The potential for cost cuts is real, but you need to understand the nuances of the AWS Savings Plan to get the greatest savings.
Cloud purchases are being noticed again as businesses look to save more costs after moving systems to the cloud in response to COVID-19. It’s time for the company’s cloud buyers to learn more about the Amazon Web Services Savings Plan (AWS), launched in November 2019, which saves up to 72% for cloud buyers.
A recent survey of more than 50 IT executives on Pulse.qa, a social research platform, found that only 16% of IT executives believe the AWS Savings Plan is helping them save money on their cloud spending. While the potential for cost-cutting is real, you need to understand the nuances of this offer to ensure you’re making the biggest savings.
How the AWS Savings Plan works
AWS Savings Plans include a one-to-three-year commitment to consistent usage in dollars per hour. For example, if you commit to using a calculation of $100 per hour, you’ll get a Savings Plan price for that usage of up to $100, and AWS will charge you on-demand for any usage beyond the commitment. AWS offers two Savings Plans:
The Power Savings Plan is the most flexible of the two plans. Prices on this plan are reduced by up to 66% compared to the on-demand price.
The EC2 Version Savings Plan offers savings of up to 72% at the rate required. As a customer, you must commit to a specific instance group in your chosen AWS region. This package automatically applies to use regardless of the size, operating system, and specific family rentals in the area.
You can’t increase your Savings Plan’s budget while you’re in the active phase. Instead, you’ll need to provide a new and separate Savings Plan.
If you’re running a new AWS account, you may experience some limitations to your Savings Plans. If this happens to you, it’s best to work with your system integrator or AWS account representative to resolve any restrictions you may experience.
One advantage of the AWS Savings Plan is that savings can be applied to on-demand cases, rather than just reservations. The calculated savings plan may apply to cases across different AWS regions. You can also apply a Savings Plan for Fargate (Version-based PaaS for Containers) and Lambda.
The AWS Savings Plan does not apply to Relational Database Services (RDS), Redshift, or ElastiCache (in-memory and cache databases). The savings plan also doesn’t include any services you offer from the AWS Marketplace.
Visualize spending as important to both you as an end customer and as an integrator of your system. Your AWS scope and usage report provide a better understanding of costs and usage of AWS Savings Packages. These reports show trends in using the Integrated Savings Plan over time. You can also use these reports to view each of your Savings Plans with corresponding usage, cost, and savings in table format.
Navigate AWS Savings Plans
As a cloud buyer who wants to get the most out of AWS Savings Plans, you need to “move left” with cloud spending management. While your organization may not have a cloud economist in your employees (or even a contract), you can use the cloud management platform to track your cloud spending over the last three to six months from a historical perspective. That historical data will provide your decision-making process to determine if a Savings Plan will save you money. Data will serve you well in any service provider negotiations.
You can get started with the AWS Savings Plan from your AWS overview page using the AWS Cost Discoverer or by using the API/CLI. If you’re buying cloud services through a system integrator, then it’s best to ask about using their Savings Plan.
According to Venkat Ramasamy, COO for FileCloud, understanding your cloud workload is key to making good use of AWS Savings Plans, according to Venkat Ramasamy, COO for FileCloud, a provider of enterprise file sharing, syncing, backup, and remote access solutions. Ramasamy emphasizes knowing whether you’re running changing or static workloads. Unless you’re building and operating SaaS applications, you’re most likely running static loads, so the AWS Savings Plan will mean a lot to you and can save you a lot of money.
Scott Dix, senior solution distribution manager at Cloudtamer.io, a cloud management platform provider, recommends using the cloud roadmap to guide your decision-making process on the AWS Savings Plan. With the cloud roadmap in place, you can model savings from backup and on-demand spending from the early stages of cloud projects —not after your first cloud payment surprise.
AWS Savings Plan and Your System Integration Tool
The AWS Savings Plan, when used by a system integrator, is capable of generating more profit margins when customers order EC2 Instances on demand. Pulse.qa’s survey of IT executives found that 64% had difficulty negotiates with their system integrates for the best discounts on their cloud spending. Negotiations are essential as the Savings Plan can save about 25% overall for SI.
According to Amir Shariff, Deputy Product and Marketing Manager at Opsani, a cloud optimization solution provider, system integrates are at risk when they don’t put themselves in the customer’s place. He said SI’s need to be representative of their customers when managing AWS Savings Plans. Shariff advises: “Use the golden rule and guide them to reduce cloud costs by changing their cloud resources.
Shariff stressed the need for SI to know about its clients’ business in order to best advise them on how to reduce their cloud spending. You should expect as much from your system integrator.
AWS Savings Plan and you
Dix Cloudtamer.io recommends caution when implementing dedicated versions and AWS Savings Plans. “The last thing that happens is people jump in and think the savings are incredible, so save maximum and pay for the long term,” he explains. Proceed slowly, closely monitor your usage and savings.
In addition to the commitment Dix mentioned, treat the AWS Savings Plan as an economic exercise in the cloud. Take a systematic approach. Perform historical analysis and make process adjustments and report the changes needed to give you and your stakeholders full confidence that the AWS Savings Plan is working to deliver significant savings on your AWS bill.