Balancing Flexibility and Cost

When it comes to cloud, rate optimization often gets oversimplified: commit to long term usage, save money. Sounds great, right? The reality isn’t quite that straightforward. Workloads can be unpredictable, and nailing future usage forecasts is, frankly, much harder than it looks.

At Strategic Blue, we believe there’s a better way. Instead of trying to predict your cloud usage with perfect accuracy, why not focus on reducing your reliance on forecasts? By balancing cost savings with technical flexibility and outsourcing your commitment management, you can unlock significant efficiency.

The Problem with Traditional Forecasting

Traditional cloud rate optimization strategies are built on the idea that you can forecast your usage accurately. Reserved Instances and Savings Plans offer attractive discounts, but they come with a big catch: you have to know how much capacity you’ll need ahead of time.

What happens if you guess wrong?

• Over-committing: You’re stuck paying for resources you don’t use.
• Under-committing: You miss out on discounts and end up paying more for on-demand rates.

This gamble puts unnecessary pressure on teams, and it can stall innovation. Why? Because no one wants to waste money. As we pointed out in Are You Ready to Manage Your Own Commitments? Reducing this reliance on forecasting is key to staying flexible and keeping costs under control.

Centralizing RI and SP Management

If juggling RIs and SPs feels overwhelming, that’s because it is. Managing these commitments manually can quickly turn into a full time job. That’s why centralizing RI and SP management is a must.

Why Centralization Matters

At Strategic Blue, we make cloud cost management simpler and smarter. Our approach to Centralized RI and SP Management helps you:

• See everything in one place: Get a clear view of all your commitments, so you can make informed decisions.
• Optimize automatically: Let us handle the hard work of adjusting your commitment portfolio to match your usage patterns.
• Stay flexible: Need to change plans? No problem. Our approach lets you flex up and down as we have several ways to mitigate usage.

By centralizing, you can stop worrying about the nitty-gritty details and focus on building cool things instead.

First-Hand Experience

Managing Reserved Instances and Savings Plans independently across multiple teams can quickly become chaotic. Without a centralized approach, challenges like these often arise:

• Overlapping Commitments: Teams purchase RIs that overlap in capacity, leading to wasted resources.
• Missed Discounts: Undercommitting leaves teams paying higher on-demand rates, missing out on available savings.
• Administrative Burden: Finance teams spend excessive time juggling multiple spreadsheets and reports, trying to track and optimize usage.

This isn’t just theory—it’s a reality we’ve seen firsthand. One of our customers faced these exact challenges. Their dev and production teams operated in silos, each making separate commitments that didn’t align. The result? Wasted resources, missed discounts, and hours lost to manual tracking.

By centralizing and automating their commitment management with our approach, we reduced their cloud waste by 20% within the first quarter. The streamlined process freed up time and resources, allowing their teams to focus on innovation rather than admin headaches.

Striking the Right Balance

Every cloud commitment is a balancing act between risk and reward. Go all-in and you risk paying for resources you don’t need. Play it too safe, and you’re leaving money on the table.

This is where we shine. At Strategic Blue, we help businesses balance risk and reward, finding that sweet spot where cost savings and flexibility meet.

How We Do It

At Strategic Blue, we blend expertise and automation to create a commitment portfolio that delivers the perfect balance of savings and flexibility. By understanding the trade-offs of each commitment type, we craft solutions that minimize lock-in while maximizing value.

Leveraging a Blend of Commitment Types

Each type of cloud commitment offers distinct advantages and challenges. Here's how we use them to your advantage:

(Technical flexibility refers to the ability to change instance types and sizes, while Spend flexibility refers to the ability to adjust commitments as cloud spend fluctuates.)

How We Apply Each Type

• EC2 Savings Plans: Used for non-Linux workloads, providing size flexibility alongside the highest discounts.
• Standard RIs: Used to maximize discounts, backed by our expertise in navigating AWS rules and controls for purchasing and selling.
• Compute Savings Plans: Purchased automatically in small increments to gain technical flexibility and create "ladders" of regularly expiring commitments, minimizing potential wastage.
• Convertible RIs: Automated conversions of hundreds or even thousands of commitments per customer every month, enabling the highest coverage and maximum spend flexibility.

By blending these types intelligently and applying advanced automation, we deliver tailored solutions that align your commitments with your business goals. The result? Optimal savings, maximum flexibility, and zero headaches.

The Results: What This Means for You

Reduce Your Risk

We distribute your commitments across Reserved Instances, Savings Plans, and limited on-demand usage to ensure financial optimization. A little underutilization can sometimes work to your advantage. By making frequent SP purchases and leveraging the RI Marketplace, we establish staggered expiry dates, providing you the flexibility to adapt as your needs change.

Maximize Discount

Our approach ensures you commit where it makes sense without sacrificing agility. By blending small, frequent purchases of SPs and Convertible RIs, we unlock significant discounts without locking you into rigid terms. This balance helps you save more while maintaining the freedom to pivot when workloads shift.

Stay Flexible

Cloud requirements don’t stand still—and neither should your strategy. Our advanced commitment management approach is built for continuous adjustments, so scales  up or down for you.

Tools and Expertise

Managing cloud costs isn’t just about strategy. It’s also about having the right tools to handle the complexity. AWS billing data can feel like trying to drink from a firehose—there’s a lot to process, and it keeps coming.

How Our Tools Help

Our tools simplify the chaos by giving you:

• Real-time insights: Know exactly what you’re spending and how effectively we are performing on your behalf.
• Tailored recommendations: Get actionable insights on how to optimize your spend outside of commitments. (TAM)
• Managed savings with measurable KPIs: Access ready-made reporting for trend analysis and tailored recommendations

If you’re shopping for tools, check out our guide to choosing a rate optimization tool. It’ll walk you through what to look for and why it matters.

Conclusion

Cloud cost optimization isn’t just about cutting costs—it’s about aligning your cloud spend with your business goals. By leveraging strategies like centralized management, diversified commitments, and our 15 years of experience, you can save money without getting stuck in inflexible commitments or, even worse, paying full on-demand rates.

At Strategic Blue, we’re here to help you strike that perfect balance. Whether you’re struggling with forecasting, or you just want to make your cloud budget work smarter, we’ve got the expertise and tools to make it happen.