Cloud FinOps, 2nd Edition

Chapter 18. Building a Commitment-Based Discount Strategy

Now that you understand the fundamentals of commitment-based discounts as described in the previous two chapters, it’s time to ask some tough but important questions:

• How much should you commit?

• What should you commit?

• When should you commit?

• Who should be involved in the process?

• How do you know your commitments are being fully utilized?

• How do you know when to repurchase them?

• Who should pay for them?

• How do you allocate the costs and savings over the commitment term?

Unfortunately, there are no definitive answers—only the answers that are right for a company at a particular time. Those answers may change considerably as you move through the FinOps maturity curve, as the cloud providers update their ever-changing commitment models, and as your company’s cash reserves change.

Common Mistakes

We see companies make a number of errors when working with commitment-based discount programs. In no particular order, these are:

• Delaying making commitments for too long

• Making commitments that are too conservative

• Committing based on the number of unique instances instead of a waterline (covered later in this chapter)

• Not managing commitments after purchasing them

• Buying the wrong types of commitments

Nearly everyone gets some part of their early strategy wrong. That’s OK. This is the early maturity stage. You can think of it like learning to ride a bike or writing your first bits of code—it’s a learning process that may take ...