10 Tips To Better Manage AWS Reserved Instances
AWS Reserved Instances (RI) is a purchasing option that allows you to use Amazon EC2 instances for a specific term rather than pay on-demand. Reserved Instances provide capacity reservation and flexibility in your AWS infrastructure planning. They are ideal for workloads that are consistent or predictable over time. So, if you need an AWS computing cloud for an extended period, for example, one or three years, RIs are a great way to save money.
As with other AWS resources, managing Amazon Reserved Instances requires specific knowledge and skills. In this post, we share ten tips on how to effectively manage AWS Reserved Instances, considering the goals of your project.
Choose the appropriate type of AWS Reserved Instances
Before you buy an Amazon Reserved Instance, you need to understand what kind of instance you need. There are two main types of AWS RI: standard and convertible. By using a standard AWS Reserved Instance, you get a larger discount but lack the ability to exchange that instance. With a convertible AWS Reserved Instance, you pay more, but you can exchange it for another instance type at any time.
So, how do you choose between the two Amazon Reserved Instances? Consider your project specifics.
A standard AWS RI should be chosen when you have steady and predictable workloads that remain consistent over the entire reservation term. An example of such a workload is a company's production database server. Such a server is a critical backend for various applications. Requirements for its resources remain constant for extended periods. For example, reads and writes to the database follow a consistent pattern. It is unlikely that they experience significant changes in the short term.
A convertible AWS RI should be chosen when you anticipate changes in your workload or instance requirements during the reservation term. An example of a project with expected changes is an e-commerce website. Such a website may have seasonal traffic fluctuations, which leads to higher resource demands on its servers. However, outside of these peak periods, the traffic returns to a normal level. With convertible RIs, you can adjust the instance configurations to match the increased demand.
Right-size your AWS reservations
It is necessary to select the RI size and configuration that meet your project needs. If you want to utilize AWS reserved instances with maximum efficiency, avoid overcommitting or underutilizing resources. Here is what you should pay attention to when selecting your AWS reservation capacity:
Project duration. Amazon provides standard reserved instances for either a one-year or a three-year duration. You should choose the appropriate duration plan depending on your project's workload stability and resource needs. Also, consider your budget when deciding your plan duration. If you don't want to pay the whole sum in advance, you can use partial upfront or no upfront payment options. If you want to buy AWS Reserved Instances for a shorter time, you can check the Reserved Instance Marketplace and buy them from individual sellers rather than the AWS provider.
Instance family. An AWS instance family is a group of EC2 instances with similar characteristics. You should choose an instance family depending on your project needs. For example, select a compute-optimized instance if you do media transcoding or scientific modeling. Opt for a memory-optimized instance if you perform real-time processing of big data or run a business intelligence app.
Number of projects or teams. If you have multiple AWS accounts within the same organization, consider sharing AWS Reserved Instances within the consolidated billing family. By sharing RIs, you can minimize costs, allocate resources efficiently, and optimize management. You can also enable different teams or projects to collaborate and utilize reserved capacity without duplicating efforts.
Leverage AWS cost explorer
AWS Cost Explorer is a tool to help you understand and manage your spending on AWS services. It allows monitoring spending patterns to optimize costs and increase resource consumption efficiency.
Here are the steps to use AWS Cost Explorer to analyze AWS Reserved Instances:
1. Access AWS cost explorer. You can find it in the AWS Cost Management console.
2. Choose the date range for analysis. You can choose specific dates or predefined periods (e.g., last month, last quarter).
3. Filter by service and usage type. Under Group by, select Service and choose Amazon EC2 as the service. Within Usage Type, select EC2: Running Hours.
4. Explore the utilization of AWS Reserved Instance. In the navigation pane, click Reservation under Cost and Usage Analysis. Here, you can view your AWS Reserved Instance utilization and see how much of your reserved capacity you've used compared to your total EC2 usage.
5. Analyze savings plans and RIs. Under Reservation Summary, you can see the breakdown of your AWS Reserved Instances and Savings Plans, including utilized and unused hours.
