Understanding the AWS Savings Plans and Azure RI Contracting Programs

Understanding the AWS Savings Plans and Azure RI Contracting Programs

It goes without saying that in today’s economic environment, we all need to be more focused on savings. If you’re using AWS or Azure and haven’t leveraged their savings programs yet, there’s no time like the present.

On average, 75-80% of an organization’s cloud spend is eligible for some form of AWS or Microsoft savings program. AWS and Azure both offer savings plans that can save you up to 72% compared to pay-as-you-go pricing. In both cases, you will need to commit to a one-year or three-year term. These plans offer predictable discounts.

AWS and Azure often tout discounts as high as 80% but the reality of achieving that level of discount is rare and requires significant commitments with specific constraints. Instead, it’s reasonable to target an immediate savings of around 30% with one-year contracts and work to increase your savings as you perfect your use of the programs.

Unfortunately, while both savings programs are free solutions, they add an additional layer of complexity to cloud-cost management when juggling your day-to-day responsibilities. Nonetheless, it’s hard to argue against such important savings in the current environment so having a good understanding of how they work, when to use them and how to make informed purchases to take advantage of the potential cost savings is critical for cloud users.

We’ve provided three top considerations and some tips to help you get started on your journey to cloud savings:

  1. Know What You Have

Some of our customers are not always aware of what’s going on in their environment, or maybe more fairly, simply don’t have the time to deep dive into the challenge.

The first step to reducing spend is to gain visibility across your entire environment. Identify areas of high or rapid growth then use best practices to optimize and contain your costs. Three quick tips to help you get started include:

  • Delete Unattached Disk Storage
    • When a Virtual Machine (VM) is launched, Disk Storage is usually attached to act as the local block storage for the application. However, when you terminate a VM, the Disk Storage remains active. By continuously checking for unattached Disk Storage in your infrastructure, you can cut thousands of dollars from your monthly cloud bill.
  • Delete Old Snapshots
    • Many organizations use Snapshots on Blob and Disk Storage to create point-in-time recovery points to use in case of data loss or disaster. However, Snapshot costs can quickly get out of control if not closely monitored.
  • Terminate Unused Assets
    • Unused assets, sometimes called zombie assets, are infrastructure components that are running in your cloud environment but not being used for any purpose. For example, they could be VMs that were once used for a particular purpose but are no longer in use and have not been turned off. Zombie VMs also can occur when VMs fail during the launch process or because of errors in script that fail to deprovision VMs.
  1. Use Procurement Best Practices

Once you have done an initial analysis and some quick clean-up, you can start taking advantage of savings programs. Both AWS and Azure provide recommendations based on your historical cost and usage data and will recommend savings plan types, terms and payment options.

Make sure you understand the difference between standard and convertible reserved instance contracts and savings plans for reserved instances in AWS. Standard contracts are less flexible and higher risk but offer greater savings. Convertible contracts are the opposite, offering lower risk and savings but higher flexibility.  AWS Savings Plans provide the best of both worlds, higher savings with flexibility even greater than convertible contracts.

In comparison, Azure’s approach is much simpler.

Side-by-Side Comparison of AWS and Azure Reserved Instances
TermAWS StandardAWS ConvertibleAzure
Payment Options1 or 3 years1 or 3 years1 or 3 years
Reserved Instance SharingUpfront, partial or no upfrontUpfront, partial or no upfrontNo upfront
Exchange OptionsAvailability Zone, instance size and networking type onlyFull FlexibilityFull Flexibility
Priority Access to Spare CapacityOnly when scoped to an Availability ZoneOnly when scoped to an Availability ZoneYes
Auto Scaling SupportYesYesYes
Maximum Discount75%54%72%

When making your decision, you should also either evaluate each instance for contracting eligibility or use a frequency analysis and coverage approach. In the latter, your goal is to understand your environment activity on an hour-by-hour basis for each RI contracting cluster to maximize savings.

Finally,  it’s important to validate your environment before you make your purchasing decisions. We helped one customer who had accidentally purchased reserved instances for the wrong region and ended up paying for both discount pricing and on-demand pricing at the same time.

  1. Continually Monitor and Improve

Both AWS and Azure have tools to help you with this such as the AWS Cost and Usage Report and Azure Alerts. You will also need to stay on top of changes as you evolve your environment that may affect cost, such as moving from T2 to T3.

As many of us can attest, it’s often not about whether you have the skills and knowledge to stay on top of the cloud-cost management but more about manpower. In some cases, it’s both.

If you’re looking for some guidance, analysis of your environment and recommendations, talk to us. Lightstream is a proven leader in cloud optimization that saved its customers millions of dollars in 2019.

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