Automated Cost Optimization Using Terraform

Project Overview

This project aims to identify and optimize AWS cloud resources by automating cost-saving actions using Terraform. The solution will detect underutilized resources (e.g., idle EC2 instances, unused EBS volumes, underused RDS databases) and scale them down or terminate them automatically based on defined thresholds. It will also enforce automated tagging for cost tracking, security, and compliance.

Architecture

• Terraform for Infrastructure as Code (IaC)
• AWS Lambda (triggered by CloudWatch) to identify underutilized resources
• AWS Cost Explorer & CloudWatch Metrics for usage analytics
• DynamoDB for storing resource usage history
• SNS & Slack Notifications for alerts
• Tagging Policy Enforcement with AWS Config & Lambda

Project Components

1. Resource Utilization Monitoring
   • Use AWS Cost Explorer API and CloudWatch Metrics to identify:
     • EC2 Instances with low CPU usage (<10% for 7 days)
     • EBS Volumes with no recent read/write operations
     • RDS Databases with low connection counts
     • Unattached Elastic IPs and Idle Load Balancers
   • Store analysis results in DynamoDB
2. Automated Scaling & Termination
   • Use Terraform to create Lambda functions that:
   • Stop or downsize underutilized EC2 instances
   • Delete unattached EBS volumes
   • Scale down RDS instances
   • Send notifications before terminating resources
3. Automated Tagging for Cost Optimization
   • Enforce mandatory tags (e.g., Owner, Environment, CostCenter, Project)
   • Use AWS Config Rules & Lambda to check for non-compliant resources
   • Apply missing tags automatically
4. Notification & Approval Workflow
   • Send alerts via AWS SNS & Slack
   • Provide an approval mechanism (SNS topic) before terminating resources

Implementation Steps

Step 1: Set Up Terraform Modules

• Create Terraform modules for:
  • EC2, RDS, EBS, and Load Balancer monitoring
  • Lambda functions for automated actions
  • DynamoDB for storing resource usage logs
  • SNS for notifications
  • AWS Config for compliance rules

Step 2: Implement Cost Monitoring

• Use Terraform to:
  • Enable AWS Cost Explorer API
  • Set up CloudWatch Metrics to track resource utilization
  • Deploy a Lambda function to analyze usage patterns
  • Store results in DynamoDB

Step 3: Configure Auto-Scaling & Termination

• Deploy Lambda functions that:
  • Identify idle EC2 instances & stop them
  • Find unused EBS volumes & delete them
  • Scale down low-usage RDS databases
• Implement an approval workflow (SNS topic + Slack integration)

Step 4: Automate Tagging

• Define tagging policies using AWS Config
• Deploy a Lambda function to enforce tagging
• Send notifications for non-compliant resources

Step 5: Testing & Deployment

• Deploy infrastructure using Terraform
• Validate:
  • Resource optimization actions
  • Cost monitoring reports
  • Tagging enforcement
  • Alerting & approvals

Technologies Used

• Terraform (Infrastructure as Code)
• AWS Lambda (Automation)
• CloudWatch & Cost Explorer (Monitoring)
• DynamoDB (Resource logs)
• AWS SNS & Slack (Notifications)
• AWS Config (Compliance)

Expected Outcome

• ✅ Reduced AWS Costs by identifying and deactivating unused resources
• ✅ Automated Cost Optimization using Terraform & Lambda
• ✅ Improved Tagging Compliance for cost allocation
• ✅ Real-time Alerts & Approval Workflow before scaling down or terminating resources