As an automated FinOps platform, our mission is to deliver cost savings outcomes for our customers that exceed what could otherwise be achieved. So how do you know if that’s true? The great thing about FinOps is that it’s wonderfully quantifiable. With the proper KPIs, this question can be answered objectively. When we started ProsperOps, no rate optimization savings metric existed, so we created Effective Savings Rate (ESR). It’s a simple yet powerful metric that’s been adopted by the FinOps Foundation, the FinOps community broadly, and other FinOps tools.
One of the features of ESR is that it can be scoped to cover different services and savings boundaries. While ESR is fundamentally cloud agnostic, ProsperOps started off managing AWS RIs and SPs, so we initially scoped ESR to measure exactly that. We created a public ESR Calculator Google Sheet that anyone can use to determine their own AWS ESRs across Compute, RDS, ElastiCache, OpenSearch, Redshift, and MemoryDB. Astute sheet users may have noticed a note at the bottom which says, “This ESR calculation is scoped to AWS Discountable Compute (i.e., EC2, Fargate, and Lambda, exclusive of Spot) savings from Reserved Instances and Savings Plans. It does not measure additional discounts from EDPs and/or Private Pricing Agreements which would deliver incremental savings and a higher ESR.”
This scope is extremely useful to objectively baseline ESR performance and measure whether various RI and SP management changes (for example, using ProsperOps) produce better results, independent of whether the company uses more or less Spot instances or negotiates better EDP/PPA discounts.
There is one more key benefit of this ESR scope. Since private pricing generally scales with spend, being able to benchmark ESR independent of EDP/PPA discounts allows every AWS customer, from small startups to large-scale enterprises, to compare and understand their relative ESR performance. This ability to broadly compare is highly beneficial, which is why our published ESR benchmarks to date have been based on this scope.
The Need for Expanding ESR Scope
Two things have fundamentally changed since we introduced ESR in 2019:
1. ESR has been widely adopted (beyond just our customers) and is often being tracked as a top-level FinOps KPI. We heard feedback that while an ESR scope that isolates RI and SP management is useful, practitioners also want to understand their “all-in” ESR to help them measure and report on the totality of their savings from all rate optimization activities.
2. While ESR is cloud agnostic, one of the things we learned as we expanded our Autonomous Discount Management service to Google Cloud and Azure is that discounts on those clouds apply differently and in a way that is incongruent with the original ESR scope. I will save the exact details for a future post comparing cloud discount models; suffice it to say that AWS discounts stack while Azure and Google Cloud discounts do not. In AWS, RIs and SPs apply first (which means savings from those instruments can be isolated), and then private pricing stacks on top after. AWS systems report savings in this manner. In Azure and Google Cloud, that is not the case. Negotiated rates can fundamentally eat into RI, SP, and CUD savings, so it’s not possible to isolate just the commit discount instrument savings, like with AWS. A broader ESR scope is required.
Given these drivers, it makes sense to introduce a second, comprehensive ESR scope to cover all rate optimization activities, which can address both of the aforementioned needs.
Introducing Savings Scopes
I’m excited to announce Savings Scopes – a new feature enabling ProsperOps customers to access and visualize AWS savings data across the original ESR scope isolated to commit discount instruments, now called RI/SP Only, and a new comprehensive ESR scope that includes all rate optimization savings, called All Discounts.
A new Console Savings Dashboard toggle (see red arrow) allows customers to switch between scopes, adjusting all data and charts on the page. The All Discounts scope shows overall rate optimization savings performance, including ESR, spot instance savings, a detailed breakdown of EDP/PPA savings, daily and trended spend coverage, and more. Customers can now easily answer questions like:
- How much did my overall rate optimization efforts, including my negotiated EDP/PPA, save me on compute?
- How much of my compute usage was discounted by RIs vs. SPs vs. Spot?
- What blended discount rates, including both native and stacked EDP/PPA discounts, did my use of RIs, SPs, and Spot deliver?
If historical data was available for your AWS organization, previous months’ savings dashboards have been rebuilt to enable the All Discounts scope, including a pre-ProsperOps baseline ESR. If the savings scope toggle is not available for a given month, no additional rate optimization savings beyond RIs and SPs were detected. In addition to our Console Savings Dashboard, our Data Export feature has also been updated to include All Discounts data, enabling customers to programmatically integrate with and ad hoc query their comprehensive rate optimization savings data.
ESR Multi-Cloud Applicability
As previously mentioned, the RI/SP Only scope only applies to AWS, while the All Discounts scope broadly applies to AWS, Google Cloud, and Azure. To clarify, the Savings Dashboard data shown in our Autonomous Discount Management for Google Cloud and Azure products is the All Discounts scope, which means it already includes savings from negotiated rates, Sustained Use Discounts (SUDs), etc.
Learn More at FinOps X
If you’ll be attending FinOps X in early June, I’ll be co-presenting a session with one of our customers, Boomi, titled Effective Savings Rate 2.0: Expanding the Ultimate Rate Optimization Metric, which covers this very topic. We’ll take a deeper dive into the expanded ESR concept, share practical examples, explore application, and will be available afterward for questions. Hope to see you there!
Our goal is to help all businesses prosper in the cloud. We’re excited to further that mission by expanding the ESR scope broadly for the FinOps community and delivering Savings Scopes for ProsperOps customers.
Prosper On! 🖖
Erik
