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Mastering AWS and Azure Reserved Instances for Savings

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Both AWS and Azure offer reserved instances, enabling you to receive significant discounts in exchange for making commitments to use particular instance profiles over one or three years. We’ll share the ins and outs of how AWS and Azure reserved instances work and help you lay out the best strategies for buying them.

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Mastering AWS and Azure Reserved Instances for Savings

  1. 1. MASTERING AWS AND AZURE RESERVED INSTANCES FOR SAVINGS
  2. 2. • Kim Weins • VP Cloud Cost Strategy, RightScale Presenter
  3. 3. • RI overview • How to buy/manage RIs • Special considerations for AWS • Special considerations for Azure • Comparing AWS and Azure • Takeaways Agenda 2
  4. 4. Two Ways to Manage Cloud 3
  5. 5. • AWS • Reserved Instances (RIs) • Enterprise Discount Program (EDP) • Azure • NEW: Reserved Instances (RIs) • Enterprise Agreement (EA) • Google • Sustained Use Discounts (SUD) • Committed Use Discounts (CUD) • “Negotiated” Discount Discounts by Cloud Provider
  6. 6. In exchange for the discount you must: • Commit for 1 year or 3 years • Agree to specific parameters that limit where the discount can be applied • Pay up front and/or agree to pay for the RI monthly even if you don’t use it It’s like buying a gym membership - you pay even if you don’t go. What is a Reserved Instance (RI) 5 A discount “coupon” that will be applied to a running cloud instance that meets the parameters of the RI you purchased
  7. 7. RIs Are Not Always the Best Way to Save 6 Savings for RI based on m5.large running Linux in US East. RI avings will vary based on instance type and region
  8. 8. AWS RIs Azure RIs Buying Parameters Region or AZ Instance family or size Operating system Network type (VPC, Classic) Region Instance family Instance size Scope (Subscription, Shared) Exchangeable Convertible RIs: Yes Standard RIs: No Yes Changeable Standard RIs: AZ (if Regional), Network, Instance size (if Regional and Linux) Yes, by exchanging or you can just change Scope Returnable Can sell on Marketplace (often impossible to find buyers) Yes - return fee is 12% of remaining value Payment Options No Upfront Partial Upfront All Upfront All Upfront AWS vs Azure RIs: Key Differences
  9. 9. • We know I can save, BUT: • I don’t have time to analyze it • I know I have underutilized instances, so I don’t want to buy RIs on them • I’m implementing Docker and that will change what I need • We have Dev instances that are changing all the time • I need to re-architect that system • I may need to change my instance sizes • There may be new instance types coming • ….and more The “Buts” of “Committment” Discounts
  10. 10. Seven Principles of Managing Discounts Think “coverage” % of instances that are covered by discounts Understand usage How will usage change in future? Select right coverage level More variability = lower % coverage Track utilization Track utilization at least monthly Make adjustments Modify , reassign, or sell Select right type of discounts Balance length vs. savings vs. flexibility Regular purchases Evaluate at least quarterly
  11. 11. Example Usage/Cost Pattern Production and 24x7 dev usage Weekday dev usage * Data from real (anonymous) customer use cases
  12. 12. Example Coverage x% coverage of steady-state 11
  13. 13. Example: Target Coverage by Usage Model Target Coverage: 75-85% Production Instances Target Coverage: 40-50% Dev Instances
  14. 14. Example: Reserved Instance Utilization
  15. 15. AWS RIs Azure RIs AWS provides both unblended and blended cost in the bill and you choose which one to use. Unblended cost: AWS first applies the RI to the account where it was purchased. Then if unused, the RI is applied to other accounts under the same payer account Blended cost: Discount is proportionally shared across all instances of the appropriate type. For Azure you choose a Scope of Subscription or Shared for each RI. You can change the scope. Subscription scope: The RI will only be applied in the specified subscription. If unused in that subscription, you have wasted the RI. Shared scope: Can be applied to any instance in any subscription. It may be applied to different accounts over time. How RIs are Applied to Instances/VMs
  16. 16. AWS RIS
  17. 17. Sharing RIs Across Accounts in AWS AWS Payer Account Linked Account Linked Account Linked Account Independent AWS Account RI Unblended costs 1. RI will be applied in account where purchased first 2. If no matching instances, it will be allocated to other accounts in the family Blended costs • The savings from the RI gets shared proportionally based on usage of instances that match the RI. RIs will be shared = more flexibility = higher coverage RIs NOT shared Set up consolidated billing
  18. 18. AWS Reserved Instances: Standard, AZ AWS Reserved Instances: Standard, Regional AWS Reserved Instances: Convertible (lower discount) Buying Parameters Region + AZ Instance family Instance size OS Network Type Region Instance family Instance size OS Network Type Region Instance family Instance size OS Network Type Automatic changes None Applies to any AZ Instance size flexibility: applies to any size in the same family (vanilla Linux only) Same as Standard Manual changes (on request) AZ Instance size Network Type Network Type Exchange for equal value of RIs Three Types of AWS Reserved Instances
