Bootcamp Recap: EC2 Reserved Instances

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Are you using AWS Reserved Instances (RIs), but you’re not sure if you’re really getting your money’s worth? Check out the slides that recap what you need to know: -How to maximize cost savings with RIs -Learn best practices for modeling, purchasing, and optimizing RIs -Understand all the different types of RIs-- and when to use them -Get 5 steps to master RI planning and purchasing
Transcript
  • 1. Reserved Instances Bootcamp
  • 2. 2 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. Agenda 1 2 3 4 EC2 Reserved Instances 101 EC2 Reserved Instances 201 Managing RIs with CloudHealth – 5 Steps Wrap-up
  • 3. EC2 Reserved Instances 101
  • 4. 4 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. 2-3x • Many people moved to cloud looking for cost savings…. • Purchasing RIs is one of the easiest ways to reduce your EC2 spend • Some RI types also offer a capacity guarantee for the account in which the RI is purchased Why buy Reserved Instances? …. However, according to Gartner, it is not uncommon for public cloud service bills to be 2-3x higher than expectations!
  • 5. 5 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. • On-demand hourly discount • Three purchasing options: - All upfront - Partial upfront - No upfront • 1 or 3 year terms • Some capacity assurance • Can be modified in limited ways Think Vouchers - Not Instances Understand EC2 Reserved Instances and Their Benefits Offer Type Commitment Discount Range No Upfront 1 Year 27%–50% Partial Upfront 1 Year 32%–53% All Upfront 1 Year 34%–53% No Upfront 3 Year 32%-55% Partial Upfront 3 Year 38%-74% All Upfront 3 Year 38%-75%
  • 6. 6 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. • Platform (e.g. Linux) • Instance type (e.g. m3.large) • Tenancy (e.g. dedicated or default) • Network (e.g. virtual private cloud or classic) • Term (typically 1 or 3 years, although variable terms can be found on the AWS Reserved Instance Marketplace) All EC2 Reservations have the following attributes: Understand the Features of EC2 Reservations & How to Use Them • Type of reservation offering (e.g. All Upfront, Partial Upfront) • Scope (e.g. Availability Zone or Region) • Class of reservation (e.g. Convertible or Standard)
  • 7. 7 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. Understanding Reserved Instance Offering Types Offering Description Discount Range All Upfront Pay for the entire RI term in one upfront payment (duh) 34% – 75% Partial Upfront Make a lower upfront payment, then charged a discounted hourly rate for the duration of the RI’s term. 32% – 74% No Upfront Pay nothing upfront, get an hourly discount for duration of term. 27% – 68%
  • 8. 8 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. Break-even analysis by RI offering Understanding Reserved Instance Offering
  • 9. EC2 Reserved Instances 201
  • 10. 10 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. • For every hour, AWS reconciles the available RIs with matching characteristics • Account • Instance Type • Operating System • Tenancy • Location • Every hour of matching usage is charged at discounted hourly rate • There is no locked assignment of an RI to a specific instance. Any RI can (and does) float hour-by-hour. Understanding RI Cost Benefits and Float
  • 11. 11 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. • Instance usage is metered and billed per second • However, a single RI still gives you 1 hour of benefit • At the end of the hour, AWS will add up all the usage across all instances that can apply to the RI, and they will all split the benefit Per second billing—what does it mean for RIs? t2.small t2.small t2.small One t2.small reservation = 60 minutes of benefit 0 603015 45
  • 12. 12 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. • Instance usage is metered and billed per second • However, a single RI still gives you 1 hour of benefit • At the end of the hour, AWS will add up all the usage across all instances that can apply to the RI, and they will all split the benefit Per second billing—what does it mean for RIs? t2.small t2.small One t2.small reservation = 60 minutes of benefit 0 603015 45 t2.small t2.small
  • 13. 13 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. • Instance usage is metered and billed per second • However, a single RI still gives you 1 hour of benefit • At the end of the hour, AWS will add up all the usage across all instances that can apply to the RI, and they will all split the benefit Per second billing—what does it mean for RIs? t2.small t2.small One t2.small reservation = 60 minutes of benefit 0 603015 45 t2.small t2.small
  • 14. 14 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. •When to Use Standard vs Convertible Reservations When to Use Standard vs Convertible Reservations Understanding Reserved Instance Class When to use Standard Reservations When to use Convertible Reservations • When you want the biggest possible discount on reservations, but in exchange are willing to accept less flexibility in changes • When you only want to make a one year commitment • When you are willing to pay slightly more to have significantly more flexibility in changes to Reservations • When you are willing to make a 3 year commitment 1 year Convertible RIs are now available • When you want to take advantage of future price drops
  • 15. 15 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. 3 c4.4xlarge RIs • Convertibles can now be purchased as 1 or 3 year commitments • Amazon now allows for splits and merges of Convertible purchase groups -- MUCH more flexible! Amazon’s recent changes to Convertible RIs 8 m4.xlarge RIs Purchase 1 expires 1/1/2020 Purchase 2 expires 6/1/2020 2 1 12 c5.large RIsExchange New RI group, expires 6/1/2020
  • 16. 16 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. When to Use Availability Zone vs Regional Scope Reservations Understanding Reserved Instance Scope Availability Zone Scope Regional Scope • When you require a guaranteed capacity for the instance type you reserve. • When you don’t mind that the Reservation you purchase will not automatically float across Availability Zones in a Region, it will be contained to one AZ. • When you don’t require a capacity guarantee for the instance type you are reserving. • When you would like the flexibility of being able to apply the Reservation benefit to any instance of that type running in the chosen Region.
