mastering aws and azure reserved instances for savings

MASTERING AWS AND AZURE

RESERVED INSTANCES FOR SAVINGS

• Kim Weins • VP Cloud Cost Strategy, RightScale

Presenter

• RI overview

• How to buy/manage RIs

• Special considerations for AWS

• Special considerations for Azure

• Comparing AWS and Azure

• Takeaways

Agenda

2

Two Ways to Manage Cloud

3

• 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

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

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

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

• 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

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

Example Usage/Cost Pattern

Production and 24x7 dev usage

Weekday dev usage

* Data from real (anonymous) customer use cases

Example Coverage

x% coverage of steady-state

11

Example: Target Coverage by Usage Model

Target Coverage: 75-85%

Production

Instances

Target Coverage: 40-50%

Dev Instances

Example: Reserved Instance Utilization

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

AWS RIS

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

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

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)

…

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.

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%

• 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

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

AZURE RIS

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.

RIs and Azure Hybrid Use Benefit (AHUB)

25

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

• 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

• 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

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.

SUMMARY

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: RightScale As of Nov 17, 2017

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

• 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

Contact sales@rightscale.com for more info

Q&A

33