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Exploring AWS Cost Anomaly Detection for Cost Control

Exploring AWS Cost Anomaly Detection

A recent Hashicorp survey reports that 94% of companies overspend in the cloud. As Amazon Web Services (AWS) controls a third of the cloud computing market, this means tracking, controlling, and optimizing cloud spend should be a bigger priority for many businesses on AWS, and part of that overall strategy will include detecting cost anomalies.

AWS Cost Anomaly Detection is a powerful tool that helps businesses analyze their spending patterns and detect anomalies such as cost spikes. 

To help you avoid any unpleasant surprises when it comes to how much your company spends on cloud resources, let’s explore how AWS Cost Anomaly Detection works and how you can use cost anomaly detection tools to track and control your cloud costs.

What is AWS Cost Anomaly Detection?

AWS Cost Anomaly Detection is a free tool offered by AWS. This tool leverages machine learning models to analyze spending and resource usage on your AWS account in real time.

AWS Cost Anomaly Detection works by analyzing your company’s historical AWS resource usage in order to detect cases of anomalous spending. It also allows you to define custom spending thresholds and set up anomaly alerts when you cross those thresholds.

AWS Cost Anomaly Detection offers a lot of room for customization, enabling you to create individual alerts for custom spending thresholds across any number of departments, workloads, and cost categories. It also allows you to set custom alert preferences and choose your alerting frequency, giving you the option to choose between individual alerts for each anomaly detected, a daily summary, or a weekly summary.

Spotting and addressing detected anomalies is a vital part of cloud financial management. By using AWS Cost Anomaly Detection to automate this process, you can detect unusual spending around the clock without overtaxing your team.

Cost Anomaly Detection vs. AWS Budgets

Along with AWS Cost Anomaly Detection, Amazon offers a variety of other tools for helping track and control AWS costs, including AWS CloudWatch, AWS Billing, and AWS Cost Management Console. One AWS tool closely related to AWS Cost Anomaly Detection is AWS Budgets.

Like AWS Cost Anomaly Detection, AWS Budgets lets you set up custom spending thresholds and automated alerts for when you exceed those thresholds. But there are also some important distinctions between these two tools you need to be aware of.

AWS Cost Anomaly Detection uses advanced machine learning algorithms to analyze your company’s historical resource usage and determine what qualifies as anomalous. The tool then monitors your spending to detect anomalies such as cost increases.

AWS Budgets, meanwhile, can be used to set budget thresholds, but it isn’t capable of analyzing your spending patterns in order to detect anomalies.

Benefits of using AWS Cost Anomaly Detection

AWS Cost Anomaly Detection is a powerful tool that offers a number of features and potential uses. Some of the top benefits of using this tool to detect spending anomalies include:

Early detection of cost anomalies

Sudden, unexpected spikes in AWS costs are something every company needs to keep close tabs on. In addition to costing your company additional money, these cost anomalies are often indicators of underlying issues you need to address.

AWS Cost Anomaly Detection allows you to detect these anomalies as they occur. This helps companies avoid costly surprises and detect and resolve anomalies in a timely manner.

Improved cost visibility

A company’s cloud infrastructure is a difficult thing to understand and analyze at a glance. If you want to achieve the type of visibility into your AWS spending, you need for effective cost optimization, simplifying the process of tracking your cloud costs via tools such as AWS Cost Anomaly Detection is a great place to start.

The reports provided by AWS Cost Anomaly Detection shed a lot of light on how your company uses AWS resources, helping you improve your cost visibility so you can easily discover opportunities for savings.

Cost optimization insights

AWS Cost Anomaly Detection doesn’t just detect spending anomalies. It also helps you identify the root cause of detected anomalies and provides actionable recommendations for resolving them.

Resolving issues causing cost spikes is a key part of AWS cost optimization. With AWS Cost Anomaly Detection, detecting and fixing anomalies driving up your AWS costs is made a whole lot easier.

Cost control and budget management

Tools such as AWS Cost Anomaly Detection and AWS Budgets help companies make sure that they don’t accidentally spend more than they mean to. With AWS Cost Anomaly Detection, you can set up custom cost anomaly thresholds for various resources, departments, workloads, and more to ensure anomalous spending doesn’t push you over budget.

By using AWS Cost Anomaly Detection and AWS Budgets to set both budget thresholds and anomalous spending thresholds, you can better control your AWS costs in a way that doesn’t require constant manual monitoring.

How AWS Cost Anomaly Detection works

AWS Cost Anomaly Detection comes complete with a number of powerful features and capabilities. Here is a breakdown of how AWS Cost Anomaly Detection works to help companies track and control their AWS spend:

1. Data collection

AWS Cost Anomaly Detection starts by collecting data related to AWS spending. This encompasses a wide range of metrics, including resource usage, billing information, and historical cost data. AWS Cost Anomaly Detection also collects detailed information about the specific resources you use, such as EC2 instances, S3 storage, and other AWS services.

2. Historical data analysis

Once the data is collected, AWS Cost Anomaly Detection uses machine learning algorithms to perform an in-depth analysis of your company’s historical spending patterns. This allows the system to form a baseline of typical costs over time, giving it the ability to distinguish between normal and abnormal spending patterns.

3. Anomaly detection

After analyzing historical data to determine what qualifies as anomalous spending, AWS Cost Anomaly Detection monitors your AWS spending in real-time to identify deviations from the established pattern. These deviations or anomalies indicate cases of unexpected cost fluctuations or unusual spending.

