AWS Morning Brief

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AWS Morning Brief for the week of April 12, 2021 with Corey Quinn.

Links:Unconventional Guide to AWS Cost Management:https://www.duckbillgroup.com/resources/unconventional-guide-to-aws-cost-management/TranscriptCorey: This episode is sponsored in part by LaunchDarkly. Take a look at what it takes to get your code into production. I’m going to just guess that it’s awful because it’s always awful. No one loves their deployment process. What if launching new features didn’t require you to do a full-on code and possibly infrastructure deploy? What if you could test on a small subset of users and then roll it back immediately if results aren’t what you expect? LaunchDarkly does exactly this. To learn more, visit launchdarkly.com and tell them Corey sent you, and watch for the wince.Pete: Hello, and welcome to the AWS Morning Brief: Fridays From the Field. I am Pete Cheslock.Jesse: I’m Jesse DeRose.Pete: We’re back again. And we’re here. We made it, Jesse.Jesse: I was worried. This was a journey. Thank you, everybody, for coming on this journey with us.Pete: It was quite an experience going through the Unconventional Guide to AWS Cost Savings. We’ve made it. I just can’t believe we’re here.Jesse: Yeah.Pete: So, what are we talking about today for the culmination of our magnum opus of cost savings optimizations?Jesse: This is a fun one. And I know I keep saying that this is my favorite about everyone, but I have to admit that this one, this topic today probably is my absolute favorite. This one I get really nerdy over. Today, we’re talking about how to predict your future and make your CFO happy. No—spoiler alert—there are not any crystal balls involved in this one. There’s no stock market conversations.This is talking about how you can use all of the different things that we’ve talked about throughout the course of this Unconventional Guide to really bring it all together into a couple ideas that will help you better understand your cloud costs, and really better understand your business, I think.Pete: Yeah. All of the things we talked about really lead up to this one, which is the clients of ours that are the most mature, who are incredibly optimized in their Amazon usage, are the ones who have adopted a majority of these specific items. They all lead to this last one, that ability to predict your future usage based on something that’s happening internally, or if a salesperson comes to you and says, “Hey, we’re about to close this deal, but I need to discount our service.” People are going to start wanting to know well, what is the cheapest that you could sell your service for and still have a positive gross margin?Jesse: Yeah. So, if you’ve done a lot of the things that we’ve talked about in the last couple episodes—I apologize, I know homework’s not the best for a podcast—but if you’ve had the opportunity to work on some of those things, you should have a ton of valuable insights into your spend. We’re talking about tagging, and showback models in particular, maybe even a chargeback model. But you can ultimately use all of this data to better understand what is your forecasted spend is going to look like with a new potential customer coming onto the platform? Or if you get into the topic that we’re going to talk about today, which is mostly unit economics, you can really understand how much can I discount my service and still make a profit, like Pete mentioned?Pete: Yeah, I mean, imagine there’s a global pandemic that happens, and it causes your usage to spike by 500% within the course of a month. How did your spend change? Do you know where it changed? And did it change in ways that you were expecting it to? Like, my databases grew by a lot, and this other thing didn’t grow by very much.Like, that would be expected. But also another thing that—a question that we actually like to ask a lot of our clients, if your sales just doubled overnight, okay would your spend change? Where are the places that are most expensive to operate your service? And again, this is kind of generic. I’ve worked in a lot of SaaS services, so I always think of sales, but just think of whether you’re using the cloud for a SaaS service that you provide and sell, like, B2C, things like that, or B2B, you still have users.They might be internal users. Well, what if your users doubled overnight? What if half the company was using your internal service and now the whole company is? How does that change your usage?Jesse: And it’s also important to think about not just your AWS usage, but all of the other services that you use that support your overall business model: things like monitoring and observability tools, logging vendors, maybe third-party sim tools. All of these are affecting your overall total infrastructure cost and are all part of this conversation. So, it’s really important to start thinking about those architecture diagrams. Remember, when we said, way, way back at the beginning of this conversation, to overlay costs on top of your architecture diagram, understanding that, understanding what parts of your product or what parts of your architecture are the most expensive will really help you understand what’s going to change?Pete: Yeah, let’s say you’ve got a six-figure bill to Datadog or one of the big log management vendors out there, but inside of that bill, is that all just evenly spread across the whole business? What if your log vendor was—the entire spend was all by one service that some developer left the debug logging enabled for? You know, you’d want a way of understanding that maybe that spend was concentrated in maybe a non-production aspect of your account. Because then again, that wouldn’t grow, right? That wouldn’t affect your growth in your sales the same way as if maybe all of your services were equally sending logs of a certain volume over.So, all of those extra services, they all add up, and we see it more and more, as more of our clients start adopting more than just Amazon services: they might be adopting a Snowflake, they might be adopting third-party services running databases running in other services, or EMR type workloads that are not on EMR, and they’re running on Qubole or things like that. There’s just a lot of these services that more and more people are consuming from that fall outside of just the AWS invoice.Jesse: And this also gets back to not just architecture diagrams, but also tagging and showback models, cost visibility, really understanding where your spend is going. And this is fantastic to understand where your spend is going, but finance is probably going to want something a little bit more than this. It’s not just about how much are we spending, or where are we spending it, and maybe it’s not even a finance question. Maybe this is a sales conversation, assuming that you’re a SaaS company. Maybe this is, as Pete mentioned before, “Hey, we want to understand where...

