science of saving with aws reserved instances - 9/11/14

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The Science Of Saving With AWS Reserved Instances

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Introduction

Today’s Topics1. Purchasing Pitfalls

2. Anatomy Of A Reservation

3. A Simplified Calculation

4. Reservation Purchasing Recommendations

Aaron Kaffen Director of Marketing

TODAY’S SPEAKER

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Poll

Is your company currently purchasing AWS reservations?

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WARNING: Math ahead.

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About Us

Cloud Infrastructure Analytics

Over $1B in tracked cloud costs across 10,000+ users

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Our SolutionHow It Works

1 2 3

4 5

Spend Management Spending visibility via monthly forecasts, dash-board, budget alerts, and daily email digests.

Cost Analytics Dig into your operating costs with detailed costs by tag, service, and usage type. !

EC2 Usage Analytics Spot under-utilized resources w/ instance level usage metrics. !!

RI Purchase Analytics Understand the exact combination of Reserved Instances that will maximize your savings. !

Enterprise Enablement Organizational group views/filtering/rollups, multi-user access. !

$1B+ of cloud spending under management • 13,000 users

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No Software to InstallHow It Works

We Collect We pull data directly from public cloud provider APIs.

We Store We warehouse your historical data.

You Access You log into cloudability.com to access analytics. !

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Purchasing Pitfalls

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Most companies over-simplify reservation purchasing

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RESULT: RI purchases misalign to your needs reducing ROI

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Go all in on 1 or 2 large buys each year

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Result: Large cliffs in reservation levels

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Poll

How frequently is your company purchasing reservations?

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Anatomy of a Reservation

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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.

COMPUTE

Amazon EC2

DATABASE

DynamoDB

RDS

Redshift

Elasticache

CDN

CloudFront

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Why Make Reservations?

1. Lower the cost of resources you are already using Reservations provide substantial cost savings versus “on-demand” pricing.

2. Lock-in future capacity in the same Availability Zone Very useful if you experience bursts/spikes in usage

3. Reserve capacity in another region just in case... Demand spikes could cause a run on capacity. Reservations ensure you get seat at the table.

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Reservations are applied each hour

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What Makes Up a ReservationReserve a particular type of infrastructure:

Instance Family Size OS Location

m1 large Linux us-east-1a

r3 8xlarge RHEL us-west-2b

1 year 3 yearOR

light medium heavyOR OR

Instance class

Term

RI type

For a particular time:

With an expected usage level

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Pricing Components

Reservation Type Upfront Fee Hourly Usage Fee Minimum Usage Level

Light Low Highest

None If the instance is not used during the hour, there is no charge.

Medium Higher Higher

None If the instance is not used during the hour, there is no charge.

Heavy Highest Low

Yes Billed a full month’s worth of hours at the start of each month.

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Break-even Points

m1.xlarge LINUX us-east-1a instance - over 3 years

Annual Utilization Rate Light RI Savings Rate Medium RI Savings Rate Heavy RI Savings Rate

20% 25% -7% -77%

40% 40% 33% 11%

60% 45% 46% 41%

80% 48% 52% 56%

100% 49% 59% 65%

There are 2,000+ different reservation classes each with their own “break-even” points.

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Poll

Why is your company purchasing reservations?

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A Simplified Calculation

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A Simplified Reservation Calculation

Overall utilization can be misleading

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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

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Remember: Reservations are applied every hour

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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

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On-demand hourly cost $0.240

RI hourly cost $0.136

RI upfront fees $729

Effective hourly rate @ 30% utilization $0.228

Hourly Savings $0.011

Total Savings for this example $90.93

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4.8%

SAVINGS RATE

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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

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Collectively the 3 instances cover 90% of the hours of the month

21

3

Heavy

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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

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41%

SAVINGS RATE

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Intro


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

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Applying what we’ve learned:

You have to understand how many instances are running each hour to know how many RIs to purchase

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Running Instances by Hour of the Month

Hour of month Running Instances

1 4

2 6

3 0

4 5

5 7

6 8

7 5

8 3

9 12

10 3

(example assumes 10 hours in the month)

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Example break-even points

RI Type Utilization Rate

Light 20%

Medium 30%

Heavy 60%

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Running Instances by Hour of the Month

0

3

6

9

12

1 2 3 4 5 6 7 8 9 10

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Running Instances by Hour of the

0

3

6

9

12

1 2 3 4 5 6 7 8 9 10

90%1 INSTANCE

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0

3

6

9

12

1 2 3 4 5 6 7 8 9 10

90%2 INSTANCES

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0

3

6

9

12

1 2 3 4 5 6 7 8 9 10

90%3 INSTANCES

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0

3

6

9

12

1 2 3 4 5 6 7 8 9 10

70%4 INSTANCES

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0

3

6

9

12

1 2 3 4 5 6 7 8 9 10

60%5 INSTANCES

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0

3

6

9

12

1 2 3 4 5 6 7 8 9 10

5 Heavy

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0

3

6

9

12

1 2 3 4 5 6 7 8 9 10

30%7 INSTANCES

5 Heavy

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0

3

6

9

12

1 2 3 4 5 6 7 8 9 10

5 Heavy

2 Medium

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0

3

6

9

12

1 2 3 4 5 6 7 8 9 10

5 Heavy

2 Medium

20%8 INSTANCES

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0

3

6

9

12

1 2 3 4 5 6 7 8 9 10

5 Heavy

2 Medium

1 Light

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Put it into practice!

(demo time)

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Purchasing Recommendations

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Purchasing Recommendations

Putting It To Work At Your Company

• Base purchase decisions on hourly instance counts of each instance type per Availability Zone (not aggregate data)

!

• Frequent reservation purchases help maximize cost efficiency

!

• Don’t over-purchase heavy reservations. Utilize Light and Medium reservations to handle volatility

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Thank You!

For more info

Or contact us

cloudability.com

[email protected]

Presentation cldy.co/ri-deck

mailto:[email protected]

science of saving with aws reserved instances - 9/11/14

Technology

hourly savings

light reservation

ri hourly cost

total savings

different reservation

ri purchaseanalyticsunderstand

substantial cost savings

simplified calculation4