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AWS Summit Sydney 2014 | The Science of Saving: A Guide to Buying EC2 Reserved Instances - Session Sponsored by Cloudability
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AWS Summit Sydney 2014 | The Science of Saving: A Guide to Buying EC2 Reserved Instances - Session Sponsored by Cloudability

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Amazon EC2 Reserved Instances (RIs) are a great way to save money on AWS, particularly since they require no engineering work to implement. But for some customers the analysis and selection process is …

Amazon EC2 Reserved Instances (RIs) are a great way to save money on AWS, particularly since they require no engineering work to implement. But for some customers the analysis and selection process is not well understood and can prevent them from making a decision that could save them money.
In this session, Cloudability CCO J.R. Storment walks you through the most common scenarios for RIs, shows you how to make the best possible decisions for RI purchases, and how to significantly reduce the time needed to make those decisions.

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  • 1. © 2014 Amazon.com, Inc. and its affiliates. All rights reserved. May not be copied, modified, or distributed in whole or in part without the express consent of Amazon.com, Inc. The Science of Choosing Reserved Instances J.R. Storment Chief Customer Officer
 Cloudability
  • 2. Introduction •  Purchasing Pitfalls •  Understanding Reservations •  How to Calculate RIs •  Recommended RI Purchase Approach
  • 3. WARNING: Math ahead.
  • 4. Cloud Infrastructure Analytics Nearly $1B in tracked cloud costs. 12,000+ Users
  • 5. Our Solution
  • 6. Purchasing Pitfalls
  • 7. Is your company currently purchasing AWS reservations?
  • 8. What we’ve learned •  Most companies oversimplify reservation purchasing
  • 9. How frequently are you purchasing reservations?
  • 10. Go all in on 1 or 2 large buys each year
  • 11. Result: Large cliffs in reservation levels
  • 12. Understanding Reservations
  • 13. What is a reservation? Reservations allow you to reserve resources/capacity for one or three years in a particular availability zone in exchange for a lower overall unit price. There are 2,000+ different reservation types each with their own “break-even” points. m1.xlarge | LINUX | us-east-1a | 3 years
  • 14. Reservation Type Upfront Fee Hourly Usage Fee Minimum Usage Light Yes Yes No If the instance is not used during the hour, there is no charge. Medium Yes Yes No If the instance is not used during the hour, there is no charge. Heavy Yes Yes Yes Billed a full month’s worth of hours at the start of each month. Reserved Instance Pricing Components
  • 15. Annual Utilization Rate Light RI Savings Medium RI Savings Heavy RI Savings 20% 25% -7% -77% 40% 40% 33% 11% 60% 45% 46% 41% 80% 48% 52% 56% 100% 49% 59% 65% RI Cost Savings vs. On-Demand
  • 16. Why are you purchasing reserved instances?
  • 17. Why make reservations? 1.  Lower the cost of resources you are already using
  • 18. Why make reservations? 1.  Lower the cost of resources you are already using 2.  Lock-in future capacity in the same Availability Zone
  • 19. Why make reservations? 1.  Lower the cost of resources you are already using 2.  Lock-in future capacity in the same Availability Zone 3.  Reserve capacity in another region just in case...
  • 20. How are reservations applied? •  Purchased for an instance type (m1.xlarge) with a specified OS (LINUX) in a particular Availability Zone (us-east-1a) •  Reservations are applied each hour •  In a consolidated billing account, cost savings from reservations can be shared between linked accounts •  Capacity reservation stays with the purchasing account
  • 21. Reservations in Linked Accounts
  • 22. Reservations in Linked Accounts
  • 23. Reservations in Linked Accounts
  • 24. Reservations in Linked Accounts
