4 ways to reduce cost and increase liquidity. #4

Many companies are under tremendous financial pressure due to the COVID-19 virus. We sat down to figure out what we can do to help and came up with 4 ways of how we can reduce cost and increase liquidity in the short term for a company. We are posting these 4 ideas in a blog series and in this blog post, we will present the fourth and final idea in the series to improve your financials – optimize your AWS infrastructure.

#4 – Optimize your AWS infrastructure

This fourth and last post in our series of “4 ways to reduce cost and increase liquidity” we will focus on optimizing your AWS infrastructure. There are great potential to reduce your AWS bill by optimizing.

Managing cloud infrastructure is different to managing infrastructure on-prem. It’s easy to provision new resources but it’s equally easy to forget to decommission resources when they’re not needed. Further more, performance tuning is often not part of daily routines and only performed when there are performance problems. Optimization is not supposed to be performed occasionally but rather on a regular basis to ensure a cost effective use of cloud computing. You can read more about cloud cost optimization.

We have performed a number of optimization projects during the years and we always identify substantial and remarkable savings. If you need to find quick ways of reducing your costs, optimizing will be one tool to use to bring good news to your CFO.

Example – a company with a monthly billing of 150 000kr

You need to consider this example as generic because it very much depends on what services you use, what share of serverless vs. EC2 instances you have etc. For the purpose of this example, we assume you have a quite common setup in AWS which we normally find when we engage with customers.

This company have a monthly billing of 150kSEK per month. We’re comparing the annual AWS cost as-is with an optimized service from us.

Year 0 represents the investment year and in this case it includes an initial analysis of 30kSEK. After reviewing the infrastructure, we are able to present a more detailed business case with a much higher precision than this example.

This company have an annual cost of 1.8MSEK per year. They would need to invest 30kSEK to enable the optimization service from us which in turn will lower the AWS cost to 1MSEK per month including a continuous optimization service from us. The total cost as-is would be 10.8MSEK over 6 years compared to 6.3MSEK for the optimization service.

AWS infrastructure as-is versus an AWS optimization service

The graph below shows yearly savings and accumulated savings over 6 years. This company would save 700kSEK the first year and 756kSEK the following years. The return on investment in this example is 7.2 months. The accumulated savings is 4.5MSEK over 6 years, or 42%.

Accumulated savings of an optimized AWS infrastructure

As mentioned before, there are of course a lot of ifs and buts in any calculation and specifically in this case as it heavily depends on how the infrastructure is set up and managed today. We have created a template for helping companies calculate a comparison between as-is and an optimization service from us. The initial analysis will reveal the potential in your specific company.

Please contact me or any of my colleagues if you would like to do the exercise for your company, we’re here to help.

This is the final example of how we can help you reduce costs and increase liquidity in the short term. Please check out the previous 3 ideas.

#1 – Hardware refresh

#2 – [ insert integration product here ] replace

#3 – Incident automation

You can also watch a webinar about optimization.

AWS optimization webinar in Swedish

AWS optimization webinar in English

Anders Eriksson