How to Drive Economic Value Through Cost Management and Optimisation - Level 200 (United States)

Hi, and welcome to how to drive economic value through cost management and optimization. I'm nice and brush the costly for well, architected today. What we're going to look at is what cost optimization actually is within going to look at the well architected framework and Cloud financial management and then we're going to have a taper look at savings plans. So, what actually is cost optimization. You can say he is has the delivery of business value at the lowest possible price point. What's really important, he is it it's not about billing or just about cost. It's just as much

about the value and what you delivering to your customers for that price point. Think about why you came to the cloud, why you looking to come to the cloud? Is that pace of innovation 3. Jody you going to be doing more of what you did before and you potentially going to be doing things that you couldn't possibly do before? So you need to make sure that you're looking at Value as much as you looking at the costs, what time account, look at the state of cost optimization in Industry today? Think about the organization, you count a walk up or an organization, you boys have previously, do they

have a security team will function other people dedicated to putting in place policies and procedures around Security in your organization. Chances are there is think about whether or not you have an operations team other people is their team, they're putting in place monitoring procedures and processes. That if something goes down, you can fix it really quickly again. Chances are the race Think whether or not you have a cost optimization tank. Is there a person or a tank dedicated to building capability around cost optimization in your organization? Chances are, they're not and that's

what we need to fix. So what do we need to focus on in 2020 and Beyond? As I said before first and foremost, we need to stop talking about billing. We need to look at the value and the efficiency of what you're doing. It again, you coming to the town to do different things. And to do more things that you did before, if your bill goes up by 10%, is that a problem? Not if you'll revenue and the men of customers, you said that goes up by 400%. Sink right out, so you need to make sure that you stopped talkin about billing and focus on efficiency, what you're doing for the price point.

Second line, you going to have to invest long, time to build capability in optimization. Think about security as well, understood that it's, everyone's job in the cloud cost. Optimization is also everyone's job. You need to put in place procedures, long-term capability around cost optimization thoroughly. This is looking tentious. But you need to look at short and easy as a measure of you like incapability. If you can quickly find $10,000 a waste, a month in your account, so that's a great thing. But also tough question. How long has it been there for? How did it come

about? If $10,000 a month of waste has been there for 6 months, that's a $60,000 problem. Again, you need to focus on building long-term capability so that it doesn't happen again and things like it. Come up. So I think about when you deploy your work lights today, they need to be reviewed and need to go through certain stuff. Got procedures. Think about the review process. Is it consistency across all the different areas of operations across security across cost optimization? Is it consistent do? All the particular pill has an area's get the same focus and thoroughly, is it consistent

across your entire technology portfolio? Chances are, it's not exactly why we developed the well. We've been working on what architect and developing it. Consistently since 2012, we've worked with hundreds of AWS experts and thousands upon thousands of customers to develop. What are the best practices to building and deploying workloads in the cloud with the well architected wipers? There's pillow white papers and a friend with white paper. A framework, white paper is a high-level summary and areas of best practices age of the pillow white papers going to a

lot of depth for Casa optimization. It's about forty or fifty pages of detailed information about how you optimized. How do you think about building in a cloud? We've also got the, well, architected tool. This is a way that you can measure your workload and organizational capability. That could be consistent process across your entire technology portfolio across your organization. It doesn't matter who does a review. When they do review. You going to get a consistent understanding of exactly where you're at and where your organization is at. We've recently folded in Cloud financial

management. These are the activities that an able finance and Technology to work more closely together to optimize will predict cost on a WS. When you successfully Implement Cloud financial management, it's going to help. Get you a better balance between agility cost control while still improving that unit cost which is that unit of efficiency. Suck a great example of this is thinking about the drive is that a very unique to cost think about the extrinsic drivers. What are the goals? What are the apis that are put upon your Builders chances are there's going to be things around

up time with things around security. They going to make sure that they build systems that are going to be secure and reliable because it's that job and that told us what they need to do. Think about intrinsic drivers. If somebody build a system that continually goes down at 2 in the morning, they're the ones that are going to get the coal and they going to have to fix the system. So they've got intrinsic job is to make sure they build systems that are going to be reliable and secure when it comes to Castleton ization. What are the extrinsic and intrinsic drivers of your people? If

you expect them to build cost, efficient systems, are they actually driven to do that? Chances are, there's not, if I build a system that cost too much money, is there actually any impact to them. Chances are not to the quickest and easiest way to fix, this is to stop putting goals on your work clothes. Take free sample web server. It needs to save us. Five thousand requests an hour with 10,000 concurrent connections, a nice to have so many names of availability. Also, add a metric go around cost and they still do this at exit number request, for every dollar that you

