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Forecast financial storms with AWS cost management

Both startups and enterprises need to keep a close eye on cloud expenditures, but new AWS tools offer a glimpse into future usage.

Cloud computing can be cheap or costly, depending on whether an enterprise properly optimizes its environment....

Controlling expenditures and adhering to the budget is often easier said than done.

Multiple conversations with c-level executives revealed that the majority of enterprises consider cost a central public cloud concern. Despite this, they still struggle to successfully predict and manage that aspect of their environments. Many newcomers encounter the cloud sprawl phenomenon -- the risk of paying for unused instances. Since provisioning new resources in the cloud is now a simple task, it's appealing to create more VMs. An enterprise can easily find itself with lots of servers running, forgetting that it's paying hourly for each of them.

To avoid empty costs and create an optimal environment, IT administrators need the ability to forecast cloud costs. Third-party and AWS cost management tools can help with that process.

Determine capacity needs

First of all, enterprises need to consider the capacity that its environment requires. No hardware is actually purchased with the public cloud, so the estimate doesn't need to be too accurate, but it is still an important consideration. An instance can be provisioned, and, if it is no longer required, it can simply be shut down.

A capacity plan is based on the specific features of your service, such as a service-level agreement, usage patterns, storage size and environment configurations. The plan should be based on business performance, including projected user-base growth and new services that are going to be released. This is especially important in large organizations when deciding on a budget.

Forecast cost expectations

To forecast AWS usage, enterprises should use a system that finely tracks current use, but also analyzes past trends to predict future bills. Last year, AWS Cost Explorer was launched, providing analytics, reports and visual aids to help regulate AWS expenditures. More recently, AWS Budgets and Forecasts was released to allow more finely tuned AWS cost tracking and forecasting.

Budgets allows users to manage AWS costs by setting monthly budgets and receiving alerts -- as many as an enterprise wishes to set -- when nearing that specific budget. For example, a user may want to be notified once costs exceed 80% of the budget, and then again at 90%.

Forecasts works via AWS Cost Explorer and enables users to be informed of future costs. Forecasts can be filtered in a variety of areas, such as resource, location and API operation. It allows users to forecast three months ahead -- so when they plan a quarterly budget, they can also allocate a budget for AWS cloud expenses.

If an enterprise has experienced recent growth, AWS Forecasts will analyze and apply future growth to the next quarterly prediction. Quarterly -- rather than yearly -- forecasts are ideal in the world of the cloud because they help identify trends, as well as take optimal action.

But, if an enterprise uses more than one public cloud vendor, it should check third-party cloud cost management providers. Cloudyn, Cloudability and Cloud Cruiser offer similar services for AWS as well as other cloud and infrastructure as a service providers.

Assess the peaks

Users can tune environments according to usage trends predicted by AWS Budgets to keep up with their costs. Users can also determine where sudden spikes in cost come from -- an issue that was previously difficult to determine. Perhaps an enterprise experienced a rapid growth in users and saw a growth in revenues as a result.

With AWS Forecasts, enterprises can determine whether sudden growth provides a high ROI or not. The original base budget is not set in stone and needs to be reviewed each quarter and fine-tuned to reflect the continually-changing business environment.

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This was last published in August 2015

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What measures has your enterprise taken to manage AWS costs?
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We analyzed our month to month costs , paying by the hour, and determined that switching all of our EC2 instances and RDS (DBs)over to Reserved Instances (RI), would save us well over 50% of our annual budget.  
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