Blog   |   Cost Management   |   July 18, 2017

Ten Steps to Reducing Public Cloud Bills: Diversify Your Portfolio with AWS Reserved Instances

Many organizations migrate workloads to the cloud with two priorities in mind: added agility, and potential cost savings. Yet, to recognize real cost savings, savvy cloud-based enterprises should be sure their EC2 portfolio includes Reserved Instances.

In Gartner’s recent roll up of Ten Moves to Lower Your AWS IaaS Costs, they describe key characteristics of EC2 families and types that can help cloud-based organizations better optimize their expenses. We’ve previously covered a few of their recommendations, sharing our take on the importance of choosing your cloud management toolkit, as well as tagging resources, automating utilization, and benchmarking instances. In this article, we look at the next recommendation, leveraging Amazon RIs, and our thoughts on how best to approach them.


The Opportunity of Using RIs

Amazon Reserved Instances provide discounted pricing and guaranteed capacity for applications, given a one- or three-year commitment. RIs can enable organizations to save 25-40% on cloud spend with various discounted purchase options: Upfront, Partial Upfront, or No Upfront. This year, Amazon also evolved their Reserved Instances offerings, making it even easier to make changes to Reserved Instances from operating system to instance family to availability zones, etc.

Unlike On-Demand Instances, RIs can be ideal when you have a sense for how much capacity you will need and are able to commit to capacity amount and type in advance. The commitment to a specific capacity can drop the hourly cost by as much as 65%, when compared to On-Demand rates.

Furthermore, RIs are significantly more reliable than Spot Instances. If you can anticipate fluctuations in capacity need, RIs are the way to go.


Considerations for Purchasing RIs

Customers should carefully analyze their environment to anticipate their need for Reserved Instances; because RIs are not commitments to actual workloads, and instead are treated more as coupons or vouchers, they can be applied to different workloads. AWS instances are physically grouped by Regions and Availability Zones (AZs), with hundreds of potential ways to reserve capacity within them.

In addition to the types of RIs you want to purchase, you should also determine how to purchase your RIs—depending on the amount of flexibility your organization may require.

  • Standard RIs, for maximum discount potential—but less flexibility
  • Convertible RIs, for added flexibility with a lower discount

Each option also has unique standards for trading, selling, changing, or combining RIs. Lastly, flexibility of commitment period varies (one OR three years for Standard, versus only three with Convertible), as does the payment model. It is important that your organization understands and evaluates the nuances of both options before diving in.

To take some of the guesswork out of reserved instance purchasing, some third-party solutions offer Reserved Instances recommendations with ROI cost comparisons and ROI projections, enabling customers to make more efficient purchase decisions.

The bottom line: purchasing AWS Reserved Instances requires your organization to consider two key factors:

  • Flexibility for shifting workloads around
  • Cost of commitment versus potential cost savings

If consistency and stability is more important than budget, three-year commitment terms will ensure you achieve the cost savings your organization desires.


Buying Is Only the Beginning

As with any service in the cloud, there is no such thing as “set it and forget it.” Neglecting to manage and optimize your RIs will inevitably lead to waste, and operational issues. Leveraging proactive monitoring and management tools like CloudCheckr can help to identify under-utilized or unused instances, and automatically turn them off for you. Or, for a more hands-on approach, the platform provides customizable alerts and reports to empower button-click fixes to reallocate and rebalance RIs.

Heat mapping reports can help identify underused instances, while map overlays offer complete visibility of inventory.

Additionally, CloudCheckr’s cloud management platform can unify all your instances and resources—from Spot to On-Demand to Reserved Instances—to offer centralized visibility and control across your infrastructure.

Try CloudCheckr for free for 14 days to see how our comprehensive cloud management platform can help you scale your cloud with confidence.

Next up: following best practices around storage policies.