Is the fall in the pound about to push up your AWS & Azure costs?
The pound has been on a downward spiral against the US dollar for some time now and it is starting to have an impact on cloud pricing. AWS & Azure prices are affected, with costs increasing as a result. If you are seeing higher costs for using these services, don't worry - there are things you can do right away!
In this article, we will take a look at what the fall in the pound means for your cloud bills and suggest some steps you can take to keep them under control.
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The US Dollar underpins all cloud costs for Amazon and Microsoft
The US dollar is the world's primary reserve currency and is used by nearly two-thirds of the world's population. As such, it should come as no surprise that the dollar is also the currency of choice for many of the world's largest companies. Amazon and Microsoft, for example, are both US-based companies and all of their services are denominated in dollars (You can be billed in another currency like the GBP£ but it's all set in US$, especially for AWS).
This impact is felt particularly strongly in the tech sector. Many of the world's biggest tech companies, such as Amazon and Microsoft, are based in the United States. Consequently, changes in the value of the US dollar can have a significant impact on the cost of their services.
For example, if the value of the dollar decreases, then the cost of cloud computing services will also decrease. However, if the value of the dollar increases, then the cost of these services will also increase. As a result, anyone who uses cloud services needs to be aware of how changes in the value of the US dollar can affect their costs.
This means that changes in the value of the dollar can have a direct impact on the costs of these services. For businesses that operate in multiple currencies, this can create significant challenges when it comes to budgeting and forecasting. However, it is important to remember that the dollar is not just a currency; it is also an important part of the global economy. As such, it is important to keep an eye on changes in the value of the dollar and how they may impact your business.
What can you do now to drive down your AWS & Azure bill?
I have written several articles on how to control cloud costs and keep them under control for the long term which can be found on our website. However, what I want to cover here is what you can do today to reduce your cloud cost now.
This does make the assumption that you directly control your AWS or Azure tenant and can control all aspects of it. If you are hosted by a partner or have a CSP agreement on Azure then you might not be able to do all of these. But however you are procuring your cloud infrastructure, price increases will hit you at some point.
Even if you have made provision to insulate yourself from price rises in AWS & Azure by taking long-term commits or reserved instances there are a number of headwinds affecting the global economy and these are most likely going to lead to price increases for AWS & Azure. These will impact your AWS & Azure cost regardless of the change in the pound-to-dollar rate change.
So what can you do right now to control your AWS & Azure costs?
- Control your exchange rate - Evaluate the base exchange rate given by the cloud providers
- Get a cashback card with no commission charges - Put monthly committed spending through a credit facility with cashback
- Carry out an audit and stop cloud sprawl - Audit your cloud deployments, changes can always be made
- Implement auto-scaling - In the short term this could be manual, and then made automatic later
1. Control your exchange rate
With the public cloud providers AWS and Azure you can choose to consume them in a local currency for example GBP £. When you do this there is a conversion from the underlying US $ rate for the service that you are consuming in the region you have provisioned it in. For example, Azure publishes their list of FX change rates here. This means you can then compare the difference between the interbank rate and the AWS / Azure native conversion rate. Then you can use this information to compare this against a credit facility like AMEX or similar.
If you have the facility in the business and you can see a difference you can translate that into a real saving and also get a minimum of 30-day terms on your cloud billing. From comparing the AWS & Azure native exchange rates with the rates available from credit providers we have seen the rates from credit providers are often better. This is a tweak and it will add up over time, but it's important to check your specific settings and circumstances for your cloud provider.
2. Get a cashback card with no FX commission charges
Depending on if you consume your cloud services in a foreign currency or not the FX commission charges could be a requirement or not if you consume it in your native currency.
What will be an advantage is getting a cashback card and running all of your cloud costs through this. Currently, AMEX offers a variety of cards that have cashback or reward points. The cashback card pays 0.5% on the first £10,000 and 1% on anything over £10,000 each month.
So if your cloud spend is £20,000 per month then you can get a discount on your AWS & Azure spend:
- This would translate into a saving each month of £150 on a cloud spend of £20,000 so a saving of 0.75%. This translates into £1,800 per year and that's if your cloud cost remains static.
Of course, when you look at this within a business there are probably the services that are provisioned on a monthly basis that can be put into this facility to increase the value of the saving to the business.
3. Carry out an audit and stop cloud sprawl
Every single customer we have worked with over the last decade has had cloud resources that are redundant but are still deployed. It's just the nature of changing systems on a consumption model. This could range from a deployment created for development or a customer trial that hasn't been turned off or redundant systems that are no longer in use like storage from decommissioned VMs.
If you don't already then auditing your infrastructure on a regular basis can highlight redundant or over-scoped infrastructure. Also assigning cloud infrastructure to cost centres within your business can help show where your cloud spend is going and if a particular team/customer is an unusually high proportion of the monthly cloud bill.
You can then look at ways to remove or scale things back and often save a significant amount. But this will allow you to target your efforts. This is why when we built CloudOps we included cost analysis and recommendations which are generated by the constant monitoring of your environment. We use machine learning and data from hundreds of cloud environments to build the recommendations and keep your spend optimised and as efficient as possible.
4. Implement auto-scaling
The cloud providers sell the idea of a consumption-based model for their cloud services and make a big song and dance about the fact that you only pay for what you use. But how many deployments just run 24/7 all year at their full cost?
This is an area that can slash your monthly cloud spend, even if you have some auto-scaling implemented it can always be fine-tuned. For example, an organisation that works 9 to 5 systems can be scaled back two-thirds of the day and all weekend by default.
Practically if you don't have any level of auto-scaling implemented currently, then you can put processes in place for development/operations teams to turn down / off applications at certain times. Once this is in place and proven you can then use CloudOps cloud management software to automate this.
Where do I go from here?
All of these are short-term high-impact steps that WILL drive your AWS & Azure cost down now. However they are not all you can do, as the founder of IG I still get my team to audit our cloud infrastructure for cost and security on a quarterly basis using our cloud management software. In this way, I know that the cloud infrastructure I am paying for is tuned to be as efficient as possible.
The CloudOps platform also has risk/licence audit lists and cost audits on a quarterly basis will identify things like new services or configuration changes such as switching to new VM types that would drive even more cost savings.
Overall I would recommend some initial steps such as the ones above, but then for the long term, implementing cloud management software would be the step I would take. This takes you from having a smart meter which shows you how much you are spending up to having a system monitoring and tuning your monthly cloud spend. CloudOps doesn't sleep and doesn't take holidays and is always watching and learning about your workloads.
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Steve Rastall - Managing Director
Get in touch: Steve.Rastall@igroupltd.co.uk
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