Cloud News

Webinar: What Are AWS Savings Plans?

We hosted a webinar to get to the bottom of AWS Savings Plans, and to answer the questions what are AWS Savings Plans, how do they differ from Reserved Instances, and what should businesses consider before purchasing a Savings Plan.

At the beginning of November, AWS launched its new Savings Plans. As with any significant development in the AWS Cloud, the launch of the Savings Plans prompted multiple questions such as why had the new discount program been introduced, what services did it apply to, and how will it affect businesses with existing Reserved Instance purchases. 

In order to answer these questions, our team here CloudHealth by VMware invited two Senior Product Managers—Jonathan Morin and Mike Giacometti—and the Principle Product Manager for Amazon EC2—Pranesh Ramalingam—into the studio to discuss the new discount program, and why you should care about them.

The Evolution of AWS Savings Plans

The webinar starts with Pranesh revealing the reason for the new discount program by providing a timeline of EC2 pricing. Pranesh explains that while On-Demand pricing gave businesses a flexible option for short-term and unpredictable workloads, and Reserved Instances offered discounts for longer-term commitments, feedback from customers indicated some operating at scale still had difficulty in managing their spend to make the best possible use of EC2 pricing.

A second issue encountered by customers was that, due to the dynamic environments in which they operated, their needs change very quickly. So, although the opportunity exists to modify, exchange, or convert Reserved Instances when customers´ requirements change, this can involve a lot of work. Consequently, AWS Saving plans will give customers an easier way to manage commitments at scale and provide an option that supports changes to compute usage without a management overhead.

How AWS Savings Plans Work

The new Savings Plans are based on one year and three-year commitments in the same way as Reserved Instances are; but, rather than being a utilization commitment, they are a monetary commitment inasmuch as customers commit to how much they spend per hour on EC2 or Fargate services. Customers have the same all upfront, partial upfront, or no upfront payment options as Reserved Instances, and it is anticipated the program will be extended to other AWS services in the future.

There are two types of Savings Plans—one offering a greater level of flexibility (like Convertible Reserved Instances), the other offering less flexibility, but higher discount percentages. The discounts are aligned to current Convertible and Standard RI pricing and can be used for On-Demand Capacity Reservations, which will enable businesses to decouple the capacity reservation and discount reservation limitations of Zonal Reserved Instances.

How Will AWS Saving Plans Affect Businesses with Existing RIs?

Initially, businesses with existing Reserved Instances will experience no difference at all. AWS Saving Plans are not intended to replace RIs, but rather add a new dimension to the discount program. 

To help businesses arrive at a decision about whether to purchase AWS Savings Plans in preference to Reserved Instances, Jonathan and Mike list the factors that might influence individual businesses depending on the nature of existing RI fleets and what percentages of the existing fleets are Convertible RIs. The considerations include the order in which Saving Plan discounts are applied, coverage rates, and other KPIs—and a number of salient points are raised during the webinar.

Watch the AWS Saving Plans Webinar

We then dive into how our existing customers can take advantage of the CloudHealth platform to arrive at purchasing decisions and a description of what new capabilities are under development to provide visibility into Savings Plan utilization and cost allocation. The webinar concludes with Jonathan, Mike, and Pranesh answering questions that came in during the live broadcast of the webinar and explaining AWS Saving Plans in greater depth. If you have any questions about AWS Savings Plans and how to manage them, do not hesitate to get in touch with us here at CloudHealth by VMware. For more information about AWS Saving Plans watch the webinar below.