Tech is unquestionably the most important ingredient behind any successful company’s growth strategy. While not every company is a tech company, it is impossible to imagine any company without it.

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Zooming into this scenario, you will quickly notice a key aspect of these tech-driven companies - leveraging cloud systems to reduce Capital as well as Operational costs.

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When it comes to cloud, AWS has taken the obvious lead as anyone’s first choice across the globe, resulting from its easy-to-understand user interface and a giant catalogue of services.

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Why is it necessary to analyse your AWS operating expenses?

While leveraging cloud for hosting applications sounds convincing, it is highly important for companies to estimate their cloud expenses, in this case, their AWS operating expenses to ensure the cost of digitalizing their business aligns with the company goals, striking off the possibility of any future surprises.

This leads us to the obvious question - How to estimate your operational expenses on AWS?

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Which are the key parameters to consider?

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1. Operational hours a.k.a. availability

One of the important aspects of cloud services is its billing model. Instead of the traditional methods of charging one-time or subscription prices for software/hardware usage, cloud services offer a pay-per-use model. While it sounds lucrative, the price is based on various service characteristics. The most common factor is hourly usage.

If a business works within stipulated hours, the operational requirement to make the cloud system available is also limited to those hours. Calculating the cost as per the number of hours it is used, is an effective way to leverage cloud services only for that duration. During Off-business hours, cloud systems can downscale, optimising the money spent.

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2. User Landscape

AWS operating expenses vary by region. In a case where the users are from a single geography, cloud services need to be deployed close to the region where your users are located to improve the latency and the overall experience.

On the other hand, a globally spread application will require CDN, redundant services, etc. to optimise the experience. Determining the user landscape can also help identify if any additional services are required, and the availability of these services in a chosen cloud provider.

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3. Data Storage

Data is the soul of any digitally managed system. The volume of this data largely depends on the operations performed in the system and increases with it. The rate of increase in the data determines the storage requirements and the device types, to reduce the latency while reading it. With that said, it is also important to understand that not all systems require the entire data to be accessed instantly.

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4. Security

No cloud system should be deployed without considering its security aspects.

Security is not just limited to application security but also requires careful consideration of how the data is stored, who will access the infrastructure, the privileges assigned to each member, what should be publicly accessible, etc. All these parameters are crucial to identify the services to be provisioned in the cloud infrastructure.

Growth projections Provisioning infrastructure is not a one-time activity. Once the system is operational, a projection must be made for the incremental growth of users and data.

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AWS Pricing Calculator

To understand the operational costs on AWS, one can leverage the AWS Pricing Calculator.

How does it work?

• Add Services - The user has to search and add the required AWS services.
• Configure service - This involves entering the details of the usage to see service costs.
• View estimate totals - Upon entering the mentioned details, the user can view the estimated costs per service, service groups, and totals.

Know the numbers Most of the parameters discussed above require a foundational awareness of the business we are operating in.

• How many users will use the product/service?
• Do you expect your system to be available 24/7?
• What are your storage requirements?
• How frequently the data will be processed and what is the size?

Questions like these provide parameters that can be fed into the cloud service provider's calculator to estimate the service costs. While it may not be possible to come up with the exact numbers, having an estimation based on experience will help identify the system requirements.

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Case Study

Enough of theory, let’s understand how this applies in a real-time scenario with a case study of one of our esteemed clients’ infrastructure case study.

The customer wanted to deploy a solution based on Home security. The challenge consisted of optimal operational cost, provision for year-on-year user growth, storage of consumer information, etc. We started gathering information based on the points discussed above.

• Compute and memory instances - This will primarily require deciding whether you need EC2 instances, Lambda services, Kubernetes-based deployments, etc. The chosen service must also have the option to integrate with CI/CD services to ease the deployment.
• Storage services - AWS Offers a rich set of options for storage requirements - EBS, EFS, Object storage, etc. Each of these varies in terms of latency, network requirements, and usage pattern.
• Networking services - Load balancers, CDN, Network interfaces, etc. have a critical impact on how the information will be made accessible to users as well as the latency of the application.
• Security services - AWS Firewall, CloudShield, Security Groups, NACLs, IAM policies, etc. will help harden the security and define the perimeter for the Application. Choosing the right service will require knowing what needs to be protected.
• Backup services - Any application that produces data will also require backup solutions and policies to ensure data recovery in case of disaster. AWS offers cold storage, replicas, snapshots, and backup solutions to cater to the application requirements.

Estimating cloud cost can be difficult, but with the right information, companies can perform a breakdown of the operating expenses, to achieve accurate and manageable cost projections.

Incorporating the strategies discussed above, allows your company to leverage AWS’s powerful cloud services efficiently, ensuring you get the best value for your investment. This proactive approach not only reduces the costs but also empowers the company to scale effectively and maintain a competitive edge in a tech-driven landscape.

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