ProsperOps reduces AWS cloud costs through automated machine learning algorithms, similar to robot investment advisors (robo-advisors) who manage and optimize personal investments.
While robo-advisors capitalize on equities, such as index funds, to help clients generate returns from a diverse portfolio of securities, ProsperOps focuses on Convertible Reserved Instances. These allow customers to maximize savings as their AWS EC2 environments evolve while minimizing financial risk.
This article helps you understand the fundamentals of Convertible Reserved Instances and why they matter when you’re trying to save money in the cloud. It also reveals how ProsperOps uses Convertible RIs with its advanced algorithms to simplify AWS cost optimization.
What are AWS Convertible Reserved Instances?
AWS Reserved Instances (RIs) are a billing option offering a discounted hourly rate, in exchange for committing to a term of one or three years. This allows users to reduce their AWS costs significantly compared to on-demand instance pricing.
There are two types of Reserved Instances—Standard Reserved Instances and Convertible Reserved Instances (CRIs).
- Standard RIs offer the highest discounts, up to 72%, and are best for predictable workloads because they do not offer flexibility in changing attributes like instance type, operating system, or quantity after purchase. In addition, they have restrictions like the inability to sell during the first and last 30 days of the term, and SRIs purchased under a discount program cannot be listed for sale on the RI Marketplace at all.
- On the other hand, Convertible RIs provide discounts up to 54% but offer the flexibility to change the attributes of the RI throughout the commitment term, maintaining the original expiration date even after modifications.
While Convertible Reserved Instances (CRIs) may offer lower discounts compared to Standard Reserved Instances (SRIs), their value lies in the flexibility to adjust to changing demands. This adaptability can outweigh the benefits of the higher discounts offered by SRIs.
With CRIs, users can modify their EC2 instance configurations without sacrificing cost savings, ensuring their cloud resources align with actual usage needs. On the other hand, investing in SRIs without accurately predicting demand can lead to inefficiencies: on days when usage is below the committed level, the financial commitment is not fully utilized, effectively wasting part of the investment. Conversely, during periods of unexpected demand spikes, additional on-demand instances might be required, leading to extra costs on top of the SRI commitment.
This makes CRIs a strategic choice for dynamic and unpredictable workloads, providing a balance between cost savings and operational flexibility. The Convertible RI best balances savings power with engineering flexibility, and we recommend it as the optimal rate optimization strategy.
History of AWS Convertible Reserved Instances
Released in 2016, Convertible RIs changed the AWS cost optimization game relative to Standard RIs in the same way that index exchange-traded funds (ETFs) changed the personal investing game relative to individual stock picking.
Index ETFs allow investors to purchase a basket of securities with a single investment/commitment and thus, participate in whichever stocks drive the overall market, versus assuming the risk of a single stock.
While the index ETF may miss out on the upside of an individual stock, it also removes the downside risk of any single stock. It’s the difference between making an aggregate bet on the market versus an individual bet on an investment. Similarly, with Convertible RIs, you are not locked into a specific instance type – your CRI commitments can be continually exchanged to match a dynamic engineering universe.
Benefits of Convertible Reserved Instances
Convertible RIs offer high flexibility, strong cost savings, regional benefits, and simplified management when using a cost optimization tool:
Flexibility
Convertible Reserved Instances (CRIs) offer the flexibility to modify commitments across different EC2 instances within the same region throughout their term, contrasting with Standard Reserved Instances (SRIs), which tie commitments to specific EC2 instances. This distinction is crucial; SRIs can become less effective if the corresponding EC2 instance’s usage changes, as unmatched SRIs continue to incur costs without providing discounts.
CRIs, however, allow users to exchange their current instance for others, enabling adjustments in instance family, size, quantity, platform (operating system), and tenancy within the region at any point during the RI term. This flexibility allows engineers to scale or modify compute capacity without negating the value of their CRI commitment. Importantly, there’s no cap on the number of times a Convertible RI can be exchanged, ensuring users can continuously align their resources with their actual requirements, optimizing both performance and cost.
Cost savings
CRIs can significantly reduce cloud costs compared to On-Demand Instances, especially if businesses commit to a larger upfront payment. As businesses experience changes within their workloads, CRIs can be modified to suit the changing requirements.
The discounts offered by CRIs typically range from 25% to 55%, depending on the term length, region, and workload. Thus, with great discounting and flexibility, CRIs are the optimum choice for dynamic workloads.
Simplified management (with ProsperOps)
When users combine the flexibility of the Convertible RI with algorithmic management, they now have one of the most powerful tools to drive AWS cost optimization.
Manual management of CRIs can be complex and time-consuming. To address this, ProsperOps has developed a fully automated Commitment-Based Discount management platform. It offers real-time coverage adjustments to match changing engineering environments.
Rather than manually evaluating RI commitment on a periodic basis, ProsperOps gives you the ability to automate the entire Convertible RI and Compute Savings Plan lifecycle, allowing adjustments in real time within user-defined constraints.
ProsperOps enables immediate savings with future exchange possibilities and combines with ML-powered algorithms for automated, real-time management.
Rather than deferring RI savings because workloads have planned instance rightsizing, for example, ProsperOps can immediately use Convertible RIs for savings and exchange them in the future, as required.
ProsperOps leverages AWS Convertible Reserved Instances using true automation to maximize AWS discounts 24/7 while minimizing long-term and inelastic commitment risk without any manual intervention. Sign up for a free demo to understand how we can help you make the most out of your CRI investment.
Can you transfer Convertible Reserved Instances?
There’s no ability to transfer, sell, or offload Convertible RIs, but you can exchange them. It’s also possible to exchange CRIs with a future expiration date, which, in effect, reduces the point-in-time commitment amount.
Convertible Reserved Instances can be exchanged using the Amazon EC2 console or the AWS CLI.
Learn more about AWS cost optimization with ProsperOps
Both Standard RIs and Convertible RIs have many benefits, though manually managing them can be difficult.
If you’re struggling to achieve cloud cost savings without manual effort, the power of a robo-advisor is now available for cloud spend with ProsperOps.
ProsperOps optimizes instance pricing, resulting in a reduced AWS bill and a simplified approach to the complexity of AWS cost management.
Sign up for a free demo today, and learn how ProsperOps can save money and time with hands-free RI management.
