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Surprisingly, AWS has very quietly released a major enhancement/overhaul to purchasing compute resources up front. To date, purchasing Reserved Instances (Standard or Convertible) has offered AWS users great savings for their static workloads. This works because static workloads tend to utilize a set number of resources and RIs are paid for in advance, thereby justifying the financial commitment. That said, how often do today’s business needs remain constant, particularly with today’s product development? So, until now, you had two choices if you couldn’t use your RIs: take the loss and let the RI term run out or undertake the hassle of selling it on the marketplace (potentially for a loss). AWS Savings Plans, on the other hand, provide a gigantic leap forward in solving this problem. In fact, you will find that these AWS Savings Plans provide far more flexibility and return for your investment than the standard RI model.

Here is the gist of the AWS Savings Plans program, taken from the AWS site:

AWS Savings Plans is a flexible pricing model that provides savings of up to 72% on your AWS compute usage. This pricing model offers lower prices on Amazon EC2 instances usage, regardless of instance family, size, OS, tenancy or AWS Region, and also applies to AWS Fargate usage.

AWS Savings Plans offer significant savings over On Demand, just like EC2 Reserved Instances, in exchange for a commitment to use a specific amount of compute power (measured in $/hour) for a one- or three-year period. You can sign up for Savings Plans for a 1- or 3-year term and easily manage your plans by taking advantage of recommendations, performance reporting and budget alerts in the AWS Cost Explorer. (Jeff Barr, AWS, 11.06.2019)

This is HUGE for AWS clients, because now, for the first time ever, savings can also be applied to workloads that leverage serverless containers—as well as traditional EC2 instances!

Currently there are two AWS Savings Plans, and here’s how they compare:

EC2 Instance Savings Plan Compute Savings Plan
Offers discount levels up to 72% off on-demand rates (same as RIs). Offers discount levels up to 66% off on-demand rates (the same rate as Convertible RIs).
Any changes in instances are restricted to the same AWS region. Spans regions. This could be a huge draw for companies with need for regional or national coverage.
Restricts EC2 instance types to the same family, but allows change in instance size and OS (e.g., t3.medium to t3.2xlarge). More flexible. Does not limit EC2 instance families or OS, and therefore, you are no longer locked into a specific instance family at the moment of purchase, as you would be with a traditional RI.
EC2 instances only: Similar to convertible RIs, this plan allows you to increase instance size, with a new twist: you can also reduce instance size! Yes, this means you may no longer have to sell your unused RIs on the marketplace! Allows clients to mix-and-match AWS products, such as EC2 and Fargate; extremely beneficial for clients who use a range of environments for their workloads.
BOTTOM LINE: Slightly less flexible, but you garner a greater discount. BOTTOM LINE: More flexible, but with less of a discount.

As with standard RI purchases, understanding your workloads will be key to determining when to use AWS Savings Plans vs. standard RIs (RIs aren’t going anywhere, but we recommend that Savings Plans be used in place of RIs moving forward) vs. On-Demand (including analysis of potential savings from auto-parking, seasonality, elasticity, and so on). Sound a bit overwhelming? Fear not! This is where 2nd Watch’s Cloud Optimization service excels! Enrollment starts with a full analysis of your organization’s usage, AWS environment, and any other requirements/restrictions your organization may have. The final result is a detailed report, expertly determined by our AWS-certified optimization engineers, with our savings findings and recommendations—customized just for you!

Due to the nature of AWS Savings Plans, they will bring the most immediate value to clients who are either new to AWS or don’t have any RI commitments currently on their account. This is due to the fact that AWS Savings Plans cannot, unfortunately, replace existing RI purchases. Whatever your goals, our optimization experts are ready to help you plan the most strategically efficient and cost effective “next step” of your cloud transformation.

And that’s just the beginning

If you think that AWS Savings Plans may benefit your new or existing AWS deployment, contact us to jumpstart an analysis.

-Jeff Collins, Cloud Optimization Product Management

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