How to Achieve 60% AWS Cost Optimization with Terraform, Functions, and Tags?

Introduction

As AWS cost optimization experts, we’ve had the opportunity to assist businesses in reducing their cloud expenses while maintaining efficiency. Recently, an Edutech company approached us with a challenge: as their user base grew, so did their AWS costs, driven by expanding infrastructure. They faced several issues, such as:

• On-demand instances running unnecessarily during non-working hours.
• Elastic IPs increasing costs in their testing environment.
• Non-critical machines operating during off-peak production hours.

To address these issues, we devised a two-fold strategy:

1. Leverage serverless functions and tagging to automatically shut down resources during off-peak hours.
2. Use spot instances for testing and staging environments.

Here’s how we achieved a remarkable 60% cost reduction for them.

Identifying Off-Peak Hours for AWS Cost Optimization

We began by analyzing traffic patterns using AWS CloudWatch metrics. Peak activity was primarily observed on weekdays, leaving evenings and weekends as opportunities for optimization. This insight allowed us to design a resource management strategy tailored to their needs.

Business Solution

1. Resource Tagging for Granular Cost Management
2. Automating EC2 Instance Management with Terraform
3. Serverless Functions for Flexible Cost Management

Results and Benefits

The implementation of serverless functions, tagging strategies, and Terraform automation resulted in significant outcomes:

• 60% Cost Reduction: The company eliminated unnecessary expenses during off-peak hours.
• Eliminated Idle Resources: Resource tagging identified and addressed inefficiencies.
• Improved Scalability: The serverless architecture enabled on-demand resource scaling.

By optimizing their AWS setup, the Edutech company maintained application performance while significantly reducing costs.

Conclusion

AWS cost optimization doesn’t have to come at the expense of performance or availability. By adopting serverless functions, resource tagging, and automation through Terraform, organizations can achieve substantial cost savings. For our Edutech client, this approach led to a 60% reduction in AWS expenses, demonstrating the power of a well-executed cost optimization strategy.