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Are you wasting money on unused Reserved Instances?

By Leah Weitz on February 10, 2015

Historically, it’s been difficult to track what happens to your Reserved Instances once you buy them. Are they being used, and accruing the savings you’d anticipated? Or are they gathering dust, inapplicable to any aspect of your infrastructure and saving you nothing without even recouping your massive upfront investment? The information hasn’t been readily available for AWS users, and as such, many users’ Reserved Instance strategies consist of calculating which Reserved Instances should match their needs, making purchases accordingly, then crossing fingers and hoping they don’t end up in the red.

But making that purchase is just the beginning of Reserved Instance portfolio management. Checking that your reservations are being used—and taking what action you can when you find that they aren’t—is critical to ensuring that the money invested in your reservations isn’t being wasted. And with new Cloudability data, you’ve got no excuse not to.

The growing consequences of an unused RI

Ongoing management of your Reserved Instance portfolio throughout the reservation lifecycle has always been crucial to achieving the greatest savings, but it’s more important now than ever.

In the past, Reserved Instance purchases have functioned one of two ways: either pay a small upfront fee in exchange for a lower hourly rate (for Light and Medium reservations), or commit to pay for all hours of the month at a lower rate (for Heavy reservations). However, when Amazon changed their Reserved Instance offerings to No Upfronts, Partial Upfronts, and Upfronts, they did away with the usage-based model associated with Lights and Mediums. Now, the variables between reservation types are simply a matter of preferred payment method, and corresponding savings rate. This means that no matter which of the three available instance types you choose, you’ll always have to pay for all of the hours of the 1- or 3-year term. You’ll pay a discounted rate for those hours, but you’ll still pay for all of them—which means that if you aren’t using them, you’ll waste money.

This simplification of the reservation-buying decision has already proven to be a great advantage for many businesses, but it also means that making a Reserved Instance purchase is a bigger commitment; if you don’t end up using the instance type that you bought the reservation for past the fairly high breakeven point, there will be financial repercussions—potentially considerable ones.

Breakeven point

The breakeven point for a 1-year All Upfront m1.xlarge is just past 60%. If it isn’t being used at least 60% of the time over the reservation term, you’ll be in the red.

That means that now more than ever, you have to ensure that your Reserved Instance usage is consistently above the level you’ll need to break even and accrue savings.

How to tell if your RIs are being used

When we released our enterprise management tools last year, one of the most exciting additions was that of new AWS data pulled directly from the Detailed Billing Report. That data not only unlocked extremely detailed and accurate AWS spending and usage data for our users, but allowed us to provide three new Reserved Instance metrics for our cost allocation reports and custom dashboard widgets: Reserved Hours, On Demand Hours, and Reserved Utilization Rate.

You can manipulate these new metrics to display your Reserved Instance data in many different ways, but one great way to get insight into your ongoing Reserved Instance coverage is with a Reserved Utilization Report.

Reserved Instance Utilization Report

To make your own, build a new Cost Report and customize the report with “Reserved Hours,” “On Demand Hours,” and “Reserved Utilization Rate” as the Metrics, and “Usage Type” and “Item Description” as the Dimensions. Then, add the filters “Item Description does not contain hours used” and “Usage Type contains usage.”

The report will display a graphical and numerical breakdown of your total usage hours within a time period of your choice. The graphical aspect will display what percentage of your infrastructure was billed at a reserved rate on any given day, and how that’s trended over time. Below the graph, you can see the specific numbers on how many of your usage hours were paid at a reserved rate, and how many were paid On-Demand. Does the coverage match your expectations? If not, it’s time to go deeper.

You can drill into which aspects of your infrastructure have the most and least Reserved Instance coverage as differentiated by the “Usage Type” dimension, displayed on the bottom section of the page.

Reserved Instance coverage

To see the items with the lowest RI coverage, filter by Reserved Utilization Rate. These are the areas that were either overlooked in your RI planning, or that aren’t using the reservations you’d planned for them. Before making any new purchases to cover these gaps, you’ll want to reallocate any unused Reserved Instances that you already own.

Get your RIs back to work

You can confirm suspicions about unused Reserved Instances by navigating over to the Reserved Instance Planner. Be sure the “Recommend RI Modifications” switch is ON, then select the account of interest and scroll down to the “Modify” tab of your recommendations.

RI modification recommendations

This section of the Planner will identify unused Reserved Instances in your portfolio, and suggest a modification that will match them to instances in your infrastructure that aren’t covered by your current set of reservations.

There are some limitations to modifying reservations, however, and the Planner will only recommend modifications within those limitations—so that might mean that some of your unused Reserved Instances won’t be addressed here. If that’s the case, simply scroll down to the “Sell” tab to see if you have any remaining unused reservations that can’t be reallocated. The reservations listed here would save you less money over the course of their term than you would recoup if you just sold them on the Marketplace.

Tip: One of the biggest obstacles to Reserved Instance re-allocation is the fact that they can’t be modified across instance families. To maximize your Reserved Instance modification capability, make an effort to reduce the number of instance families in your infrastructure.

Keep the data front and center

Regularly checking on your Reserved Instance usage to ensure that you’ve got the coverage you need is key to keeping your reservations closely aligned with your infrastructure—and vital to maximizing savings. You can keep the data top-of-mind by adding a Reserved hours vs. on-demand hours widget to your Cloudability dashboard, so that you can take a look at your coverage every time you log in.

Reserved hours vs On-Demand

This widget will display what portion of your usage hours (the dark blue area) are on demand (the light blue line), in addition to displaying your Reserved Instance utilization rate (the green line, displayed as a percent per the numbers on the Y-axis on the right). If your data looks like the widget above, you’ve got some considerable gaps in your portfolio! If you don’t own many RIs, it’s time to get more—and if you do, they aren’t being used. Time to take another look at the Planner and check for Modifications.

If your widget displays a high Reserved Utilization Rate and a minimal number of On Demand Hours, congratulations! Your work is paying off, and your Reserved Instances are well on their way to serious savings.

Ready to explore the new Reserved Instance data? Log in or sign up for a free 14-day trial of Cloudability Pro today.

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