Have You Made AWS Savings Plans For 2020 Yet?

CloudHealth Tech Staff
Dec. 19, 2019
6 minute read

For some businesses making AWS savings plans for 2020 involves trimming excess waste and optimizing what´s left. For others, AWS´ new discount program - coincidentally called “Savings Plans” - represents an opportunity to do more for less. 

The longer you put off trimming excess waste and optimizing what´s left, the worse the situation will become. Fortunately, help is at hand with our “10 AWS Cost Optimization Best Practices” blog and our detailed eBook “How to Accelerate Your AWS Cloud Journey to Reach Cloud Maturity”.

By taking advantage of the tips in the blog and advice in the eBook - and then automating best practices - you should be able to smoothly depart the category of “wasteful” cloud users. Then, to further reduce the management overhead, you might want to take advantage of AWS Savings Plans for 2020.

What are AWS Savings Plans for 2020?

AWS Savings Plans for 2020 were actually launched in November 2019 and are a new discount program for businesses willing to make a commitment on how much they will spend per hour over the next one or three years. If these sound like Reserved Instances (RIs) to you, you are not far wrong.

The major difference between Reserved Instances and AWS Savings Plans for 2020 are that, rather than committing to a specific instance type in return for a discount, you are committing to a specific spend per hour (the “per hour” bit is important, which is why we are going to keep repeating it).

There are two types of AWS Savings Plans for 2020 - EC2 Instances Saving Plans and Compute Savings Plans. The first is much like Standard RIs, while the second shares attributes with Convertible RIs with the added bonus that discounts can be applied to the Fargate container service.

We elaborate on each type of Savings Plan below, but first it is important to note Saving Plans can only currently be used for EC2 instances and the Fargate service. Businesses using Reserved Instances to cut costs on RDS instances and other services will have to wait until the new discount program is extended.

A Deeper Look at EC2 Instance Savings Plans

EC2 Instance Saving Plans are similar to Standard RIs inasmuch as you get the same discount on On Demand pricing as you would with Standard RIs and you can purchase them for one-year or three-year terms with the payment options of all upfront, partial upfront, or no upfront.

The main differences between EC2 Instance Saving Plans and Standard RIs is that Savings Plan discounts are applied automatically to any EC2 instance (within the same family and region) regardless of the operating system or tenancy. This saves you purchasing separate RIs for Linux-based and Windows-based EC2 instances and it can also increase the cost-efficiency of consolidated accounts.

A further difference that will be important for some businesses is that Savings Plans do not offer capacity reservations. However, if you need to reserve capacity in a specific zone, the way to get around this issue is to use On Demand Capacity Reservations and the EC2 Instance Savings Plan will be applied at the discounted hourly rate to the EC2 Instances used in the deployment.

Overall, EC2 Instance Savings Plans can make life simpler and can save businesses using On Demand Capacity Reservations a lot of money. Commitments start at just $0.001 per hour, but remember, if you commit to (say) a $10 per hour EC2 Instances Savings Plan, you are committing to using $10 of EC2 services every hour, day and night, for one or three years.

More about Compute Savings Plans

The second of AWS´ Savings Plans for 2020 is Compute Savings Plans. You commit to and pay for these in the same way as EC2 Instance Savings Plans; but, because they offer a lot more flexibility, you only get discounts equal to those offered by Convertible Reserved Instances.

The big selling point for Compute Savings Plans is that the discounts are applied to EC2 instances of any size, in any family, with any tenancy, using any OS, and - very importantly - in any region. This will be huge for businesses with a large fleet of Convertible RIs, because the savings plan removes the management overhead of manually modifying and exchanging Convertible RIs.

It is also worth noting for businesses with consolidated accounts that the benefit of aCompute Savings Plan is first received by the purchasing account, and then - if any of the committed purchase discount remains - the benefit flows out to linked accounts, thus reducing any “cloud waste” that still exists within your AWS Cloud environment. EC2 Instance Savings Plans will exhibit this same “float” behavior.

Like EC2 Instance Savings Plans, commitments start at just $0.001 per hour, and AWS Compute Savings Plans have the same term and purchase options. One further point to note is that, at present, you cannot re-sell underutilized AWS Savings Plans for 2020 in the Amazon EC2 Reserved Instances Marketplace. One you have committed to then, you have to see out their whole lifecycle.

It´s Never Too Early to Plan for 2020 AWS Savings Plans

Businesses that have invested in one-year Reserved Instances or that have three-year reservations due to expire next year should start looking at the new discount programs now to see if they are an appropriate match to their needs. AWS Saving Plans for 2020 can be layered incrementally, so as one Reserved Instance expires, it is easy to replace it by increasing an existing monetary commitment.

In fact, it might be a good idea for businesses to look at AWS Savings Plans for 2020 before the year end. If, for example, AWS Cloud costs are running under budget, using up excess funds now could help prevent a reduction in the 2020 budget. Alternatively, if AWS Cloud costs are running over budget, AWS Savings Plans for 2020 can be purchased now to help reduce the budget overspend.