spend. Soon, as you put a dog on a walk, would it notifies our entire organization that we care about cost the organization then develop the capability to be able to measure this and monitor this long. Why do you want to invest in? Well, architected? And clad financial management. Simply put we lost the site to save you from paying for things three times over. Think about when you provision something incorrectly old, as white ancient are real. That that waste is there, you're paying for it? You didn't have to find the wisest, you potentially could be paying for third-party

tool, or you're paying someone to go around and find pieces of white East 3rd. You didn't have to fix the Weis, remove it as to what it should have been. So you paid it for juice. The waist you paid a find it, you didn't pay to fix the widest. We're here to help you build systems correctly the first time so that that effing instead of rebuilding and fixing problems, spent building and delivering you value your customers. That's why the, well I could take their framework Fuller's to learn measure and improve process. Did learn about the best practices for the white papers and for the tool,

you can then measure where the workout is at and your organization by using the Walker, take the tool in the console and thirdly, you can improve by implementing the best practices that are provided to you in the Improvement plan and also using the wall architected labs, open source hands, on gods on how to implement the best practices for your systems. So, let's have a look at what the well architected tool actually. Looks like in the console. You can say, he's a screenshot, I'm currently in the cost optimization pillow on the very left there. You could say the different areas of cost,

optimization the questions, these the different areas that make up optimization and what you need to be considering in the middle, you can say there's a description for the particular question helping. You understand what it's about and why you should care about it underneath that are the different best practices. These are the very specific backtrack practices that you implement to achieve. Will I could take it in this particular question. On the right, you can see a little bit more information. If you're not clear about what the particular best practices, you can click on information and

get a little bit more detailed information to help you understand what it means to help guide you through the process. Once you perform a wall architect review, you're going to get an improvement plan, this is going to help you, prioritize the list of things you need to remediate. You can say, he doesn't number of high-risk Adams is the number of medium rare items in the particular order. You identified in the part ization of H, the pillows Alfani, there's also the well architected Labs. You can see here that this is a cost, optimization lab. And when we build days, we've got

financed people in mind and this is how you get your people try. Using the tools, developing the dashboard in the different techniques to be able to cost optimize across your organization. Each and every step is well-defined will tell you what to do. If they'll be a screenshot of going along with it and you can log into the console, you'll be able to complete these labs and start to build capability in cost optimization. So now we're going to look at savings plans. Settings plans are commitment by discount. Will you make a commitment to a, the 103 years? A certain level of spend, and you

get a discount for making that commitment. If it's not even our eyes, they're very similar, Let's look at the existing reserved instances that we have. We've got to stand in our I will then introduce the region are on which gives you flexibility of the availability Zone. We've been implemented ideal size flexibility, which gave me flexibility around the availability Zone. And also the sauce in the instant they were the highest discount of 72% within introduced a convertible. I realize these gave him more flexibility, more features, but you had to pay a little extra hamster at a

discount, right? Of slightly less of 66%, they schedule flexibility of operating system or tenancy. However, you had to make the change, I know some operational costs involved. You can say hey this is what savings plans look like. You can see the operating system and the Tennessee flexibility has moved across to the high discount level and in the 66%. Discount category with introduce region and service flexibility second, Chief savings plans. Not only work on ac2 they work on Ava Computer Services like Lambda and without extra flexibility. Come from trees cost. Unlock a

convertible r. I you don't have to make the changes. They automatically applied to your usage without any effort from you. The other thing that's important with savings plans. It have discounts are allocated. We can see in this particular account with what a $200 savings plan and it gets allocated from the highest discount to the lowest discount from top to bottom. So $200 savings, plan will get us about $168 of sightings. If we also had another account for the $200 savings plan, you can stay in this particular account, it only gives us $86 a discount

because there's a much larger amount at Aloha discount, right? What's important when the discounts are applied, a savings plan is applied in the account, that's purchased an exhaust in that account and then goes to all of your other accounts. So the best way to purchase a savings plan is to use a terrorist organizations and purchased a savings plan in an account with no usage, no resources such as the master repair account or a separate dedicated account. That is only for purchasing savings plans. Savings plan in this account, you can say that it was virtually brings across the

highest discounts. That I $200 savings plan will give you the most amount of savings of about $228, always purchase your savings plans and I can't be no usage. It'll then I doubt the biggest discount across your entire iws organization, and you get the best value from it. There's a downside to the flexibility. I'm always think about invalid recommendations will look at a very specific example. If you've got 30 instances of x1ae, Lodge running at 100% utilization, that's going to be on demand cost. That will be the sightings Plan. Cost you going to get a discount of

about $7,000 or 38% which is a great discount that must cost would definitely purchase. If you also had a single axle on a 32 extra large running, a only 63% utilization on demand cost would be a little of it. And dollars. And the Savings Plan again, would be a little bit over $12,000. You can see here that there is a sighting, that particular example is a very small siding but there is still a saving so that would be a valid recommendation if that's what you were running. It would be cheaper to get a savings plan hands at The Valor