  • 17. 17 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. Availability Zone vs Regional Scope Reservations Availability Zone Scope RIs Regional Scope RIs: Size Flexible (Linux/UNIX, Shared tenancy) Regional Scope RIs: Non-Size Flexible (All other Regional RIs) Capacity guarantee? • For the instance type in the purchase account • No capacity guarantee • No capacity guarantee Who gets the benefit? • Applies to instances with matching AZ, size, OS, and tenancy • Applies to instances with matching Region, family, and OS • Applies to instances with matching Region, instance type, and OS Manual modifications • Change Scope (AZ or Region) • Change AZ (within a Region) • Change Size (.large, .xl, .2xl, .4xl) for Linux/UNIX only • Change Scope (AZ or Region) • Change Scope (AZ or Region)
  • 18. 18 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. • RIs can now float across size (in addition to accounts and locations) • It’s a billing artifact where the benefit will be applied to any matching usage • An m4.4xlarge can provide discount to: • 1 m4.4xlarge instance • 2 m4.2xlarge instances • 1 m4.2xlarge + 1 m4.xlarge + ⅛ m4.8xlarge (⅞ will be billed at OD rate, unless other RIs apply) • 1 m4.2xlarge + ½ RI Unused How does Size Flexibility work?
  • 19. 19 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. Normalization factors Instance Size Normalization Factor nano 0.25 micro 0.5 small 1 medium 2 large 4 xlarge 8 2xlarge 16 4xlarge 32 8xlarge 64 10xlarge 80 16xlarge 128 32xlarge 256
  • 20. 20 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. xlarge (6 units) NFUs bring great flexibility, but also complexity small (.25 units) medium (1.75 units) One large reservation = 4 units (60 min) 0 603015 45 Minutes Units 2 4 8 16 32 large (1 units)
  • 21. 21 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. NFUs bring great flexibility, but also complexity small (.25 units) medium (1.75 units) One large reservation = 4 units (60 min) 0 603015 45 Minutes Units 2 4 8 16 32 large (1 units) xlarge (6 units)
  • 22. 22 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. xlarge (6 units) NFUs bring great flexibility, but also complexity small (.25 units) medium (1.75 units) One large reservation = 4 units (60 min) 0 603015 45 Minutes Units 2 4 8 16 32 large (1 units)
  • 23. Managing Reserved Instances — Five Steps
  • 24. 24 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. • EC2 Instances running workloads are often heavily underutilized • Either because of wrong size • Or wrong instance type • Very common even with sophisticated cloud users • Goal: Pick the most effective instance to meet the technical requirements of the given workload Step One: Rightsize Your Instances
  • 25. 25 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. Considerations: Will you purchase based on budget? Or on coverage? RI Purchasing strategies Step Two: Plan your RI Buy Determine frequency: Monthly, quarterly, continually? Centralized or delegated purchases? 70% CHT best practice is 70% Reservation coverage Monitor CHT best practice is to continuously monitor for opportunities for savings with RI purchases Centralized CHT best practice is to purchase centralized
  • 26. 26 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. • For customers who use Regional Reservations, they can now just purchase a single large regional reservation and let it apply to all instances of a family • Or, consider buying only the smallest instance size in a family and let them flex up & down • Start thinking in UNITS, not INSTANCES -Instead of buying 10 all-upfront r4.2XLs in us-east, I might buy 160 units of r4 in us-east RI Buying Strategies with Size Flexibility Step Two: Plan your RI Buy
  • 27. 27 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. Step Three: Model Out the Right Reservations and Make the Purchase • Base analysis on historical and projected usage (typically 30 days) • Make sure to account for recently purchased or recently expired reservations! • Understand payback period, ROI and total savings • Make the purchase through the AWS portal or with your cloud management solution
  • 28. 28 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. Standard modifications Step Four: Continuously Modify Reservations • Change between Regional and an Availability Zone scope • Change between Availability Zones within the same region (for AZ scoped RIs only). • Change between Classic EC2 and Virtual Private Cloud. • Altering the instance size within the same family • $0 (not financial transaction) Cannot change Region, Family, OS, tenancy, or purchasing Account
  • 29. 29 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. Convertible exchanges Step Four: Continuously Modify Reservations • A new instance type • A new operating system • A different tenancy • A different instance size • Must exchange for equal or greater value Cannot change Region or purchasing Account
  • 30. 30 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC. • Keep an eye on underutilized reservations, you can resell on the Amazon Marketplace • Look for areas with high on-demand usage, there may be opportunities for additional savings with reservations • Stay on top of expiring reservations! Step Five: Monitor for New Opportunities and Underutilized Reservations
  • 31. Thank you
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