Bootcamp Recap: EC2 Reserved Instances

Reserved Instances Bootcamp

2 © 2017 CLOUDHEALTH® TECHNOLOGIES I NC.

Agenda

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EC2 Reserved Instances 101


Managing RIs with CloudHealth – 5 Steps

Wrap-up


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!


• 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%


• 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)


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%


Break-even analysis by RI offering

Understanding Reserved Instance Offering


• 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


• 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







t2.small

t2.small


0 603015 45

t2.small

t2.small


•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


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


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.


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


matching Region, family,

and OS


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


Region)


Region)


• 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?


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


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)



small (.25 units)

medium (1.75 units)


0 603015 45

Minutes

Units

2

4

8

16

32

large (1 units)

xlarge (6 units)


xlarge (6 units)


small (.25 units)

medium (1.75 units)


0 603015 45

Minutes

Units

2

4

8

16

32

large (1 units)

Managing Reserved Instances — Five Steps


• 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


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

MonitorCHT best practice is to

continuously monitor for

opportunities for savings

with RI purchases

CentralizedCHT best practice is to

purchase centralized


• 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


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


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


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


• 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

Thank you

Bootcamp Recap: EC2 Reserved Instances

Technology

Transcript of Bootcamp Recap: EC2 Reserved Instances