recommendation that he's made whether or not you want to purchase a savings plan that gives you 2% discount, maybe not, here's the important thing. So they are part of the same family, they're both dx1ae family. So the valve recommendation of a savings plan for this particular family is going to be $23,000 and you're going to save about 23%. That looks like a Nike a discount but half of that savings plan is in my class 38% and half of its the much lower. 2% discount. So it's really critical. You understand what's inside of the sightings plan and what actually

makes out that plan Perform. A lot of research around reserved instances and commitment, based discounts, to be able to understand what's a good recommendation versus what's actually a valid and what customers should be choosing The first thing is to select the lowest point of sustained, usage or spent. So you look at you, like I said, this is what your utilization look like throughout the month. It was going up and down the best animation. Valid recommendation would be, that one, right? At a hundred that green line, then that will give you the cheapest overlap come for. That very

specific usage, but you're using too many change. Do you look for the lowest sustained Point? That's going to be the lowest point but it's a very short Sparks, you ignore that. That's going to be your lowest point of sustained usage. That's what you should select. When purchasing recommendations of savings plan or reserved instances, The second point, you want to look for a steady or positive trend is this is what you'll use. These look like for the month, steady 200, then dropped off again the best recommendation would be a hundred. What's it going to look like next month is it going to

continue with that low point? Or is it going to go back up again? Make sure you select recommendations that it for usage. That is steady or increasing over the time. You select for analysis. So, do you want to be able to pay off the investment in 9 months? If it takes just less than 12 months, to pay off the investment of a savings plan or reserved, instance, if anything changes before that, you haven't paid it off. And you'll be at risk the Sunnah. Something pays itself off, the less risk, there is the magic numbers about nine months so you can pay off the savings plan or the reserve

instance, in nine months. That's what you should be selecting. The significant instance account, if you have 10 instances running you turn off 5/2 fuel usage has gone. If you put a hundred instances in your turn off, five only 5% of your usage is going. So what's going to be significant to your organization is going to be very you need to understand what's the chance of a lot of my usage being turned on or off. Understand what that number is to organize. A shop and make sure her recommendation is for a small number of instances. Maybe it's not best to choose that at the point in

time and thirdly, always purchase small amounts in increments over time, your work clothes in your organization are going to evolve over time, you need to make purchases over time as well, so bright and quick and easy way to do this is to purchase half or a quart of the recommendation, wait, a couple of weeks, do a reanalysis and make another purchase. That's a great low. Risk strategy to be able to make purchases over time. I mentioned before we got the wall architect and lives and we just released alive around savings plans. So this is a screenshot of the dashboard that you actually

get to create with your usage and with the Ws processing, it takes the processing, combines it with your usage and gives you an interview of your usage at the savings plans, right? You can filter by region by operating system. You can look at different instance families. You can see that you get the recommendation of sightings plans. That's that's the lowest point of sustained usage already calculated. It can be grain, it can be yellow, red depending on whether or not it's worth purchasing. We can also highlight and change the color to a conditional formatting of the discount, right? So

you said a business rule, only purchase a savings plan if it gives me more than 10% discount then you can set that to be read if it's less or equal to 10%. We've also got the train there as well. So if it's a positive or a steady Trend, it'll be green, it'll be yellow or red of its Decline. And you've also got the instant account that you can set. So, if you want to set the number of instances to a minimum of 10, if it's less than that, then it's going to come off as being red. That's a great dashboard to instantly understand how you want to make a purchase and what's going to be the

correct purchase. That suit your organization and you'll business rules. The other great thing that love does is it helps you understand. How the, in the discount, it going to be allocated in your organization because it's mixture usage with the sidings plans, right? You can get a view of your bill that looks like sightings plans. So we can say, he has a quick, snapshot each and every hour out by Alex. What your bill would have been if it was savings plans, applied But it helps, you purchase savings plans to get the best possible value and then redistribute the benefit how you want to

according to your business rules, where would have that discount? I've gone this gives you that exact you and jump online. Have a look at well-architected loves.com and have a look at the savings plans. Love Thank you very much. Attractive in solution, architect associate, and then, it stops administrator, associate administrator associate. And I came out when I was trying to build a solution then suddenly I know. It came out like it is going to cost me. A huge bill that's where this is. David ministrator associate use that kind of knowledge day. Today is the most of

the administrators Spain Lord of time on fixing the application issues with the subject ministrator, particularly on a AWS Aflac. Phone bill, give much more insights how to troubleshoot and fix the application sites are definitely is worth spending some time to do this multiplication.