What Is AWS Cost Management? A Comprehensive Overview

AWS cost management is key for meeting your business needs with the cloud, and luckily there are many tips and tricks for optimal spend. If you are looking to learn how to leverage AWS cost optimization tools, evaluating existing practices, and learning to maintain performance and functionality over time (while paying less!), then you should check out our white paper, “AWS Cost Optimization: Effective Savings Tactics” or even our on-demand webinar, “Considerations for Cutting Cloud Costs.” In the meantime, stick around on this blog to learn about 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 never exhausting more than 100% of your budget. An estimated 28% of cloud spending is wasted, giving reason to why 82% of organizations cite managing cloud spend 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 spend optimally.

Managing your cloud spend effectively can have a strong impact on your business’ cost control and optimization, resource allocation, forecasting and planning, scality and agility, and cost accountability. With the 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 unlocked your strategy, you have then found the method to scaling your cloud presence and fueling growth. Luckily, it is very achievable to 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!

Use case	Best AWS tool
Cost Visibility & Monitoring	The AWS Cost Explorer is a built-in service with an interface to visualize your AWS cost and usage. It also allows to analyze your past spending, and forecast future spending based on this information.
Cost Allocation & Attribution	The AWS Cost and Usage Report includes granular information, in a receipt-like style, to track your expenses and tag them to particular projects, teams, or even departments.
Cost Control & Budgeting	AWS Budgets allows you to set your cost and usage limits for your AWS account. Alerts can also be set up here, pinging you once you’re approaching or exceeding your limit.
Cost Optimization	The AWS Trusted Advisor is a great tool that inspects your environment and provides recommendations on its own for opportunities to optimize resources or reduce costs. Amazon EC2 Auto Scaling can also be set up for dynamic workloads to automatically adjust the number of instances running to match your workload, which diminishes the risk for over-provisioning. It is also possible to convert your databases from on-demand pricing to reserved instances using Amazon RDS and DynamoDB On-Demand to Reserved Instances Conversion.
Resource Scheduling	AWS Lambda and AWS Step Functions are serverless compute services that can schedule the execution of AWS resources like EC2 instances, databases, and more. This allows you to save costs by turning off the execution during non-business hours.
Rightsizing Resources	The AWS Cost Explorer has a feature for “Rightsizing Recommendations” which does exactly that. Specifically, this feature will identify underutilized resources and recommend how you should either resize or terminate.
Spot Instances	Amazon EC2 Spot Instances are available at a much lower cost compared to on-demand instances, and this should be taken advantage of for data that is more fault-tolerant or flexible for your business’ overall operation.
Reserved Instances (RIs)	AWS Reserved Instances can be purchased for EC2, RDS, and other services. These RIs force you to commit to an instance type and region, oftentimes at a cheaper rate.
Monitoring & Alerts	Amazon CloudWatch allows you to set alarms for resource utilization, mitigating the risk for passing defined thresholds.
Data Analysis & Forecasting	Amazon QuickSight is a data visualization tool that helps discover insights about your AWS cost and usage trends.

The choice for which tools you find most useful is up to 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 Explorer

The AWS Cost Explorer is one of the top features in the AWS Console — without the AWS Cost Explorer, there isn’t “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 more.

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

Lastly, you’re also able to save specific views for cost that you find useful, export this data into your own data visualization tools, and also integrate 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, and we are thankful for this. Let’s walk through how to set a budget up in your environment:

Navigate to the AWS Budgets feature from the search bar in your AWS Console
Click “create a budget” and you will be prompted to choose a budget type (see image below). Give your budget a name and period based on the template you select.
Set budget values.
Select the filters to specify which accounts, services, or usage types that you want to include in your budget.
Configure your alerts based on your thresholds and set up notifications via Amazon SNS so you can take quick action after an alert.
Click “Create” on your budget.
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 good as you are, 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 and communicate regularly, and leverage the other features that AWS has to continually improve your strategy (as listed earlier in the blog).

Challenges of AWS Cost Management + How Can Veeam Help?

Despite all of the aforementioned best practices and tools for AWS cost management, there are still many challenges. AWS services can be complex and ever-changing, which is also why third-party cost management services can also be very useful to take advantage of.

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.

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 in reducing 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.