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AWS Morning Brief for the week of April 5, 2021 with Corey Quinn.

Links:Unconventional Guide to AWS Cost Management:https://www.duckbillgroup.com/resources/unconventional-guide-to-aws-cost-management/Trash Taxi: https://trash.taxiTranscriptCorey: This episode is sponsored in part byLaunchDarkly. Take a look at what it takes to get your code into production. I’m going to just guess that it’s awful because it’s always awful. No one loves their deployment process. What if launching new features didn’t require you to do a full-on code and possibly infrastructure deploy? What if you could test on a small subset of users and then roll it back immediately if results aren’t what you expect? LaunchDarkly does exactly this. To learn more, visitlaunchdarkly.com and tell them Corey sent you, and watch for the wince.Pete: Hello, and welcome to the AWS Morning Brief: Fridays From the Field. I’m Pete Cheslock.Jesse: I’m Jesse DeRose. [laugh].Pete: Hashtag #FFF. Not my grades in high school; that is Fridays From the Field.Jesse: We will make it a thing. It’s going to happen.Pete: It’s going to happen. We’re going to do our best to use the hashtag triple-F as much as possible. So, if you have any questions for us, just again, reminder, you can go to lastweekinaws.com/QA as we talk more about our Unconventional Guide to AWS Cost Management. Please give us your feedback, ask us some questions, we’ll answer those in a future episode. Today, we’re expanding on tagging. Because it’s so thrilling to talk about tagging some more, Jesse.Jesse: We know that you have struggled to fall asleep at night listening to our podcasts. So, we wanted to do a very special episode just for you, to talk more about tagging. Let’s move into our NPR voices. [silky-smooth voice] Hello, and thank you for listening.Pete: [buttery-smooth voice] Sponsorship of this—no, I’m just kidding. We’re not—we leave that work to, Corey.Jesse: [laugh].Pete: So, today is really about how to win friends and influence DevOps, and it’s all about continual tagging improvement.Jesse: We talked about the importance of tagging, and one of the things that’s really important to tagging is identifying a tagging strategy, and then building and developing that tagging strategy over time. Your tagging strategy is going to change over time; that is the nature of the beast. Your organization is going to change over time, therefore your organization’s needs are going to change over time, and the tagging strategy and the tagging needs are going to change over time, as well.Pete: Exactly. You’re going to build new products; you’re going to grow, hopefully; you’re going to add additional Amazon accounts; you can make acquisitions; you could get sold to another business. There’s just so many things that are going to happen, they’re going to change. It’s just inevitable. So, how do you continue this process of tagging, and this is, I think, a really important discussion because when you start that process, you take that first step and you start investing in tagging, the best way to get those—you know, that compound interest on all of the return value that you’re putting into tagging, is by making it a long term, continual process. And I’m not talking about, like, “Well, you know, we do a little thing every month, and it’ll be good by, I don’t know, maybe a month or two, next quarter. And then we’ll be done.”Jesse: [laugh].Pete: And that doesn’t work. The best companies that we’ve seen that have really knocked this out of the park have turned this into just a multi-year endeavor. It is going to take you a long time to reach just, like, the pinnacle of tagging, having that ability to allocate just down to the penny of your Amazon spend is going to take a long time. So, manage those expectations appropriately that this is not an overnight fix.Jesse: So ultimately, at this point, you’ve tagged all of your resources; you’ve built this policy. The next thing to really think about is, why? Because in a lot of cases, a lot of engineers are going to ask you this very question. Why should we tag this information? Why should we tag these resources?And you’re going to need an answer that’s more than just, “Well, finance wants this information,” or, “Product wants this information,” or, “The engineering leadership team wants this information.” What you’re getting at with tagging is cost attribution. So, at a really high level, for those who aren’t familiar, cost attribution is the process of identifying, aggregating, and assigning your AWS spend to your organization’s teams, your business units, your products, however you want to slice-and-dice that data, whatever different tags you might be leveraging within your tagging policy. So, it’s really about where is your AWS spend going, along these different lines of the different things that finance cares about, that engineering cares about, that product cares about, that IT or security cares about. So, it’s not just about tagging your resources so that everything’s tagged, but it’s about leveraging that information to understand, where are your costs going?Pete: I think that also gives companies a great KPI—Key Performance Indicator for the non-business folks. But it's a good metric. It’s a good way to track your success with tagging is to basically answer this question: what percentage of spend is tagged? Not number of resources because there are some resources that simply don’t have a cost that have the ability to be tagged. So, tracking tagged by a percentage of resources is, for the most, part not useful.Jesse: Yeah.Pete: But tracking what percentage of your spend is tagged—and specifically tags that are enabled as cost allocation tags, which is something that you need to make sure you set up—but by tracking that spend, that KPI, that’s how you can start to understand how good of a job you’re doing at this. Now, again, we’re obviously focused on tags as a cost attribution strategy. But the reality is, is that’s the main use of them on Amazon, specifically. The main use of tags, again, that we see is so people can understand where the money’s going.Jesse: Yeah. AWS even calls them out as user-defined cost allocation tags. For example, if you want to log into Cost Explorer and see where your spend is going among different products, among different teams, among different business units, you need to make sure that those tags that you’re leveraging are enabled as cost allocation tags in Cost Explorer. So, that’s a really important footnote to call out.Pete: Yet to that point, is if you do enable your cost allocation tags, there’s maybe some default ones that Amazon will enable for you, but you’ll have to enable any of your own customs. Those take effect going forward; they’re not retroactive. So, if you want to understand which tag is costing you a certain amount of money, make sure to go and enable that as soon as you possibly can because it’s not going to—you’re goin...

