, which is why 82% of organizations cite managing cloud spending as their top business challenge. The volume of data in the cloud continues to rise, so it is more important now than ever to manage your budget optimally.

Managing your cloud spend effectively can have a strong impact on your business’ cost control and optimization, resource allocation, forecasting and planning, scalability, agility, and cost accountability. With a perfectly orchestrated AWS account, you can ensure that your cloud costs remain within a defined limit, which in turn helps to plan budgets across the entirety of your business in the most impactful manner. Once you’ve defined your strategy, you can more effectively scale your cloud presence and fuel growth. With careful planning, you too can set up your AWS account in a way that is perfectly tailored to your business needs! Let’s dive in.

How Does AWS Cost Management Work?

An effective AWS cost management strategy will encompass the use of various tools, services, and best practices. There are many general or niche use cases for specific tools within AWS, so we’ve put together a table for you to determine what’s most relevant for your business!

The choice of which tools you find most useful depends on the needs of your business, but AWS offers a vast variety to ensure that you will be covered no matter what your use case is. However, some tools are undoubtedly going to be used by your business — let’s take a look.

AWS Cost Allocation

AWS cost allocation refers to the practice of identifying, aggregating, and allocating your cloud expenditure. You can break your cloud spending down into several cost centers, such as per development team/tenant, project, or service.

This gives you a better insight into not only the types of AWS resources you’re using and how much you’re spending on those resources but also what those resources are being used for in the real world. Armed with this insight, you can establish a framework for assigning costs to specific business units, based on their usage.

AWS cost allocation can highlight the amount of resources each business unit is consuming, so those units can make better resource allocation decisions, disabling unnecessary instances and optimizing their use of other resources to reduce their overall cloud expenditure.

AWS Cost Explorer

The AWS Cost Explorer is one of the top features in the AWS Console — without the AWS Cost Explorer, there would be no “AWS Cost Management.” You can easily access this feature via the search bar at the top of the screen. From there, you will have the option to dive into all of its features that appear on the banner on the left side of the page.

The cost and usage graph allows you to visualize your historical data for cloud spending, helping you find trends for daily or monthly expenditures. You also have the option to build custom reports based on the following criteria:

• AWS service
• Account
• Region
• Usage type
• And several other metrics

One particularly useful feature is Anomaly Detection, a built-in feature that automatically identifies irregular spending patterns. Imagine you traveled abroad and were using your mobile data accidentally, and then came back home to an unexpected bill. Well, within AWS, the Anomaly Detection feature prevents situations like this from happening.

Lastly, you’re able to save cost data views that you find useful, export this data for use in third-party data visualization tools, and also integrate it with the AWS Budgets feature.

AWS Budgets

The AWS Budgets feature allows you to set your spending thresholds as well as alerts to monitor your AWS costs — or just “budgeting” in short. Everything you need to manage a budget is made available by AWS here. Let’s walk through how to set a budget up in your environment:

1. Navigate to the AWS Budgets feature from the search bar in your AWS Console
2. Click “create a budget” and you will be prompted to choose a budget type (see the image below). Give your budget a name and period based on the template you select.
3. Set budget values.
4. Select the filters to specify which accounts, services, or usage types you want to include in your budget.
5. Configure your alerts based on your thresholds and set up notifications via Amazon SNS so you can take quick action after an alert.
6. Click “Create” on your budget.
7. You can now focus on running your business, and AWS will let you know when it’s time to check up on your budget.

Budgeting is still only as effective as your resource management is, so here are some bonus tips and best practices to improve your skills. Make sure to set realistic budgets, regularly review your spending (don’t just wait for the alert!), collaborate with your team, communicate regularly, and take advantage of the other AWS features we’ve discussed, to continually improve your strategy.

Challenges of AWS Cost Management

Managing the cost of cloud services can be challenging for companies that have only just migrated to the cloud, and for those that are growing rapidly. There are several issues that must be addressed before you can properly manage your cloud spending:

• Inelasticity: Applications designed for the cloud typically rely on microservices which can be started up and shut down quickly and easily. Older, monolithic applications don’t lend themselves to this kind of environment, making it harder to adjust capacity based on current demand, and therefore leading to wasted resources.
• Poor architectural decisions: Inexperienced IT teams may not be confident enough to manage cloud resources dynamically. Even experienced engineers may make cautious, but costly, decisions if they’re pressured to just lift and shift the organization’s existing systems to AWS without refactoring them for the cloud. Breaking down large applications and choosing the right type of hosting for each one can greatly cut costs.
• Failing to account for all factors in cost forecasting: To get the most accurate forecasts, you need access to enough historical data, along with an idea of typical demand trends. It’s also useful to have testing environments to look at how changes to any software you’re running might affect your cloud usage. The more information you have, the more accurate your forecasts are likely to be.
• Oversizing: IT teams often fall victim to the habit of oversizing their cloud environments, even if there’s enough spare capacity for normal usage. Sometimes, this happens as a ‘quick fix’ for a difficult-to-diagnose bug, but if this quick fix becomes the long-term solution it can become an expensive decision.
• Poor billing literacy: AWS bills can be hard to understand, especially the first few times you see them. IT teams and finance departments should work together to understand the budgets available for each department, and how that budget is being spent. Development teams must aim to optimize the performance of their applications while minimizing their cloud resource usage.

The above are just some of the challenges faced by IT and finance teams. Cloud platforms may be an essential part of IT infrastructure today, but they’re uncharted territory for many developers, and the complex billing systems create many pitfalls that can cause an unsuspecting developer to run up a larger-than-expected bill. Even something as simple as choosing the wrong storage class or archiving data to a server on the wrong IP could make a huge change to your bill.

Using the tools discussed above can mitigate that risk, and help developers stay within their department’s budget.

Managing Your AWS Costs With Veeam

As we’ve discussed, despite the aforementioned best practices and tools for AWS cost management, there are still many challenges. AWS services are complex and ever-changing. Using third-party cost management tools can reduce some of that complexity.

In a dynamic cloud environment, there can be a lack of visibility, resource overprovisioning, lack of cost accountability, intimidating pricing models and billing structures, data transfer costs, and multi-cloud environments, all of which complicate the notion of cost management. Trying to optimize spending can be intimidating, with teams not being sure where to start when looking for cost savings.

With Veeam, users save costs in AWS by optimizing data protection and management practices. Through efficient backup and data retention policies, Veeam reduces the risk of data loss, minimizing the need for costly data recovery operations. It facilitates the implementation of cost-aware backup schedules, ensuring that backup tasks run during off-peak hours to lower AWS data transfer costs. By archiving less frequently accessed data to cost-effective storage classes and automating data lifecycle management, Veeam helps reduce AWS storage expenses. Additionally, Veeam’s monitoring and reporting features provide visibility into AWS usage and costs, empowering users to make informed decisions and further optimize their AWS spend. Overall, Veeam’s data protection and management solutions contribute to significant cost savings by preventing data loss, minimizing data transfer expenses, and efficiently managing data storage.

To learn more on how to lower your spend within AWS check out our AWS Cost Optimization: Effective Saving Tactics e-book.

Related Content

• Cloud Backup Costs: Key Strategies for MSPs
• The Total Economic Impact of Veeam with AWS
• Cloud Backup Cost Optmization Strategies for Data Protection
• The Cost Savings and Business Benefits of Veeam + AWS