The world of cloud computing is dynamic, with frequent updates, terms adjustments, policy changes, and enforcements from cloud vendors that can reshape your organization’s cloud cost management landscape. AWS’s recent enforcement change regarding selling reserved instances (RIs) on the AWS RI Marketplace has sparked some interesting conversations among cloud professionals and FinOps practitioners. As a leader in cloud financial management, Apptio, an IBM company, is here to guide you through these changes, ensuring that your cloud strategy remains robust and cost-effective.
Customers leveraging Apptio Cloudability Savings Automation are unaffected by this we continue to work hard on our solutions. In fact, by adopting an innovative solution, such as CSA, organizations can eliminate their reliance on the RI Marketplace, thereby securing a more reliable and effective means of achieving cloud savings.
Interpreting the AWS update on selling Reserved Instances
The key benefit of the RI marketplace is that it allows AWS customers to offload commitments when conditions change. The first thing to note is that the recent update from AWS doesn’t represent a policy change but rather enforcing an existing policy. In late October 2023, AWS started communicating directly with customers, notifying them that the policy disallowing the sale of discounted RIs will be actively enforced starting January 15, 2024. Since discounted RIs are commonplace, either due to RI volume discounting or private pricing, this change is expected to impact many customers. By doing this, AWS intends to streamline the marketplace’s functionality and uphold the integrity of the discounting process. Here’s the relevant excerpt:
“5.6.1. The rights to an active EC2 Reserved Instance can be offered for sale through the RI Marketplace as long as (1) the remaining term on the Reserved Instance is greater than 1 month and (2) your payment of the upfront charge for it has been received and processed (for credit card purchases, 30 days after you have paid the upfront fee, and for invoice purchases, after you have paid the applicable invoice) (a “Marketable EC2 Reserved Instance”). You can be a “Seller” if you are a current AWS customer in good standing, you have a Marketable EC2 Reserved Instance associated with your AWS account, and you complete the registration process through your AWS account. You can be a “Buyer” if you are a current AWS customer in good standing. Non-U.S.-based entities may not be Sellers without providing the Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding) to establish that you are not a U.S. person. You can resell an EC2 Reserved Instance that you previously purchased through the RI Marketplace. You may not resell an EC2 Reserved Instance that you purchased through a discount program (Reserved Instance Volume Discounts or otherwise) without obtaining our prior approval.”
Apptio’s approach to cloud savings
CSA avoids marketplace dependencies by offering a comprehensive commitment management system that maximizes savings and flexibility. Our solution is engineered to automate the management of Savings Plans and Convertible Reserved Instances (CRIs), ensuring that you achieve and maintain a high commitment coverage of over 90% and access 3-year discount rates without requiring extensive manual processes.
Maximizing value with Convertible RIs
CRIs are at the heart of our commitment strategy. We harness their term flexibility (achieved via specific exchange flows) to adapt to your fluctuating usage patterns. This includes being able to dynamically shift up or down your overall commitment coverage, all the while getting 3-year discount rates. With this peace of mind, customers can confidently target much higher coverage rates, reducing the amount of usage charged at higher on-demand rates. Behind the scenes, automated exchanges continuously align your portfolio with your usage, eliminating the need for manual intervention and securing the financial benefits of long-term commitments.
Real-world success with Apptio
Our customers have seen significant benefits from our approach, including a banking software leader and a special effects company. Both organizations achieved over 95% commitment coverage and realized 3X returns on their AWS spend. By removing human error and reducing the workload on DevOps teams, we’ve enabled these organizations to focus on innovation rather than cloud cost management.
Rest assured, CSA is not impacted by Amazon’s change in enforcement. Our process is independent of the AWS Marketplace, avoiding all external dependencies. Our commitment to your success is reflected in our strategy, designed to deliver savings and flexibility irrespective of marketplace policies. We invite you to engage with our team to explore how these changes affect your organization and how Apptio can help you easily navigate them.
Want to learn more? Check out how Apptio Cloudability Savings Automation can help your business.