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AWS Morning Brief for the week of March 29, 2021with Corey Quinn.

Links:Unconventional Guide to AWS Cost Management:https://www.duckbillgroup.com/resources/unconventional-guide-to-aws-cost-management/TranscriptCorey: This episode is sponsored in part by LaunchDarkly. Take a look at what it takes to get your code into production. I’m going to just guess that it’s awful because it’s always awful. No one loves their deployment process. What if launching new features didn’t require you to do a full-on code and possibly infrastructure deploy? What if you could test on a small subset of users and then roll it back immediately if results aren’t what you expect? LaunchDarkly does exactly this. To learn more, visit launchdarkly.com and tell them Corey sent you, and watch for the wince.Pete: Hello, and welcome to the AWS Morning Brief. I am Pete Cheslock.Jesse: I’m Jesse DeRose.Pete: Fridays From the Field. Triple F.Jesse: Wooo.Pete: It’s going to be a thing. We’re working on it. And you can follow along this Unconventional Guide by going to the duckbillgroup.com. Website, you can download this entire Unconventional Guide as a handy PDF. We’ll include the link in our [show notes 00:00:33]. It’s a really long link that I’m not going to read out here.Jesse: Is it wrong that I want Rebecca Black’s, “Friday” to be our opening intro music now?Pete: Oh, yeah. That would be, actually, pretty good. I feel like the cost of licensing that might be a little higher than we want to bear. But I don’t know, maybe there’s some sort of fair use thing that we could do with it.Jesse: I like it. We’ll think about it.Pete: Well, you know what? We can all just sing it in our heads. And that’s a good way to get it—Jesse: [laugh].Pete: —very cost-effective way.Jesse: We know that you’re groaning as much as we’re groaning, and that’s what’s important.Pete: That is very true. So, today, we are talking about why are you still paying retail prices for your Amazon usage? And maybe you’re sitting there going, “Well, what else would I pay?” Well, you’d pay less than that, right?Jesse: Yeah. Last week, we talked about reservations and savings plans, reserved instances. And that’s really important, but today we’re talking about something a little bit different than that. Reservations are still important and still, potentially, part of this conversation, but it’s possible to not pay retail prices. You have to think about it in the same way that you’re thinking about reservations: you have to be willing to make investments into your cloud spend, into your cloud usage.Pete: So, we mentioned this in a previous episode, that no matter how much your spend is, from a couple of dollars a month all the way up to hundreds of millions of dollars a month, you have an account manager with AWS. You may have never met them, but there is someone that is specifically assigned to you. And the reason for this is that every big-spending client out there starts as a small-spending client, if you’re a startup, you might be spending $10,000 a month. That can be a huge amount of money for your business, but Amazon knows that next year, you’re probably going to spend more than that. And so everyone gets an account manager, and that account management team is there to help you improve your bill. And by that I mean, help you spend less when it’s possible. So, the way they do this is by helping investing in this relationship. They want you to save money. And I’m not making a funny here, that may sound like a very strange topic. But Amazon doesn’t want you to spend your money wastefully. That makes for angry customers. Right, Jesse?Jesse: Yeah, this is