Our Vision for Cloud Savings
When we started ProsperOps in 2018, our mission was to automate maximum savings outcomes for customers. In the early days, we spent a lot of time evaluating where to start and how to quantifiably generate the most savings.
We created Effective Savings Rate (ESR) as a way to measure and definitively know the answers to our modeling questions. Ultimately, we landed on commitment-based discount management and concluded that a portfolio of Convertible Reserved Instances (RIs), later augmented with Compute Savings Plans (2019) would generate the highest ESR. Our platform consistently delivers the highest ESRs in the world for customers.
What about Standard Reserved Instances?
Standard RIs Carry Higher Discounts
Customers have asked us about Standard RIs. It’s a logical question since Standard RIs generally carry a higher discount than Convertible RIs. While true, Standard RIs are also less flexible than Convertible RIs, and this leads to:
- Lower Utilization rates: because of the inability to quickly adapt them
- Lower Coverage rates: as purchasers naturally hedge more
The data shows that by leveraging various advanced techniques with Convertible Reserved Instances, higher coverage and utilization rates can be achieved, which more than offset the lower Convertible RI discount rate. Said another way, a higher ESR can be achieved with an all Convertible RI strategy than with an all Standard RI strategy.
Maximizing Discount Opportunity, Coverage and Marketplace Liquidity
While Standard RIs are otherwise rigid and inflexible, one unique feature is the ability to offload unwanted commitment via the AWS EC2 Standard RI Marketplace. The challenge with the AWS RI Marketplace is liquidity and counterparty risk—someone may never buy your unwanted commitment, leaving you stuck paying AWS for no benefit until the commitment expires.
To mitigate this risk, one approach we’ve seen is to only buy:
- Standard RIs in the most common regions
- For the most common, latest generation instance types
- For the most common operating system (i.e. Linux)
This reduces liquidity risk, but we’re now back to the problem of low coverage. And, as discussed above, a higher ESR can be achieved with Convertible RIs because their higher coverage rate more than offsets their lower discount. We’ve also seen customers that just aren’t comfortable taking any AWS RI Marketplace risk at all.
Is there a way to achieve higher discounts with Standard RIs, with no AWS RI Marketplace liquidity risk, without sacrificing coverage? Said another way, can Standard Reserved Instances safely be used to improve ESR? The answer is yes!
Introducing Flex Boost
I’m thrilled to introduce Flex Boost, our autonomous EC2 Standard RI management capability.
Flex Boost is an optional feature customers can enable that automatically and safely layers Standard RIs into their portfolio of discount instruments. In the same way you might invest your money in a diversified financial portfolio to balance return on investment (ROI) and risk, we now create a blended savings portfolio that leverages the unique strengths of:
- Convertible Reserved Instances
- Standard Reserved Instances
- Compute Savings Plans
This approach maximizes ESR while managing overcommitment risk (note: we do not use or recommend EC2 Instance Savings plans).
“Flex Boost is yet another demonstration of the advanced and sophisticated thinking and capabilities of ProsperOps. It really changes the game as it increases savings in a broader scope with huge flexibility.”
Michel Zitman
Cloud Financial Management Practice Lead at Xebia
Blended AWS Savings Portfolio that Includes:
Compute Savings Plans
Compute Savings Plans are great because they are automatically horizontally flexible and can float across regions and EC2, Lambda and Fargate. They are vertically immutable, however, so once you make a commitment, you have no recourse if usage declines. They are great as a base commitment.
Standard Reserved Instances
Standard RIs are good because they generally offer higher discounts, but they are inflexible and can’t adapt quickly. They can be disposed of on the AWS RI Marketplace (if there is liquidity after a minimum hold time), so they are a good choice to cover the “stable middle.”
Convertible Reserved Instances
Convertible RIs offer vertical flexibility and can be rapidly adapted, so they are perfect for the “dynamic edge.”
Simple to Turn On
Enabling Flex Boost is simple: toggle one feature setting and you’re done. ProsperOps’ algorithms and automation take over from there. Flex Boost is an optional feature (though we expect most customers will enable it), so you can turn it on whenever you are ready.
Greater Overall Savings Opportunity
Flex Boost uses 100% 3 year No Upfront Standard RIs. This means there are no CAPEX or AWS RI Marketplace transfer fee implications. When Convertible RIs offer a higher discount, which they sometimes do, we automatically favor Convertible RIs over Standard RIs. As a result, you always get the higher savings rate.
