RightScale Webinar: Decoding AWS Reserved Instances (RIs) What It Means for Cloud Pricing
Strategies For Lasting Savings With AWS Reserved Instances
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@cloudability Strategies For Long-Term Savings With AWS Reserved Instances
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Buying AWS Reserved Instances is just the beginning. You need a strategy that will help adjust your reservation portfolio to keep in-line with changes in your AWS usage. In this session, we'll show you an iterative approach to buying and modifying Reserved Instances that stay aligned with your evolving infrastructure needs over time. Topics include: Speeding up your reservation buying process Leveraging small, frequent purchases and modifications Building a Reserved-Instance-friendly architecture
Transcript of Strategies For Lasting Savings With AWS Reserved Instances
@cloudability
Strategies For Long-Term Savings With AWS Reserved Instances
@cloudability
1. Overview of RI Buying Cycle
2. Understanding Reservations
3. Building an architecture optimized for cost savings
4. Speeding up your reservation buying process
Toban Zolman VP, Product Development
TODAY’S SPEAKER
Introduction
Today’s Topics
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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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Overview of RI Buying Cycle
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Intro
What Drives Infrastructure Changes?• Application needs
Apps change, scale, and become more sophisticated needing more compute, memory or storage
• Price changes As Amazon drives down prices it changes the cost profile of existing infrastructure
• New optimized instance types Leverage optimized instances to be more efficient
The goal is to anticipate these items and constantly tweak reservations to maximize coverage (and thus savings)
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Intro
RI Buying Cycle
Infrastructure Changes
RI Purchases
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Understanding Reservations
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Anatomy of a Reservation
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 type
Term
RI type
For a particular time:
With an expected usage level
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Anatomy of a Reservation
Each combination is a different price!
There are 2,000+ different reservation configurations
๏ Each with their own upfront fee
๏ Each with their own unit price
๏ Each with their own “break-even” points.
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Anatomy of a Reservation
Break Even Points
Break Even
Up front cost
Savings
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Anatomy of a Reservation
Break Even Points
The goal is to drive unit cost down as close as possible to RI hourly cost
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Building an Architecture Optimized for Cost Savings
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1. Consolidate instance families
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Reserved-Instance-friendly architecture
Why Instance Families Matter
• RI modifications can only happen within a family Reservations can be changed at any time from one size to another within a family
• RIs can apply across consolidated billing accountsReservations can apply across linked accounts if the original account is not using it. Fewer families means more spots an RI can be applied.
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Understanding Modifications
Modifying Reserved Instances
• Instances with Linux OS • Instance type (within family) • Availability Zone (within region) • Network (VPC or Classic)
• Instances with a licensed OS or without a family • Availability Zone (within region) • Network (VPC or Classic)
• Reservations cannot be moved between accounts
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Understanding Modifications
We Are Family
M1 M2 M3 C1 C3 R3 i2 t2
small medium large xlarge
xlarge 2xlarge 4xlarge
medium large xlarge 2xlarge
medium xlarge
large xlarge 2xlarge 4xlarge 8xlarge
large xlarge 2xlarge 4xlarge 8xlarge
xlarge 2xlarge 4xlarge 8xlarge
micro small medium
LEGACY FAMILY
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Understanding Modifications
Instance types without a family
• t1.micro !
• cr1.8xlarge !
• cc2.8xlarge !
• cg1.4xlarge !
• cr1.8xlarge !
• hi1.4xlarge !
• hs1.8xlarge !
• g2.2xlarge
LEGACY FAMILY
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Understanding Modifications
Changing Instance Type
Instance Size Normalization Factor
micro 0.5
small 1
medium 2
large 4
xlarge 8
2xlarge 16
4xlarge 32
8xlarge 64
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Understanding Reservations
Modifying Instance Type
2xlarge 16 PTS=
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Understanding Reservations
Modifying Instance Type
2xlarge
xlarge xlarge
168 8+ =
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Understanding Reservations
Modifying Instance Type
2xlarge
xlarge xlarge
large large large large
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Understanding Reservations
Modifying Instance Type
2xlarge
xlarge xlarge
large large large large
medium medium medium medium medium medium medium medium
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Understanding Reservations
Modifying Instance Type
2xlarge
xlarge xlarge
large large large large
medium medium medium medium medium medium medium medium
small small small small small small small small small small small small small small small small
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Understanding Reservations
Modifying Instance Type
2xlarge
xlarge xlarge
large large large large
medium medium medium medium medium medium medium medium
small small small small small small small small small small small small small small small small
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Reservations represent sunk cost. Modifications let you move those reservations to maximize savings as your infrastructure changes
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2. Migrate to modern instances
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Reserved-Instance-friendly architecture
Cost Savings
m1.medium m3.medium
On Demand $0.087 $0.07
Heavy RI upfront $247 $222
Heavy RI hourly $0.02 $0.018
Annual Cost (100% util) $762 $613
Save $150 year20% savings
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Reserved-Instance-friendly architecture
Instance Type Migration Paths
Legacy Instance Type Modern Instance Type
T1T2
M1
M1 M3
C1 C3
H1 I2
M2R3
CR1
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Reserved-Instance-friendly architecture
Migration Strategy
• Proactively plan instance type migrationsFinance and Ops have to talk on this one to understand when upgrades should happen and what impact it has on reservations
• Tactically renew reservations on legacy instances If you’re going to run a legacy instance for a while you might as well cover it with an RI, but only renew what you have to
High frequency reservation purchases make this transition easier
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The Financial Impact of Frequent Purchases
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1. Increases your savings
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Go all in on 1 or 2 large buys each year
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RESULT: Infrequent buys misalign reservations to infrastructure
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RESULT: Annual cliffs in reservation levels
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RESULT: Infrastructure lock-in
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The Financial Impact of Frequent Purchases
Scenario: Growing Instance Volume
0
12.5
25
37.5
50
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
m3.large us-east
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The Financial Impact of Frequent Purchases
Scenario: Growing Instance Volume
m3.large End of Year Savings Rate End of Second Year
1 year RI - Purchased Annually 4% 17%
1 Year Heavy RI - purchased quarterly 29% 34%
1 Year Heavy RI - purchased monthly 33% 36%
$25k savings
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2. Aligns reservations to actual infrastructure
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The Financial Impact of Frequent Purchases
How to Structure Monthly Changes
1. Start with modificationsGet the most out of what you already have
2. Focus on high confidence purchasesBuy reservations for instances that are (almost) always running
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The Financial Impact of Frequent Purchases
Structuring Monthly Buys
8 instances running 75% of the hours Break even 68.09% 25.87%
SAVINGS RATE
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Reserved-Instance-friendly architecture
Cost Savings
8 @ 75%
5 @ 100%
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The Financial Impact of Frequent Purchases
Structuring Monthly Buys
5 instances running 100% of the hours Break even 68.09% 34.38%
SAVINGS RATE
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Reserved-Instance-friendly architecture
Cost Savings
Usage Rate Instance Count Savings Rate
100% 5 34%
94% 1 30%
70% 2 12%
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The Financial Impact of Frequent Purchases
How to Structure Monthly Buys
1. Start with modificationsGet the most out of what you already have
2. Focus on high confidence purchasesBuy reservations for instances that are (almost) always running
3. Spread purchases horizontally across infrastructurePurchase tactically across all instance families to avoid cliffs and lock-in
4. Monitor cost per hour to measure effectiveness Unit cost should go down as reservation volume goes up
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Recap
1. Reduce the number of instance families that you use
2. Have clear migration plans for legacy instances
3. Do monthly modifications and RI buys