  19. 19. How Instance Size Flexibility Works xlarge large large medium medium medium medium large medium medium Original footprint Option 1 Option 2 Option 3 Within the same instance family (eg m3) …
  20. 20. Instance size Normalization Factor nano .25 micro .5 small 1 medium 2 large 4 xlarge 8 2xlarge 16 4xlarge 32 8xlarge 64 10xlarge 80 32xlarge 256 Instance Size Flexibility: Normalization Factor Regional RIs for vanilla Linux have Instance Size Flexibility and can be applied to any size instance in the same family based on the following normalization factor. Example: You buy a RI for m4.xlarge. If no m4.xlarge is running in the region, the RI can be applied to 2 m4.large instances.
  21. 21. Example: RI Coverage for Low Instance Utilization 100 medium instances 100 large instances RI Coverage 40% Today 50% of instances have low utilization Later We’ve downsized instances RI gets applied to 2x medium instances, coverage now 80%
  22. 22. • Cannot be modified or sold on marketplace • Can exchange for other Convertible RIs with different configurations • End date for the RI does not change • Exchange is based on the prorated list value of the RI • Must exchange for the same or higher payment option • Ex: Partial Upfront can be exchanged for Partial Upfront or All Upfront. • Must exchange for equal or higher value • True up for the difference Understanding Convertible RIs 21
  23. 23. Convertible RIs: Convert to Other Families RI value $100 RI value $50 RI value $50 RI value $30 RI value $30 RI value $30 RI value $30 RI value $50 RI value $30 RI value $30 Prorated value of RI Equal trade Pay $20 true up Convert RIs to other families based on value Pay $10 true up
  24. 24. AZURE RIS
  25. 25. Azure RI and EA Discounts are Not Additive 24 Your realized savings from an RI is the difference between EA and RI price, not the published RI discount off of list. Your EA price could be lower than RI price -- if so, DON’T BUY the RI.
  26. 26. RIs and Azure Hybrid Use Benefit (AHUB) 2 Infrastructure portion of cost No OS portion of cost Vanilla Linux Infrastructure portion of cost Windows portion of cost Windows Infrastructure portion of cost Premium OS portion of cost Premium OS RI discount applies here AHUB discount applies here
  27. 27. • There’s no such thing as a free ride • You paid for that Windows license • For Standard Edition you can use Windows license on-prem OR in Azure • For Datacenter Edition you can use Windows license on-prem AND in Azure • Each 2-processor license or each set of 16-core licenses are entitled to two instances of up to 8 cores, or one instance of up to 16 cores. (use fully so you don’t waste the benefit) • You have to run a Windows Server image from marketplace or use Site Recovery to migrate to AHUB-enabled image • Once that’s setup, you can flip switch on a VM to apply AHUB or not About Azure Hybrid Use Benefit 26
  28. 28. • Like Convertible RIs • Not an “automatic” exchange or adjustment • Make a request from console, it opens a support ticket • Can exchange for other RIs • Exchange is based on the prorated value of the RI Exchanging Azure RIs 27
  29. 29. The Challenges of RI Allocation on Azure 28 You want to buy RIs centrally and share across your Business Units Use: Shared scope Cons: ● You can’t control which subscriptions get the RIs ● It may change who gets the RIs from day today ● It’s hard to “sell” the idea to BUs because they don’t know how much benefit they will get. ● You can only figure out how to allocate out the Upfront costs after each month is over once you see how RIs were allocated You want BUs to buy and get the benefit of their own RIs Use: Subscription scope Cons: ● If a BU has multiple subscriptions, you need to buy RIs for each subscription separately. ● If that subscription can’t use the RI, you can move it or exchange it. ● You have to track RI utilization for each subscription and make changes as needed.
  30. 30. SUMMARY
  31. 31. VM Type US Linux AWS 1Y Convertible RI Annual Azure 1Y RI Annual AWS 1Y Convertible RI Annual /GB RAM Azure 1Y RI Annual /GB RAM Standard 2 vCPU w Local SSD $597 $508 $75 $64 Standard 2 vCPU no Local disk $578 $508 $72 $64 Highmem 2 vCPU w Local SSD $885 $683 $59 $43 Highmem 2 vCPU no Local disk $788 $683 $52 $43 Highcpu 2 vCPU w Local SSD $519 $543 $130 $136 Highcpu 2 vCPU no Local disk $499 $543 $125 $136 AWS vs. Azure with 1 Year “All Upfront” RIs Source: RightScaleAs of Nov 17, 2017
  32. 32. AWS Pros • Choice of payment options • Convertible and Standard RIs • Better allocation options • Instance size flexibility (vanilla Linux) • Convertible RIs are changeable Cons • Can be more expensive • Not returnable Pros and Cons 31 Azure Pros • Lower price in more use cases • Fully changeable • Returnable Cons • Must pay All Upfront • Allocation options not good
  33. 33. • RI recommendations from your cloud sales rep will be self- serving • They want you locked into their cloud • Consider other savings opportunities • Consider future changes in cloud use • Think coverage % • 100% coverage is almost never right • Carefully plan your RI purchases • Track utilization and adjust RIs as you go • Plan for how you will allocate costs Final Takeaways 32
  34. 34. Contact sales@rightscale.com for more info Q&A 33

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