This is part 4 of a ten-part series, "Top 10 Strategies to Manage Cost and Continuously Optimize AWS," which is an excerpt from an eBook by the same name, produced in cooperation from AWS by HyperGrid Cloud Management Platform. A link to download the entire eBook with all 10 strategies is located at the bottom of this post.
Strategy #4 - LEVERAGE RESERVATIONS TO REDUCE COSTS—START WITH EC2
Reservations are the easiest way to optimize your AWS costs because using them requires making no technology changes. Reserved Capacity is available for various services; EC2 Reserved Instances are the most popular, due to the relative size of EC2 spend over other services.
Accuracy in reservations is key. Reservations are not guaranteed to be applied towards your bill. They apply only if your utilization matches the terms of the reservation. They can only be purchased in 1- and 3-year variants; it can be hard to plan that accurately and that far in advance.
Managing your reservations is just as important as purchasing them; unused reservations are one of the easiest ways to lose money in AWS. Not only did you spend money on a resource you did not use, you probably had to spend again on another instance that matches your needs more closely.
EC2 Reserved Instances have the most complicated structure of all reservation types due to the abundance of instance options; however, they also provide the greatest flexibility. Understanding and leveraging this flexibility is key to being able to leverage the pricing breaks offered by reservations.
Look at your EC2 estate and find opportunities for saving via reservations. There are typically plenty of low-hanging fruit—long-running instances that haven’t changed in a long time. To do this at scale, HyperCloud can help you pick from curated RI options based on deep insights from your historic cloud and instance usage patterns and real time price vs. performance.
Start by purchasing Convertible Reserved Instances; they offer a smaller discount but provide a trade-in capability that makes a very big difference to the inexperienced user. With experience under your belt, you can venture out to Standard Reserved Instances to save even more.
A simple best practice is to standardize on one or two instance types, which greatly increases the probability that an unused reservation can be applied against an instance. This can be difficult for an organization that isn’t building their own services and relying on recommendations from individual vendors.
Nearly all Reserved Instances can be split or combined, as long as you stay within the bounds of the overall Reservation. HyperCloud provides reports on RI Utilization and Waste, which can be used to find unused RIs and discover opportunities to apply them towards existing instances.
Be a bargain hunter. Browse the AWS Reserved Instance Marketplace for an RI that may meet your exact needs better than a brand new 1-year and 3-year RI. Note that the Marketplace only lists Standard Reserved Instances, and not Convertible.
If HyperCloud identifies a Standard Reserved Instance lying unused, sell it on the RI Marketplace to recover cost. Before you list your instance on the RI Marketplace, you can modify it (e.g., split a large instance, combine smaller instances, exchange an RI on an unpopular instance size for a more mainstream one, and so forth) to make it easier to sell.
Purchasing RIs with all payment up-front is the best discount that you can get from AWS. However, when you try to sell an unused RI on the RI Marketplace, AWS will charge you a fee based on the up-front price you charge, which can make up-front RIs more expensive to sell. This makes it even more important to use a predictive analytics tool like HyperCloud to help with your proactive RI selection.
Reservations allow you to get pricing breaks on AWS instances without making any changes to your deployment. Intelligently purchasing Reserved Instances is important but managing Reserved Instances and ensuring that they are being applied towards utilization will have an even bigger impact on AWS costs.
"Top 10 Strategies to Manage Cost and Continuously Optimize AWS"
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