  • 25. Reservations in Linked Accounts
  • 26. Reservations in Linked Accounts
  • 27. Reservations in Linked Accounts
  • 28. Reservation Modifications •  Transfer a reservation from one Availability Zone to another •  Trade in reservations for a different size in the same family
  • 29. 1 xlarge g 2 large 1 large g 4 small Changing Instance Type Instance Size Normalization Factor small 1 medium 2 large 4 xlarge 8 2xlarge 16 4xlarge 32 8xlarge 64
  • 30. Instance types without a family •  t1.micro •  cc1.4xlarge •  cc2.8xlarge •  cg1.8xlarge •  cr1.8xlarge •  hi1.4xlarge •  hs1.8xlarge
  • 31. The fine print •  Transfers do not happen automatically •  Transfers are not guaranteed and are based on available capacity •  Transfers must share the same expiration date
  • 32. A Simplied RI Calculation
  • 33. Overall utilization can be misleading
  • 34. m1.large linux us-east-1a A tale of three instances 30% 30% 30% 30% is greater than the break even point for a light reservation 1 2 3 3 Light
  • 35. When were the instances running? A tale of three instances Remember: Reservations are applied every hour
  • 36. Instances running at the same time If the instances are running at the same time you need multiple RIs Sun Mon Tue Wed Thu Fri Sat 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 26 27 28 29 30 A tale of three instances
  • 37. 3 Light reservations cost savings A tale of three instances On-demand hourly cost $0.240 RI hourly cost $0.136 RI upfront fee $243 Effective hourly rate @ 30% utilization $0.228 Hourly Savings $0.011 Total Savings for this example $90.93
  • 38. 4.8% SAVINGS RATE
  • 39. Instances running at different times Sun Mon Tue Wed Thu Fri Sat 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 26 27 28 29 30 A tale of three instances
  • 40. Instances running at different times A tale of three instances Collectively the 3 instances cover 90% of the hours of the month 2 1 3 1 Heavy
  • 41. 1 Heavy reservation cost savings A tale of three instances On-demand hourly cost $0.240 RI upfront fee $676 RI hourly cost $0.056 Effective hourly rate @ 90% utilization $0.141 Hourly Savings $0.098 Total Savings for this example $774.65
  • 42. 41% SAVINGS RATE
  • 43. 1 Heavy vs. 3 Lights A tale of three instances 1 Heavy 3 Lights Total Savings $774.65 $90.93 Total upfront fees $676 $729 Buying 3 lights would have wasted $486 in upfront fees
  • 44. You have to understand how many instances are running each hour to know how many RIs to purchase Applying what we’ve learned:
  • 45. Histogram of Hourly Instance Levels
  • 46. Histogram of Hourly Instance Levels
  • 47. Histogram of Hourly Instance Levels
  • 48. Histogram of Hourly Instance Levels
  • 49. Histogram of Hourly Instance Levels
  • 50. Histogram of Hourly Instance Levels
  • 51. Histogram of Hourly Instance Levels
  • 52. Histogram of Hourly Instance Levels
  • 53. Putting it into practice! (DEMO TIME)
  • 54. Recommendation Recommendation is based on 17 instances running 83.18% of the hours in the report period which is higher than 1-year break even point of 63.12% for a m1.large LINUX in eu-west-1b.
  • 55. Action Items Purchase Purchase 9 m1.large heavy reservations in eu-west-1b Transfer Transfer 8 m1.large heavy reservations from eu-west-1a to eu-west-1b Transfer 8 m1.large heavy reservations from eu-west-1c to eu-west-1b Trade-in Convert 1 m1.xlarge heavy reservation to 2 m1.large RIs in eu-west-1b
  • 56. Purchasing Recommendations
  • 57. Implications for savings •  Base purchase decisions on hourly instance counts •  Frequent reservation purchases help maximize cost efficiency •  Don’t over purchase heavy reservations. Utilize Light and Medium reservations to handle volatility •  Utilize light reservations to hold capacity in other Availability Zones •  Don’t be afraid of 3 year reservations
  • 58. Stop by our booth or 7pm AWS meetup cloudability.com / Twitter @cloudability