© 2014 Amazon.com, Inc. and its affiliates. All rights reserved. May not be copied, modified, or distributed in whole or i...
Introduction
•  Purchasing Pitfalls
•  Understanding Reservations
•  How to Calculate RIs
•  Recommended RI Purchase Appro...
WARNING: Math ahead.
Cloud Infrastructure Analytics
Nearly $1B in tracked cloud costs. 12,000+ Users
Our Solution
Purchasing Pitfalls
Is your company currently
purchasing AWS reservations?
What we’ve learned
•  Most companies oversimplify reservation
purchasing
How frequently are you
purchasing reservations?
Go all in on 1 or 2 large buys each year
Result: Large cliffs in
reservation levels
Understanding Reservations
What is a reservation?
Reservations allow you to reserve resources/capacity for one or
three years in a particular availab...
Reservation Type Upfront Fee Hourly Usage Fee Minimum Usage
Light Yes Yes
No
If the instance is not
used during the hour,
...
Annual Utilization
Rate
Light RI Savings Medium RI Savings Heavy RI Savings
20% 25% -7% -77%
40% 40% 33% 11%
60% 45% 46% 4...
Why are you purchasing
reserved instances?
Why make reservations?
1.  Lower the cost of resources you are
already using
Why make reservations?
1.  Lower the cost of resources you are
already using
2.  Lock-in future capacity in the same
Avail...
Why make reservations?
1.  Lower the cost of resources you are already
using
2.  Lock-in future capacity in the same Avail...
How are reservations applied?
•  Purchased for an instance type (m1.xlarge) with a specified OS (LINUX)
in a particular Av...
Reservations in Linked Accounts
Reservations in Linked Accounts
Reservations in Linked Accounts
Reservations in Linked Accounts
Reservations in Linked Accounts
Reservations in Linked Accounts
Reservations in Linked Accounts
Reservation Modifications
•  Transfer a reservation from one Availability
Zone to another
•  Trade in reservations for a d...
1 xlarge g 2 large 1 large g 4 small
Changing Instance Type
Instance Size Normalization Factor
small 1
medium 2
large 4
...
Instance types without a family
•  t1.micro
•  cc1.4xlarge
•  cc2.8xlarge
•  cg1.8xlarge
•  cr1.8xlarge
•  hi1.4xlarge
•  ...
The fine print
•  Transfers do not happen
automatically
•  Transfers are not guaranteed and
are based on available capacit...
A Simplied RI Calculation
Overall utilization can be misleading
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 reser...
When were the instances running?
A tale of three instances
Remember: Reservations are applied every hour
Instances running at the same time
If the instances are running at the same time you need multiple RIs
Sun Mon Tue Wed Thu...
3 Light reservations cost savings
A tale of three instances
On-demand hourly cost $0.240
RI hourly cost $0.136
RI upfront ...
4.8%
SAVINGS RATE
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 ...
Instances running at different times
A tale of three instances
Collectively the 3 instances cover 90% of the hours of the ...
1 Heavy reservation cost savings
A tale of three instances
On-demand hourly cost $0.240
RI upfront fee $676
RI hourly cost...
41%
SAVINGS RATE
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
...
You have to understand how many
instances are running each hour to
know how many RIs to purchase
Applying what we’ve learn...
Histogram of Hourly Instance Levels
Histogram of Hourly Instance Levels
Histogram of Hourly Instance Levels
Histogram of Hourly Instance Levels
Histogram of Hourly Instance Levels
Histogram of Hourly Instance Levels
Histogram of Hourly Instance Levels
Histogram of Hourly Instance Levels
Putting it into practice!
(DEMO TIME)
Recommendation
Recommendation is based on 17 instances
running 83.18% of the hours in the report period
which is higher th...
Action Items
Purchase
Purchase 9 m1.large heavy reservations in eu-west-1b
Transfer
Transfer 8 m1.large heavy reservations...
Purchasing Recommendations
Implications for savings
•  Base purchase decisions on hourly instance counts
•  Frequent reservation purchases help maxim...
Stop by our booth or 7pm AWS meetup
cloudability.com / Twitter @cloudability
AWS Summit Sydney 2014 | The Science of Saving: A Guide to Buying EC2 Reserved Instances - Session Sponsored by Cloudability
AWS Summit Sydney 2014 | The Science of Saving: A Guide to Buying EC2 Reserved Instances - Session Sponsored by Cloudability
AWS Summit Sydney 2014 | The Science of Saving: A Guide to Buying EC2 Reserved Instances - Session Sponsored by Cloudability
AWS Summit Sydney 2014 | The Science of Saving: A Guide to Buying EC2 Reserved Instances - Session Sponsored by Cloudability
AWS Summit Sydney 2014 | The Science of Saving: A Guide to Buying EC2 Reserved Instances - Session Sponsored by Cloudability
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 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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AWS Summit Sydney 2014 | The Science of Saving: A Guide to Buying EC2 Reserved Instances - Session Sponsored by Cloudability

  1. 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. 2. Introduction •  Purchasing Pitfalls •  Understanding Reservations •  How to Calculate RIs •  Recommended RI Purchase Approach
  3. 3. WARNING: Math ahead.
  4. 4. Cloud Infrastructure Analytics Nearly $1B in tracked cloud costs. 12,000+ Users
  5. 5. Our Solution
  6. 6. Purchasing Pitfalls
  7. 7. Is your company currently purchasing AWS reservations?
  8. 8. What we’ve learned •  Most companies oversimplify reservation purchasing
  9. 9. How frequently are you purchasing reservations?
  10. 10. Go all in on 1 or 2 large buys each year
  11. 11. Result: Large cliffs in reservation levels
  12. 12. Understanding Reservations
  13. 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. 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. 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. 16. Why are you purchasing reserved instances?
  17. 17. Why make reservations? 1.  Lower the cost of resources you are already using
  18. 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. 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. 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. 21. Reservations in Linked Accounts
  22. 22. Reservations in Linked Accounts
  23. 23. Reservations in Linked Accounts
  24. 24. Reservations in Linked Accounts
  25. 25. Reservations in Linked Accounts
  26. 26. Reservations in Linked Accounts
  27. 27. Reservations in Linked Accounts
  28. 28. Reservation Modifications •  Transfer a reservation from one Availability Zone to another •  Trade in reservations for a different size in the same family
  29. 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. 30. Instance types without a family •  t1.micro •  cc1.4xlarge •  cc2.8xlarge •  cg1.8xlarge •  cr1.8xlarge •  hi1.4xlarge •  hs1.8xlarge
  31. 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. 32. A Simplied RI Calculation
  33. 33. Overall utilization can be misleading
  34. 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. 35. When were the instances running? A tale of three instances Remember: Reservations are applied every hour
  36. 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. 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. 38. 4.8% SAVINGS RATE
  39. 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. 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. 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. 42. 41% SAVINGS RATE
  43. 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. 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. 45. Histogram of Hourly Instance Levels
  46. 46. Histogram of Hourly Instance Levels
  47. 47. Histogram of Hourly Instance Levels
  48. 48. Histogram of Hourly Instance Levels
  49. 49. Histogram of Hourly Instance Levels
  50. 50. Histogram of Hourly Instance Levels
  51. 51. Histogram of Hourly Instance Levels
  52. 52. Histogram of Hourly Instance Levels
  53. 53. Putting it into practice! (DEMO TIME)
  54. 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. 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. 56. Purchasing Recommendations
  57. 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. 58. Stop by our booth or 7pm AWS meetup cloudability.com / Twitter @cloudability

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