6. View usage trends. Explore the Usage tab to see how your usage of RIs changes over the selected date range.
7. Customize and export data. Use filters, tags, and other options to customize your analysis further. You can save your customized reports for future reference or export the data for deeper analysis.
Mix AWS Reserved Instances with Spot and On-Demand Instances
You can mix AWS Reserved Instances with Spot and On-Demand Instances. This will help you significantly reduce costs spent on AWS resources.
AWS On-Demand Instances allow you to pay for computing capacity on an hourly or per-second basis. This may be beneficial for specific scenarios, such as launching virtual servers or running short-term data processing tasks. The main benefit of AWS On-Demand Instances is that you do not have long-term commitments or upfront payments. However, the downside is that On-Demand Instances are more expensive than AWS Reserved Instances.
AWS Spot Instances are spare computing capacity available on the AWS cloud. They are offered at significantly reduced prices compared to AWS Reserved Instances or On-Demand Instances. You can bid for this unused capacity, and if your bid price exceeds the current Spot price, you gain access to the instance. However, note that AWS can terminate the Spot Instance with short notice. This may happen if the Spot price rises above your bid price or if the capacity is needed by AWS Reserved Instances On-Demand Instances.
Use Auto Scaling
AWS Auto Scaling is a service that automatically adjusts the number of Amazon EC2 instances based on user-defined policies. This is a handy way to maintain application performance at the optimal level and ensure efficient resource utilization.
To use Auto Scaling for managing AWS Reserved Instances, do the following:
1. Create an Auto Scaling group
Log in to your AWS Management Console
Navigate to the Amazon EC2 Dashboard
Click
Auto Scaling Groups
and then
Create Auto Scaling group
Define your group's launch configuration, instance type, and other parameters
2. Configure scaling policies
Define CPU utilization, network traffic, and other CloudWatch metrics
Configure scaling actions. For example, define specific instances to be added or removed when certain thresholds are met
3. Use AWS Reserved Instances
To leverage AWS Reserved Instances, ensure that your Auto Scaling group instances match the instance type and attributes covered by your RIs
AWS Reserved Instances are automatically applied to instances that match the attributes you've reserved
4. Mix with On-Demand Instances
You can mix AWS Reserved Instances and On-Demand instances within the same Auto Scaling group
This allows you to utilize RIs for predictable workloads while dynamically adding On-Demand instances during traffic spikes
5. Monitor and adjust
Monitor your Auto Scaling group's performance and resource utilization
Adjust your scaling policies and instance attributes to minimize cost and optimize performance
Implement tagging
Tags help categorize, organize, and track resources in your AWS environment. Here's how to use tagging to manage AWS Reserved Instances:
1. Create meaningful tags
Define tags that align with your project needs. You can use descriptive tags (e.g.,
Environment, Application, Owner) or tags based on usage (e.g., Production, Development)
Ensure consistent naming to make tagging useful and clear
2. Tag during purchase
Apply relevant tags to each reservation. This will help you identify the purpose of RI right from the start.
3. Tag existing RIs:
Apply tags for AWS Reserved Instances already in use
Go to the Amazon EC2 Dashboard, select "Reserved Instances," choose the RI, and click
Add/Edit Tags
4. Use key-value pairs
Create tags consisting of key-value pairs, for example, "Environment" with the value
Production
Utilize these pairs to categorize AWS Reserved Instances based on attributes that matter to your management and cost allocation
5. Utilize automation
Use AWS Resource Groups or AWS Config to automate the process of tagging
6. Manage your AWS Reserved Instances easily
Quickly filter and search for specific RIs
Allocate resources based on cost attributes
Monitor RI utilization and optimize reservations
Identify underutilized RIs
Utilize AWS Reserved Instance Marketplace
The Reserved Instance Marketplace is an Amazon platform that allows users to buy and sell unused RIs. It benefits both buyers and sellers because the former can monetize their excess capacity, and the latter get RIs for lower prices.
