AWS Savings Plans doesn't assure cost savings; Tracking & Amending with AWS Budgets does !!

#aws #ec2 #cloudcomputing #costoptimization

This article is to bring out the essential reason & benefits of having Budget setup for being on track with the usage of Savings Plans based on coverage/utilization factors

Welcome to an ultimate pocket guide on AWS Savings Plans' understanding & tracking the same using AWS Budget !!

We all know that AWS Budgets exists to notify us on the status of exceeding the threshold towards a resource configuration. This helps in having resource utilization under control and eliminates AWS Invoice surprises(not good ones though :-()

In this article, let us take a setup of budget for tracking "Daily Savings Plan Coverage/Utilization" . Without an iota of doubt, this is extremely important to pursue the full benefits of AWS Savings Plans.

Let us see, the budget setup in few screenshots
Step 1:

Step 2: Illustrated to create Savings Plan Coverage budget tracking at resource EC2 level

Step 3: Illustrated to create Savings Plan Utilization budget tracking

Step 4: Chosen to receive alerts via email; But officially, designate SNS Topic or Chat bot alerts which is the right way of setting up alerts. Emails if used, can be group or team email id, so that a group stays notified rather than individuals

Step 5: Simple illustration of creating a Savings Plan coverage budget

Now that we know how to setup budget to track the coverage of Compute instance against the Savings Plan procured, let us as well see the benefits of having them in place

Why Savings Plan is being Purchased ?
Savings Plan offers discounts over on-demand rate on your Compute Resources like EC2, Sagemaker thus enabling you to save unto 72% on costs. With data driven SP purchase recommendations & your homework, you can opt in for buying Savings Plan(s). Key driving factor for purchasing a Savings Plan is when you have committed usage of any compute resource for 1 to 3 year period

What is Coverage on Savings Plan ?
Coverage represents how much of your usage of compute is utilizing the discounted price of SP or how much of compute usage is running on on-demand rates

What is Utilization on Savings Plan ?
Savings Plan is purchased by committing to use certain amount per house and Utilization gives actual usage out of the committed amount

Purpose of threshold against Coverage & Utilization ?
Threshold is defined at scale of 1-100 and Budget tracker notifies you when utilization or coverage goes below the threshold defined

Ideal Threshold ?
Though threshold is same and needs to be defined at 100% to make the most out of the SP(s)

What does the SP Coverage threshold breach represent ?
Coverage threshold set at 90% & if it goes below that then you have committed less for per hourly in Savings Plan(s) and will end up paying the remaining compute usage with on-demand rates

Low on SP Coverage Illustration:
SP Commitment Rate per hour = $100
Actual Usage per hour cost = $110
$10 usage is billed at on-demand rate which means you are under committed/hour in your SP(s)

Low on SP Coverage & What to do ?
Represents potential miss on savings with under-committed SP Purchase and denotes buying SP with higher commitment rate or additional SP(s) with revised commitment rates based on recommendations

What does the SP Utilization threshold breach represent ?
Utilization threshold for example 90%, and if reported below 90% by AWS Budget tracker, then this is clear case of over commitment of usage/hourly on SP(s)

Low on SP Utilization Illustration:
SP Commitment Rate per hour = $100
Actual Usage per hour = $90
Utilization is 90% an hour, $10 is wasted which means you are over committed/hour in your SP(s)

Low on SP Utilization & What to do ?
Represents cloud waste and SP(s) commitment rate needs to be revised/reduced based on recommendations or SP(s) needs to be returned

Key Restrictions on returning SP(s) to AWS: