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Amazon Convertible Reserved Instance Exchanges Made Easy

As most consumers of Amazon Web Services (AWS) know, if you’re looking for a quick way to reduce your cloud spend, buying Reserved Instances is a tried and true approach. By making an upfront commitment of at least a year to AWS on the types of assets you plan to use, Amazon offers up to 75% discounts. While this offering has been extremely popular, a year is a long time in the cloud world. And if you want the best discounts, you need to make a 3 year commitment. Enter the Convertible Reservation: an incredibly flexible reservation type that can be Exchanged in a wide variety of ways. The only question that remained was how to know which Exchanges to make, and when?

The Rise of Convertible Reservations

Convertible Reservations have been growing rapidly in popularity over the past year. CloudHealth Technologies manages more than $5B of cloud spend across more than 3,000 customers. We’ve found that 75% of our customers are taking advantage of EC2 RIs. Of the more than one million active RIs CloudHealth customers currently have, today about 44% of them are Convertibles.  And this number is growing quickly, up from around 4% in November 2017. We expect that by the end of the year, the proportion of active Convertible RIs will be at least 60%.

One major enhancement AWS brought to the table that helped accelerate adoption was the ability to purchase 1 year Convertible RIs. At the same time, they made Exchanges more flexible, allowing customers to split and recombine groups of RI purchases to make more advantageous Exchanges. However, all of this added another layer of complexity to making Convertible RI purchases and Exchanges. Up until now, customers using Convertible RIs were relying on complex spreadsheets to do the analysis for the Exchange, and even then, were unsure if they were making the right decisions. Just planning for a simple Exchange could take several hours every week.

Four Steps to Easier Convertible Exchanges

This is why I’m very pleased to announce the general availability of the CloudHealth Convertible Reserved Instance Exchanger. This is an industry-first solution for quickly analyzing your AWS environment and making recommendations on Convertible RI Exchanges that can save you tens or even hundreds of thousands of dollars in a matter of minutes. Here is how it works:

  1. Set a budget for your Exchange. It can be $0 if you don’t want to make any additional investments in the transaction.
  2. CloudHealth identifies underutilized Convertible Reserved Instances and On-Demand usage candidates. Next, the Platform will select the most efficient candidates.
  3. CloudHealth will recommend which of your Convertible RIs should be Exchanged, and what they should be Exchanged to. It will show you how much additional money you will save every month and over the whole lifetime of the Reservation.
  4. Export the results and send them to your AWS rep or jump into the console to make the Exchange.

Drinking Our Own Champagne

During the extensive testing of this new capability, we decided at CloudHealth to “drink our own champagne” (a nicer way to say eat our own dogfood). As a rather large consumer of AWS ourselves, our devops team runs a diverse RI portfolio that includes both Convertible and Standard RIs. As part of the early testing process, we decided to see what we could save by running Convertible RI Exchanges on our own environment. Boy, were we in for a surprise (in a good way). We uncovered 223 RIs that would benefit from an Exchange. The results? For a mere $466 in true-up costs, we were able to save $200k over the lifetime of the RIs, which was about 7 months. The best part is that once we started working with customers, we found out these results were pretty typical. During the beta period, the typical customer found $100k+ in savings, with one customer we found savings of more than $12.5M!

Exchanged from:

Exchanged to:

7 r3.large RIs

187 t2.nano partial upfront RIs

160 r3.large RIs + 28 r3.xlarge RIs

180 i3.large partial upfront RIs

10 existing r3.large + 18 r3.xlarge RIs

40 i3.large no upfront RIs

Take the Next Step

If you haven’t made the leap yet to Convertible RI, now is the perfect time! With modeling new Convertible RI purchases and Exchanges now easier than ever, you can get both the significant discounts and the flexibility you want. Learn all about the different types of Reserved Instances in our eBook “The Ultimate Guide to Reserved Instances.”

If you’ve already invested in Convertible RIs, it’s very likely that you’re leaving unrealized savings on the table.