How to assess service providers who offer reserved instances automation?
In Automated Reserved Instances, we talked providers that can help our over-provisioning and coverage gap issues with Reserved Instances. In this article, we dive deeper into different aspects we can consider from them.
TLDR The Big Questions
How much of a cut does the provider take from your savings?
What is the mechanism of this RI coverage?
How does buyback work and who is paying during the lead time?
Taking a Closer Look
These products are supposed to save us more money instantly and long into the future. Understanding how they work with our systems will lower the chances of encountering surprises. We want to make sure that we are saving as projected. There multiple dimensions that can impact our costs so we want to be aware of as many factors as possible.
Let’s examine the questions.
How much of a cut does the provider take from your savings? Starting off simple, these providers are middlemen. They take a cut from savings they generated for you.
Each provider represents this number in different ways:
A simple percentage. Zesty’s fee is 25% of savings for example.
Tiered savings.
If you want to skip calculating, some will obscure the calculations and just show net savings.
Take note of the fees for now and compare it to the value they are offering.
What is the mechanism of this RI coverage? The tech behind this is relatively simple if you are familiar with AWS Organizations. A common approach is to let the provider’s AWS accounts join your organization with resource sharing enabled. These accounts is where they will manage buy/sell RIs based on your compute capacity.
One would assume that this is an automated process but this is not always the case. There are providers that manage these accounts manually (sort of a “mechanical turk”).
However, they still manage to attract customers because of a specific clause in their buyback agreement.
They pay for over-provisioned RIs. No questions asked.
Whether you lean towards fully automated or manual providers depends on your risk appetite for human error. This is why the buyback agreement is the most important element you need to look at during assessment.
How does buyback work and who is paying during the lead time? The Reserved Instance Marketplace is a platform that supports the sale of RIs. The sale is not instantaneous unfortunately since a buyer purchase on the other end. If you terminated your EC2 instance, you have an over-provisioned RI until it is sold.
Most of these providers also rely on this marketplace. They will inevitably face this scenario except you are footing the bill. After all, their AWS accounts are under your organization so those RIs belong to you.
There are 2 ways to approach this:
Credit back the lead time. This approach involves crediting or refunding you for the delay in selling the RIs.
Opt for products that offer instant sale “no questions asked”. These products are typically guaranteed if you based on your contractual agreement. Alternatively, you can also get this condition upon meeting certain criteria.
I found most providers use the first approach. Personally, I do not like this. This is because it makes financial tracking more complicated where I need to calculate and track refunds on a monthly basis. It does not provide a “fully-managed” experience. On another note, it feels like my money went on a tour instead.
The second approach is nicer because the billing has a clean cut-off. A clear standout of this approach is Archera and their Guaranteed Reserved Instances (GRI). GRIs are guaranteed to go off your books as long as you keep them for at least a month. They are also fully automated so this is advantageous in avoiding human error.
Other Things to Consider
The topics above should give you a solid direction in which provider best suits your needs. You may consider the following as well:
Do you have compliance requirements where your data cannot exist in restricted jurisdictions? Which regions do they run their platforms in?
Are the IAM roles they use to interact with your organization too relaxed? They can add/remove their accounts in your organization. Can they do the same with yours?
Do they cover all EC2 instance types? Graviton instances in particular are new and do not have large RI markets yet. Your provider may be hesitant to provide RIs for them thus lowering your potential savings.
In the event that these providers fold over, you may be unable to sell the RIs they placed in your organization. Are they insured to pay you back?
These are a few of my findings dealing with these providers. I say they are totally worth it but always look closely into the engagement and manage risk. I hope this helps!