4. Threshold calculation

AWS Cost Anomaly Detection is able to calculate dynamic thresholds based on historical spending data. It also allows you to set custom thresholds for anomalous spending. These thresholds then serve as benchmarks for distinguishing between expected variations and cost anomalies.

5. Anomaly identification

When deviations exceed the calculated thresholds, AWS Cost Anomaly Detection identifies them as anomalies. These anomalies represent potential areas of concern that require further investigation.

6. Alert generation

After detecting a cost anomaly, AWS Cost Anomaly Detection then sends automated alerts to notify you of the issue. You can configure these alerts to send them to various stakeholders within your company. You can choose whether AWS sends them via email, Amazon SNS (Simple Notification Service)—or, they can be integrated with AWS Cost Explorer’s anomaly detection feature.

7. Root cause analysis

Once  AWS Cost Anomaly Detection detects an anomaly, it then performs a root cause analysis that offers detailed information about the specific resources or services contributing to the anomaly. By correlating anomalies with factors like changes in resource utilization, configuration, data transfer patterns, or pricing changes, it can help companies pinpoint the underlying reasons behind unexpected spending patterns.

8. Actionable recommendations

In addition to identifying anomalies and their root causes, AWS Cost Anomaly Detection goes a step further by offering actionable recommendations for resolving the issue. These recommendations are based on AWS best practices and may include optimizing resource usage, modifying configurations, leveraging Reserved Instances (RI) or Savings Plans (SP), or exploring alternative pricing models.

Setting up AWS Cost Anomaly Detection

Setting up AWS Cost Anomaly Detection is a relatively simple process. To get started using this tool to detect and address cost anomalies, here are the steps you will want to follow:

Creating a cost monitor

The first step when setting up AWS Cost Anomaly Detection is to create a cost monitor. You can do this by logging in to your AWS Management Console and navigating to the “Billing and Cost Management” dashboard. Here’s where you’ll find the “Cost Anomaly Detection” option.

Once you select this option, you can create cost monitors. Follow the prompts to specify the AWS accounts and resources you want to monitor. You can also choose between different monitor types, such as AWS services monitors, linked account monitors, and cost allocation tag monitors.

The final step is to choose a name for your monitor. You want to use a name that serves as a brief description of the monitor so you know what it represents when you view your monitors on the “Cost Monitors” tab.

Getting an alert subscription

After creating a cost monitor, you’ll need to set up an alert subscription so you and other stakeholders within your company can be alerted when the monitor detects cost anomalies. You can do this by going back to the “Cost Anomaly Detection” dashboard and navigating to the “Alerts” section.

From here, you can choose between individual alerts, daily summaries, and weekly summaries, set up alert thresholds based on your company’s spending tolerance levels, choose alert recipients, and choose the channels AWS will send the alerts through.

Receiving cost anomaly detection alerts

Once you configure your alert subscription, AWS Cost Anomaly Detection will monitor your specified resources and spending patterns. If any deviations exceed the defined thresholds, the system will trigger alerts according to your chosen notification methods.

With the actionable information these alerts provide, you can take immediate steps to investigate the anomalies, identify root causes, and implement necessary adjustments to maintain cost efficiency.

Leveraging AWS Cost Anomaly Detection for cost optimization

AWS Cost Anomaly Detection plays a pivotal role in helping companies optimize their AWS costs. With this tool, you can ensure you detect and resolve any unexpected issues driving up your cloud costs as quickly as possible.

Of course, detecting cost anomalies with AWS Cost Anomaly Detection is just one of the best practices for AWS cost optimization. From right-sizing resources to leveraging the right discount instruments to terminating unused resources, a lot goes into maximizing cost efficiency on AWS.

Using a comprehensive AWS cost optimization solution like PropsperOps is the easiest and most effective way to streamline your company’s AWS cost optimization efforts. ProsperOps can integrate with AWS tools such as AWS Cost Anomaly Detection to unlock powerful new features and capabilities.

This includes automatically executing an AWS cost optimization strategy by monitoring your spending and making automated, cost-saving adjustments. 

From applying the appropriate discount instruments to right-sizing resources to powering off instances when they are not in use, ProsperOps automatically performs cost-saving optimizations. This helps companies avoid the price spikes AWS Cost Anomaly Detection would otherwise detect and take a more proactive approach to cost management.

ProsperOps also prevents unexpected lapses in coverage through autonomous discount management. This can be in the form of real-time coverage using CRIs, or the autonomous renewal of Savings Plans based on the threshold at which customers set their Savings Plan coverage to be maintained. This helps customers avoid missing renewals, which can result in days (or weeks) of uncovered compute usage.

By combining AWS tools such as AWS Cost Anomaly Detection with ProsperOp’s powerful cost optimization solution, you can get better insights into your AWS costs and continually optimize your processes for maximum savings.

Optimize your AWS spending with ProsperOps

AWS Cost Anomaly Detection is useful for detecting cost anomalies, but it’s only the beginning when it comes to optimizing costs on AWS. With a comprehensive AWS cost optimization solution such as ProsperOps, you can optimize and automate every aspect of your AWS cost management strategy.

ProsperOps automates AWS rate optimization to ensure you pay the lowest rates for the resources you use. Free your team up to focus on other important responsibilities and let ProsperOps execute a fine-tuned cost optimization strategy that practically runs itself.    

Sign up for a free demo of ProsperOps today!

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