According to Andy Jassy at Re Invent 2014 “AWS customers aren’t just about the cost savings but sign on for agility and innovation. “You can go from idea to launch in record time,” said Jassy. “If you have an idea you know you have a chance to make it work.”
AWS Reserved Instances (also known as ‘RIs’) are a potentially money-saving feature provided to AWS customers by Amazon.
Purchasing a Reserved Instance means making a commitment to an upfront cost and/or an ongoing hourly rate for a certain number of EC2 instances/servers of a certain type. In exchange, if you are running the same number of EC2 instances/servers of the matching (‘applicable’) type, instead of being charged the full standard hourly rate amount for those instances, you will be charged only the (discounted) costs of the Reserved Instance.
If you lock yourself into a certain amount of compute over a three year term, you could end up with either too much or not enough at the end, if the contract you signed three years ago doesn’t accurately reflect reflect your business needs today
Reserved Instances can offer you flexibility ! But the problem is, with such flexible RI purchase options, it’s easy to land on the wrong one. Here are the top five mistakes businesses make when miscalculating their RI needs
One of the most common mistakes is simply to RI’s with the greatest discount on a the maximum term. There are three payment types of Reserved Instance on AWS: All Upfront, Partial Upfront and No upfront across 1 or 3 year contrat terms. Discounts are greater based on the length of term and amount of upfront payment. A business figures that they’ll need as much coverage as they can get, particularly since the rate is so much lower, so they’ll often choose a greater upfront version. After all, it’s better to have too much than not enough, right? In fact, over 95% of Reserved Instances purchased from AWS were Heavy (under the old system). However, it’s important to realize that when you purchase a Reserved Instance of, say, a year, you also commit to a certain number of hours of usage within that year, and pay for all of those hours, whether they end up being used or not. Because of this, if you miscalculate your usage needs, you could end up spending more in the long run, wasting money and resources by paying for unused compute. Rather than simply buying a the RI with the greatest discount on a 3 year term it’s important to calculate your specific reservation needs and plan accordingly.
In an effort not to purchase too many RI’s, some companies end up purchasing too little instead. They figure that they’ll only buy as much as they need, but still miscalculate and end up running out of compute. A mistake like this can cause any number of problems, and making up for it often ends up costing a lot more money than the company is prepared for.
3. Buying for Too Long
Even if you do calculate your company’s reservation needs accurately, it’s still possible to buy too much. RIs can be purchased for up to three years. If you still plan on using AWS cloud computing three years from now, you might be tempted to go for that option, to save more money, as well as time and trouble down the line by not having to renew your contract as quickly. However, you never know when your business’s needs may change. If you lock yourself into a certain amount of compute over a three year term, you could end up with either too much or not enough at the end, if the contract you signed three years ago doesn’t accurately reflect your business needs today. Buy your Reserved Instances in smaller chunks, to give you a chance to phase out instances you no longer need and only pay for what you do need.
All of the above problems can be boiled down to the miscalculation of a business’s reservation needs. It can be a complex thing to figure out. Many businesses make the mistake of trying to calculate their needs on their own. Particularly if your reservation needs are a bit more complex, or subject to fluctuation, it’s better to enlist the help of an expert to find the best RI to meet your needs and save you the most money.
5. Not Managing Changes
So you bought a shorter term RI of one year, rather than three, anticipating that your needs would change over time. And indeed they did. Unfortunately, once the year was up, you didn’t take the time to recalculate your reservation needs based on those changes. So even though you’re buying shorter RIs, you’re still wasting money by buying the wrong type. Did you have any wasted or unused RI this year? Take that into consideration when buying next year’s RI.
So to get the most most out of your AWS Cloud you need a process to plan and manage your Cloud infrastructure. With CloudMGR we provide Insights and ways of taking action all in a simple inituative Interface.
Try our Free AWS RI Tool today