Cloud services have different approaches that leverage spend commitment to offer discounts on services. These vary from customized commercially negotiated discounts, to spend-based commitment discounts like AWS Savings Plans, resource-based commitment discounts like Google CUDs and others.
Spend-based commitment discounts and resource-based commitment discounts are the most popular rate optimizations that cloud service providers offer. This is partially because CSP native tooling and FinOps platforms enable you to plan, manage, and benefit from these types of discount constructs.
Each cloud service provider has a slightly different offering with its own specific rules on how it works and the discounts it provides. You must also consider the implementation models that organizations use, based on their needs, and how the overall process should work inside an organization.
Altogether the implementation of these strategies drives an organizations Effective Savings Rate (ESR). It is important to note that under utilization of a commitment based discount would also negatively impact ESR as would significant usage not covered by discounts.
WHERE ARE ORGANIZATIONS IN TERMS OF MATURITY
Responses indicate that organizations operating at a FinOps Run maturity utilize high levels of available cloud discount constructs to improve costs rather than pay on-demand pricing. Responses showed most organizations had adopted some strategies for using cloud discount offerings with the majority in cohorts operating their cloud cost management practices at a FinOps Crawl and Walk maturity
written for each persona responsible for the functional activity and processes encapsulated by his Capability. each one should be associated generally to one of the FinOps Phases (Inform, Optimize, Operate). for example:
As a [FinOps Persona], I will [functional activity] so that [desired outcome] is achieved.
Measures of success are represented in the context of cloud costs and may include one or more key performance indicators ( KPI ), describe objectives with key results ( OKR ), and declare thresholds defining outliers or acceptable variance from forecasted trends.
the information used that contributes to the measure(s) of success listed above; information here may include specific datasources, reports or any relevant input
Get involved and contribute to the community by sharing your real world experiences related to this Capability in the form of a story or providing a playbook for how you have implemented best practices in your organization. Your real world experiences can be provided in the context of:
Join the conversation about this Capability in Slack . You can submit stories, how-tos and suggest improvements using one of the options for contributing here.
Dave Van Hoven from HERE Technologies spoke about Green (Allowed) Zone/Red (Restricted) Zone approach to buying Reserved Instances (RIs) centrally — and distributing RIs to product teams across a massive estate of over 10 million unique instances annually.
Kara Mosley of Koch Industries shared her perspective as an IT Finance Manager on how Finance supports centralizing reservations and the journey of moving FinOps from Infrastructure to Finance to Business.
In this breakout session, Josh Bauman of Electronic Arts talked about their journey through cloud products like Reserved Instances, Committed Use Discounts, and Savings Plans, and how they’ve leveraged the products to drive user behavior.
When you purchase Committed Use Discounts (CUDs), you receive discounted prices in exchange for your commitment to use either a minimum level of resources or spend a minimum amount, for a specified term of one or three years.