According to a 451 Research report from 2019 on cloud cost management, 85 percent of respondents overspend their cloud budgets, while only 58 percent acknowledge overspending. Sixty-nine percent of the latter say they spend 25 percent more than budgeted; the rest either spend even more or can’t access the actual numbers.
In this modern world of digital transformation—especially in fintech, where financial institutions are forced to adopt cloud for the sake of saving competitiveness with start-ups—these numbers seem shocking. Another 451 Research survey says that cutting existing costs is one of the main reasons (cited by 41 percent) why fintechs consider cloud implementation.
In today’s article, we offer a quick look at ways to optimize costs for fintechs as they adopt cloud.
Is AWS cost-effective?
If we compare Amazon Web Services (AWS) cloud with an on-premises data center, each option has its pros and cons. For example, when using AWS cloud, you pay only for used resources, whereas using an on-premises data center requires paying maintenance costs irrespective of use.
By contrast, you can put the desired security level in place with an on-premises data center or entrust security of the entire infrastructure to the cloud provider. Our white paper “Cost Optimization and Consumption Factors on AWS” has more examples of opportunities and threats hidden in AWS cloud compared to what an on-premises data center can offer.
In our research, we analyze the pros and cons of AWS and on-premises data centers regarding the following aspects:
For details, download the white paper. Here, we’ll show you two examples of how costs may change as your requirements shift.
When it comes to performance, AWS EC2 instances cost a fraction of what an efficient data center environment can cost. However, AWS performance upgrades are likely to continue to affect cost in contrast to performance adjustments with on-premises facilities, where drip expenses may occur only to improve performance.
The situation is quite different when we analyze maintenance costs. According to the Shared Responsibility Model, AWS is responsible for infrastructure maintenance. Thus, on-premises facilities maintenance becomes much more costly due to the need to inspect and report problems with equipment, conduct safety checks, maintain temperature and humidity requirements, and perform other tasks.
How to optimize AWS costs
According to the AWS Well-Architected Framework white paper, cost optimization in the cloud is composed of four areas:
- Cost-effective resources
A number of different approaches exist to use services, resources, and configurations for your workloads. To save costs, optimize your architecture and refine the selection of resources and configuration options.
- Matching supply with demand
Depending on whether your demand is fixed or variable, you can create metrics to ensure that your environment management is minimal. AWS offers different approaches to match supply with demand based on the (a) varying cloud resources you use, (b) rate of message producers and consumers, or (c) time when you expect to need additional resources.
- Expenditure awareness
Efficient usage behaviors and informed decisions about where to allocate resources within your business help reduce wasted costs.
- Optimization over time
Measure and monitor how closely your system utilization is aligned to your requirements, and minimize the utilization gap. You can also periodically review your existing architectural decisions to ensure that they remain cost effective.
You can learn which AWS services and solutions can help optimize your spendings on AWS in the “Cost Optimization and Consumption factors on AWS” white paper.
For most fintechs, AWS is a preferable cloud services provider because it not only is economical but also offers a wide variety of options and solutions. However, streamlining the costs of your AWS infrastructure is not a one-time task. In our white paper “Cost Optimization and Consumption factors on AWS,” you can find the following information:
- Pros and cons of adopting AWS cloud versus an on-premises data center
- Basic principles for cost optimization with AWS
- Key aspects that shape your infrastructure’s effective functioning
- Descriptions of the tools, services, and solutions AWS offers to leverage cost consumption
Download our free white paper here.