Prior to Flex Boost, it was common for our customers to achieve a 45% or higher ESR (meaning they are saving almost ½ off their AWS compute bill, net our savings share charge). When we originally designed the ESR gauge in our console, we set the max at 50% thinking it would be tough to beat. Our goal with Flex Boost was to break the gauge and during testing, we did. Mission accomplished!
With the public release of Flex Boost, we’ve increased our ESR gauge max to 55% (and we’ll keep increasing as necessary). Here’s to more cloud savings! 📈
Automatic, Constantly Improving Savings Outcomes
ProsperOps algorithms automatically determine which EC2 instance types to cover based on incremental discount opportunity and, most importantly, known AWS RI Marketplace liquidity across ProsperOps customers. That last part in particular is hugely significant.
No Liquidity Risk, Requires No Notice of Changes
ProsperOps is approaching $1 billion of annual compute usage under management, across hundreds of organizations. At that scale, we don’t need to rely on unknown counterparties on the other side of an AWS RI Marketplace transaction; we can act as a market maker.
By looking at our customers’ usage in aggregate and properly sharding Flex Boost coverage across our customers, we can safely deploy Standard RIs knowing that if one customer’s usage changes, we can rapidly shift Flex Boost commitment through the AWS RI Marketplace to another one of our customers by orchestrating both sides of the transaction.
With this model, there is little to no liquidity risk. As such, we require no advanced notice of usage changes, no matter how large. Our platform is watching usage changes in real-time and acting accordingly, maximizing savings and freeing you to focus on other valuable FinOps tasks.
Savings Increase as ProsperOps Scales
The other benefit of this model is that Flex Boost coverage and savings increase over time as ProsperOps scales. As our aggregate compute usage under management grows, there is a powerful network savings effect that happens where all ProsperOps Flex Boost customers save more and achieve higher ESRs, even if their compute usage is flat.
In other words, Flex Boost savings should constantly improve over time. As ProsperOps grows, customers save even more, which is the way we want it to be.
Most Marketplace Guarantees are Utilization-Based
We recognize some customers are reluctant to use Standard RIs and the AWS RI Marketplace. We want to remove risk and make Flex Boost a no-regrets decision—not just by explaining how our algorithms lessen risk, but with a contractual guarantee.
Similar guarantees exist in the market today, but they are fundamentally utilization based, i.e., they pay out (usually in service credits) anytime Standard RI commitment is unutilized. This is problematic for two reasons:
1. It assumes unutilization is bad, which is not always the case
In fact, you sometimes need to create unutilization to maximize savings. Our algorithms seek to maximize ESR and savings—not utilization rate—the latter being inferior. Read our blog on maximizing savings on cyclical workloads for a detailed example.
Suffice it to say, unutilization as a basis for a Standard RI guarantee, is inherently flawed. A guarantee that incents perfect RI utilization is a guarantee to achieve suboptimal savings.
2. It fails to address the largest risk: wanting to leave a commitment-based discount automation provider and getting stuck with a large amount of Standard RIs you no longer need or want to manage
The fundamental concern is not that you may have a few hours of unutilized commitment on any given month, but that if you leave your commitment-based discount automation provider, you will have months or years of unutilized commitment if the Standard RIs they procured on your behalf can’t be disposed of on the AWS RI Marketplace.
Flex Boost Genuine Buyback Guarantee: Cash Back Instead of Credits
Our model is different. We want to offer a different kind of guarantee: The Flex Boost Genuine Buyback Guarantee. This guarantee states that should you ever wish to disable Flex Boost or leave the ProsperOps service, we guarantee removal of Flex Boost Standard RIs up to $250,000 in remaining value within 60 days, or we will pay you the difference in cash (not service credits)!
For example, if you have Flex Boost Standard RIs with $175,000 of remaining value and choose to disable Flex Boost and we can only remove $75,000 of value in 60 days you receive a check from ProsperOps for $100,000.
Getting Started with Flex Boost
Flex Boost is now available for current and new customers. As with our existing Autonomous Discount Management service, our savings share charge is a percentage of Flex Boost savings (not overall spend), so we only make money when we save you money.
This is the biggest feature we’ve launched since building the core ProsperOps service. We think it’s a game changer and can’t wait to see how much additional savings our platform can generate for customers.
Request a demo to learn more about ProsperOps and Flex Boost.
Prosper On! 🖖
-Erik
