Getting More Value from Your AWS Spend with Billing Conductor Margins Analysis

Yesterday, AWS rolled out a powerful new capability for Amazon Billing Conductor (ABC) to help customers better understand and optimise their AWS spend. Developers and stakeholders can now analyse the margins (realised savings) for each AWS service that their accounts utilise. This allows granular visibility into where cost savings are being achieved across your organisation's use of AWS.

What Are Margins in AWS Billing Conductor?

Margins refer to the difference between what you are charged by AWS and the "proforma" cost calculated by Amazon Billing Conductor for the services your accounts use. Essentially, it compares the actual invoiced amounts from AWS to what Amazon Billing Conductor estimates you would have paid without any discounts or savings plans applied.

The key benefit is that you can see exactly which services and accounts are yielding the highest cost savings in absolute dollar amounts. This simplifies chargeback to business units and highlights areas where you may want to lean into savings plans and reservations to drive even higher efficiency.

Driving Deeper Understanding of AWS Savings

Previously, most customers using Amazon Billing Conductor could only analyse savings in aggregate across billing groups across their whole AWS footprint. The new margins analysis features offer more granular insight.

For example, you can quickly identify the margin for EC2 usage across different production vs development accounts. If your savings rate is much higher in dev accounts, you may want to right-size production reservations to maximise margins there too.

The margins analysis may also highlight that some services used in your environment offer much higher returns than others. You could focus on migrating more workloads to those high margin services.

Considering AWS Fargate, you may find surprisingly high margins from using over provisioned EC2 instances for containers. That might spur plans to accelerate AWS Fargate adoption across development teams.

Additionally, some core AWS services like S3 tend to have modest list prices close to the actual costs AWS incurs. This leaves little room for heavy discounts or margins improvement. The analysis could spotlight higher efficiency opportunities moving off expensive legacy systems to AWS databases like DynamoDB or Aurora.

Getting More from Savings Plans

One key area where customers can drive higher margins is with Savings Plans which offer significant discounts compared to On-Demand pricing.

For example, let's say you purchase a 3-year Compute Savings Plan to cover 30% of your overall EC2 usage. The Savings Plan offers an average discount of 66% compared to On-Demand.

Amazon Billing Conductor would calculate the proforma cost for your EC2 usage without any discounts applied. It would then compare this to your actual AWS invoice costs after the Savings Plan discount. The difference is your realised margin.

Over time, as your organisation purchases more Savings Plans, your overall margins for services like EC2, Fargate and Lambda should steadily rise. This means you are getting increasing value from your AWS cloud consumption.

Enabling Better Business Decisions

The overarching benefit is that Amazon Billing Conductor Margin View better aligns cloud cost analytics to key business priorities around efficiency, agility and innovation.

Technology leaders can spot their highest return cloud investments. Finance has the data to fund migrations that accelerate margins. Executives can track margin Key Performance Indicators (KPIs) quarter over quarter as an indication of cloud optimisation and digital transformation progress.

This also facilitates more transparency for effective showback and chargeback to business units based on their actual realised savings – not simple pro-rated splits.

As cloud costs continue to grow, understanding margins at a granular level becomes critical. Amazon Billing Conductor Margins analysis provides the insights enterprises need to tame cloud complexity and drive higher value from every cloud dollar spent.