Cost optimization
The cost optimization pillar provides guidance to help customers apply best practices in the design, delivery, and maintenance of their AWS environments, with the most effective use of services and resources at a minimal cost. Cost optimization includes the continual process of refinement and improvement of a system over its entire lifecycle.
Many financial services institutions have low latency requirements for trading, high performance compute requirements, and constantly changing security and regulatory requirements. These, coupled with extrinsic economic drivers, create a demand for robust and dynamic cost optimization processes across all of the organization's workloads. Many financial services companies run at enterprise scale, and thus run hundreds of diverse workloads with large IT and Security staff.
Compared to small and mid-sized businesses (SMBs), that typically run an on-premises model where budgets are relatively fixed and organizations strive to utilize allocated budgets, larger enterprise workloads running on AWS allow customers the freedom to continuously evolve and optimize their resources, usage, and processes to stay efficient. That said, even SMBs can maximize their ROI by migrating their workloads to the AWS cloud and implementing cost optimization best practices.
From the initial design of your first proof-of-concept to the ongoing operation of extensive production workloads, adopting the cost optimization practices outlined in this whitepaper allows you to build and operate cost-aware systems that achieve your business outcomes while minimizing costs, thus allowing your business to maximize its return on your IT investments.
For most financial services customers, there is a need to understand cost both at an application-level and at a workload-level to improve and optimize your costs associated with the workload.
Design considerations
Similar to the other pillars of the Well-Architected Framework, there are several trade-offs to consider for cost optimization. For example, whether you plan to optimize for your speed-to-market, versus optimizing for cost. In some cases, it's best to optimize for speed — going to public quickly, shipping new features, or meeting a deadline — rather than investing in upfront cost optimization. Because you can optimize over time, you can gradually migrate your workload to achieve higher cost optimization once your initial products are launched.
Due to the agility of many enterprise customers' operations, investing in reserved instances (RIs) and AWS Compute Savings Plans (SPs) and usage of spot instances can provide your team with direct ways to save on costs, even if you do not utilize them 100%. Nonetheless, capacity planning and usage forecasting is important for managing your commitment plans.
Design decisions are sometimes directed by haste rather than data, and the temptation always exists to overcompensate for worst case scenarios, rather than spend your time benchmarking for a most cost-optimal deployment. Overcompensation can lead to over-provisioned and under-optimized deployments. However, you may find this to be a reasonable approach if you begin your cloud migration by lifting and shifting resources from your on-premises environment to the cloud. Once you have stabilized your cloud-based workloads post-migration, then you can develop a program to optimize them over time afterwards.
Investing the right amount of effort in a cost optimization strategy up front allows you to realize the economic benefits of the cloud more readily, by ensuring a consistent adherence to best practices and avoiding unnecessary over provisioning. The following sections provide techniques and best practices for the initial and ongoing implementation of Cloud Financial Management and cost optimization for your workloads
Adopting the practices in this pillar helps you build architectures that can:
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Move your usage and costs in line with demand.
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Use appropriate services and resource types to minimize costs.
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Analyze, attribute, and forecast costs.
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Reduce costs over time.
Cost optimization is a continual process of refinement and improvement of a system over its entire lifecycle. A cost-optimized system aims to fully utilize all resources, achieve an outcome at the lowest possible price point, and meet your workload's functional and business requirements.
Design principles
In addition to the design principles described in the cost optimization pillar of the AWS Well-Architected Framework whitepaper, the Financial Services Industry Lens identifies the following design principles to facilitate good design in the cloud for your financial services workloads.
These design principles can help you to build and operate cost-aware workloads that achieve business outcomes while minimizing costs and allowing your organization to maximize your return on investment:
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Monitor cost and resource utilization: Financial services workload usage can be cyclical and can have usage spikes during specific days like month-end or quarter-end, or it can be intra-day during specific hours. AWS provides customers with a number of usage monitoring services that can scale your operations up and down as demand conditions require. Monitor cost at an application-level, and a workload-level on a regular basis, and optimize usage of resources and cost.
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Define recovery objectives per workload: FSI customers have workloads with varying levels of recovery objectives (RTO and RPO). A cost-conscious design approach considers the recovery objectives per workload before suggesting an appropriate DR strategy (Backup and restore, pilot light, warm standby or active/active).
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Operational efficiencies: FSI customers may request customization of their workloads to achieve certain business outcomes. Using AWS analytics tools, you can track, attribute, and charge back your IT costs to each responsible FSI business unit and organizational group. This encourages accountability among the teams and leads to better departmental management of usage costs.
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Data transfer cost: In many scenarios, the customer workloads can be running in multiple Regions. Monitor data transfer and storage egress costs for the workload.
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Adopt cloud financial management: Due to the size of many financial services enterprise customers, the benefits of aligning your IT organization with a Cloud Financial Management approach helps you save on the costs of both infrastructure and operations. To enable this capability, invest in knowledge building programs, resources, and processes to help become a more cost-efficient organization.
Definitions
There are five focus areas for cost optimization in the cloud as described in the cost optimization pillar of AWS Well Architected Framework. These focus areas are applicable to all types of workloads including financial services. In this section, we have listed financial services-specific best practices.