Here's how to use the AWS Reserved Instance Marketplace:
For sellers:
List the AWS Reserved Instances that you no longer need due to changes in your workload
Set your price. It can be higher or lower than the standard AWS pricing
List the RIs through your AWS Management Console
For buyers:
Browse listings
through your AWS Management Console
Compare the prices of RIs listed on the Marketplace with the standard AWS pricing
Purchase an AWS Reserved Instance once you find a suitable option
It's important to note that some risks are associated with purchasing AWS Reserved Instances on the Marketplace. For example, listings might not perfectly meet your needs, and specific RIs might be unavailable.
Use AWS Trusted Advisor
AWS Trusted Advisor is a service that provides recommendations to optimize your AWS infrastructure. By analyzing your AWS environment, it can offer actionable insights on how to improve performance, security, fault tolerance, and more.
Here is what AWS Trusted Advisor can do to optimize your Reserved Instances:
Highlight AWS Reserved Instances that are consistently underutilized or overprovisioned
Offer recommendations for right-sizing your instances based on actual utilization
Identify idle instances or instances with low CPU utilization
Recommend how to organize your resources with tags and attributes
Provide insights into your IT infrastructure security and fault tolerance
To use AWS Trusted Advisor for managing RIs:
Log in to your AWS Management Console and navigate to the Trusted Advisor dashboard
Check recommendations provided by Trusted Advisor for cost optimization, performance improvement, security, and fault tolerance
Make informed decisions about your RI strategy
Benefit from consolidated billing
If you have multiple AWS accounts, you can combine them to simplify payment. While consolidated billing itself doesn't directly affect the use of AWS Reserved Instances, it can help you optimize their usage and decrease costs.
So, here is how you can get started with consolidated bills:
Set up consolidated billing by creating an AWS Organization
Purchase RIs in the Payer Account. This is the main billing account responsible for purchasing AWS Reserved Instances
Allocate RIs to specific member accounts after purchasing them in the Payer Account
Monitor your RI usage across member accounts
Modify and exchange RIs if your workloads change
Educate account managers about the usage of AWS Reserved Instances
Set up and adjust the AWS Reserved Instances strategy
Do not rush to buy large capacities immediately, especially if you have a new project or are unfamiliar with AWS infrastructure. It makes sense to start with On-Demand Instances to assess how certain services work and then switch to Reserved Instances. You can also use the partial upfront or no upfront payment options to minimize costs in the initial phase. Additionally, you could start with convertible Amazon Reserved Instances and exchange them for other instance types if they don't work for you.
Once you set your RI strategy, gradually review it. Here's a step-by-step guide on how to do this effectively:
Set a review schedule.
Depending on your organization's needs, this might be monthly, quarterly, or annually. Also, consider reviewing AWS Reserved Instances after significant workload or cost changes.
Gather usage data.
Collect data about your instance types, regions, and utilization rates.
Identify underutilized RIs.
Instances with low utilization are good candidates for modification or sale.
Identify overages.
Instances that exceed your RI coverage are billed at on-demand rates. In some cases, it might be beneficial to convert them into Reserved Instances.
Document changes.
Keep a record of all modifications and provide the rationale behind these decisions.
Seek expert guidance.
If your organization has a complex AWS infrastructure, consider consulting with AWS experts or third-party partners for optimization recommendations.
Need help with managing your AWS Reserved Instances?
According to Gartner Magic Quadrant, AWS is the leading cloud provider on the market. It provides various cloud services for enterprises and startups and has a flexible yet complex pricing system.
Amazon Reserved Instances is a purchasing option allowing you to reserve AWS capacity for a long period and, thereby, save money on AWS resources. However, managing Reserved Instances, like other AWS services, is daunting for non-technical professionals.
To select the perfect AWS services for your project, you need deep expertise in cloud development in general and AWS development in particular.
At Erbis, we have been developing cloud-based applications for 11 years. We have experience with projects of various sizes and industries, as well as expertise with different cloud platforms, including AWS.
If you are looking for experts to help you manage your Reserved Instances and other AWS resources, you are in the right place. Contact us today to upgrade your cloud strategy and reserve AWS instances at the most attractive price.
