Cloud is fantastic. It lets customers quickly and flexibly scale resources on-demand, and has provided customers with compute capacity that otherwise wouldn’t be accessible. The issue is, when using the most flexible, On-Demand compute costs are at their highest. The cloud vendors have to charge higher because they hold all the risk, and this makes it difficult for AWS to plan their data centre capacity.
One of the best ways to reduce your cloud costs is through committing usage and spend to AWS. In such scenarios, a customer will commit usage or spend to the cloud vendors on 1-year or 3-year terms, notably through mechanisms such as Reserved Instances or Saving Plans. These will typically help customers save circa 30% off the On-Demand costs, and is fantastic for workloads that are forecasted to be left switched on persistently.
But what happens when a customer can’t commit to the 1 or 3-year terms? These customers are stuck paying the highest tariff for the flexibility they don’t particularly need. This is where Strategic Blue, a cloud reseller who focuses purely on the financial part of the cloud, ‘cloud FinOps’, can help.
Over recent months, Strategic Blue has found an increasing number of use cases, where the customer would like to save money, but can’t quite fit into the 1 or 3-year terms provided by the cloud vendors. There can be an array of use cases for this; perhaps a researcher who only has a grant for a 6-month period, or a FinTech who knows their engineering team will be increasing their usage for a 9-month period while a project runs. In both of these cases, the customer will find it difficult, or impossible, to do anything other than paying the On-Demand costs for these workloads.
How do Short-term Cloud Commitments Work?
Strategic Blue facilitates flexible and short-term commitments that help customers get a discount that they otherwise would not be able to access. Strategic Blue buys at the 1 or 3-year terms that the cloud vendor offers, and then sells a length to the customer that suits their individual needs. We see this as a win-win scenario, as the vendor gets their commitment, and the customer can sign a commitment through Strategic Blue that matches their unique project length. The Strategic Blue customer doesn’t need to worry about any remaining Reserved Instance or Saving Plan, as Strategic Blue uses their portfolio of customers to manage these seamlessly. From the customers’ perspective, they get the commitment from Strategic Blue that they’ve agreed to.
Making the most of Short-term Cloud Commitments
Strategic Blue is currently putting in place a variety of commitment lengths with our customers, the shortest being a 2-month commitment, to tie an organisation over until their new ownership got up to speed. This allowed a discount off the On-Demand costs, and let the new owners come in with a clean slate 2 months later. Within the research community, we find that a 3-6 month commitment is favourable, allowing the researcher to stretch their grant money as much as possible, but not locking the researcher to spend for the full 1 or 3-years. This type of flexibility is really valued in the research community.
The message to all cloud customers is: don’t feel constrained by the cloud vendor terms. If you’re an organisation that wants to learn more about commitments, short-term commitments, and how Strategic Blue can provide deals that suit your business needs, please don’t hesitate to reach out to the Strategic Blue team and we’d be more than happy to provide one of our free FinOps reviews.