ultimately something that I see come up again and again. AWS’s account management team really wants to help you; their job is literally to help you. This relationship is super, super important, and can manifest in a number of different ways: it can manifest in your account manager trying to set you up with a solutions architect or technical account manager to use more AWS services; it can be talking about some of the discounts that we’re going to talk about today; it could be a whole slew of things, maybe credits to move or migrate from your data center into AWS. That’s when we’ve seen a couple times with a couple different clients of ours.Pete: Yes, specifically, we’re talking about one of the most well-known, I guess, of all of the discount programs inside of Amazon called the Enterprise Discount Program. This is often referred to as an EDP. And you might have an Enterprise Discount Program—this is actually separate from something called an Enterprise Agreement which is just, I believe, some shared legal agreements of how you will operate on the platform. This is actually broader than that. This is both Amazon and your business committing to certain terms—so legal is going to get involved; it’s going to be some legal requirements that are needed—but at the end of the day, this is how you can get a discount on your spend, just a straight, broad, cross-service discount that applies to all of your spend—for the most part. I say ‘all’ but for a majority of your spend within Amazon.Jesse: So, now you’re thinking to yourself, “Fantastic. How do I sign up, sign up? Shut up and take my money.” So, there’s levels to this. We’ve usually seen clients or AWS customers, whose spend exceeds $1 million per year. That’s usually the sweet spot where your account manager will step in and say, “Hey. Hello. Hi, how are you?”Pete: Yeah. That’s where you get the introduction because at that spend, yeah, okay, you’re at—what—$100,000 a month, at least? Six figures a month, that’s real spend. That’s real spend that’s probably not going to go away anytime soon. And it’s spend that probably is going to increase in the coming years.Jesse: And even if you’re not at $1 million per year, you can still start that conversation with your account manager today. They can still tell you what are the levers that you have in order to become part of this EDP program? What are the levers that you have to start getting discounts on your usage today?Pete: So, something we see a lot of, we actually help a lot of our clients, hold their hand through this negotiation process, and help our clients negotiate on their behalf to improve their discounts. And a good number of our clients actually, will preemptively negotiate these contracts in advance of their spend growing on Amazon, basically making these multi-year commitments because maybe they’ve just closed a deal with a large customer, they’re expecting some future growth and they want to make sure that they can get the biggest discount possible. And that’s what an EDP can do is, basically you’re saying, “I commit to spending a certain amount of money per year, and in exchange, I will get a discount.” Now, there’s a lot of nuances here, but the key thing is that when you make that commitment—let...

Want to give your ears a break and read this as an article? You’re looking for this link.Never miss an episodeJoin the Last Week in AWS newsletterSubscribe wherever you get your podcastsHelp the showLeave a reviewShare your feedbackSubscribe wherever you get your podcastsWhat's Corey up to?Follow Corey on Twitter (@quinnypig)See our recent work at the Duckbill GroupApply to work with Corey and the Duckbill Group to help lower your AWS bill