45° FinOps Content
Savings Plan for Cloud Computing
Times like these, we want the best price for everything we use. At home, we focus on reducing gas consumption, while at the same time, municipalities try to pay attention to whether and how long street lights should light up. These are all examples of how parameters like the cold, bad weather and time of year will play a role in basic decisions like turning on the heat or not. This extreme awareness is relatively new to businesses, whereas, translated to your Cloud spendings, you want the best deal for consumption at all times. You want the best price for the services we use. The formula influencing your final Cloud bill is straightforward: usage x rate = Cloud spent. This blog will mainly cover the rate bit.
Because recently there is a new rate kid on the block within Microsoft Azure: Say hi to the Savings Plan for Cloud Computing
“Why would you buy a Savings Plan?” I hear you thinking. Well, that’s why we first need to understand what’s already out there in terms of cost management and what relevance it still has, as to where it falls short. So let’s take the high-level route for a moment to establish our point.
Aka, what’s in a name. You pay, what you consume. When you turn on a service for instance, you will pay the market price without a discount. Pay-as-you-go will be the most expensive consumption option within Azure at all times.
Reservations is another approach to paying for your Cloud services. With reservations however, there are several parameters to consider. First of all, they will be tied to a particular service, such as a computing service excluding the license. The latter can be optimized in other ways, though. Here we are talking about pure infrastructure, for instance: a function, dedicated host or any flavor of VM’s. A Reservation is also tied to a particular region. In itself, this is not a problem, but it could affect flexibility in the long run. Again, the term plays a role here because you will commit for 1 or 3 years. You will have the cheapest consumption solution for your Cloud consumption in Azure with a reservation, though. Reservations bring up a few problems that can be partly solved with some tricks but will never provide a very flexible solution.
This doesn’t have to be a problem, but you never know that the need for a particular computing service may change over time. Or that there is more considerable consumption in another region, and you may be unable to deploy reservations to get a better rate in that particular region. Or you have scaled up a particular computing service to a different instance type. These possibilities will prevent your reservations from being used optimally. You might be thinking: what about a trade-in? However this option will disappear by 2024, so you need a backup plan. Right?
Hello, Savings plan for Cloud Computing
A bucket full of hours for computing resources can compare to a Savings plan. You can buy this bucket for 1 to 3 years. But why would you want to do that? A Savings plan is much more flexible and although you won’t have the same discount as a reservation, you’re financially still better off than with pay-as-you-go. In addition, Savings plans give you access to almost all computing resources in any region. This, in itself, is already good news because now you can deploy a Savings plan at the highest level and be sure it is used where it is the best fit.
To make the most of your Cloud consumption and get the most out of every dollar you spend on Cloud computing consumption, you should consider a combo of all payment methods to get the result you want. Creating the most optimized rate strategy is in our DNA at 45 Degrees. Want to learn more about the rate strategy that suits you and your business best?
Get in touch, and we’ll be happy to help.
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