Cost Avoidance and Operational Costs | Maximizing Business Value with AWS

Posted on April 18, 2019 by MarkRichmanMarkRichman

In the previous article in this series, I discussed how you can have a more productive workforce by leveraging the cloud.

In this article, I’ll discuss both cost avoidance, and the impact of the cloud computing model on operational costs.

Cost Avoidance

The overall cornerstone of the cloud’s business benefits to customers are cost savings and cost avoidance. For example, you can eliminate costly infrastructure refresh programs, and a variety of software license maintenance. Lower your unit price for core pieces of underlying infrastructure in the cloud. Latch supply with demand, ultimately eliminating waste from over-provisioning.

Customers reduce costs by saving everyday operational expenses, and by avoiding spending money in the first place.

Consider the typical items in your budget in a traditional IT environment like hardware maintenance costs, costs associated with OS patching, storage administration, and testing.

Then think about reducing or eliminating capital carrying costs associated with large capital investments, facility expansions in the face of unknown demand, hardware refresh programs, etc. All these things add up!

Operational Costs of AWS

AWS lets customers pay for exactly the amount of resources they actually use, matching supply with actual demand. How does AWS enable this?

First, customers don’t need to invest in any infrastructure before they know the demand. Instead, they can replace that up-front capital expense with variable cost.

Secondly, there are no minimum commitments required. This flexibility minimizes the need for detailed resource planning. Customers can start or stop using a service at any time, and no long-term contracts are required.

Next, for certain products, customers can invest in reserved capacity. In other words, pay one time for a low up-front fee and the on-demand rate is reduced by 28-62%.

For storage and data transfer, pricing is tiered. The more resources that are used, the less customers pay per GB. Additionally, AWS offers pricing models to support variable and stable workloads. This means customers only pay for what they use.

As AWS continues to expand, it increases the economies of scale, and passes those savings onto customers.

In my next article, I’ll wrap up this blog series by diving into cost reduction techniques put into practice through simplifying the application stack.

Questions about the concepts presented in this article? Feel free to drop me a line at mark@linuxacademy.com.

More on Maximizing the Business Value of AWS

Next Steps

Your organization needs qualified professionals to help mitigate the risks involved in migrating to the cloud. Make sure your staff are properly prepared with hands-on training from Linux Academy.

With a Linux Academy For Business Account, you can:

  • Increase your IT team’s efficiency
  • Combine the benefits of in-person and online training, maximizing your budget
  • Turn constant cloud technology changes into a strength
  • Get your team certified and ready to meet the needs of your customers.

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