Best Practice 18.1 – Understand the payment and commitment options available for Amazon EC2 - SAP Lens

Best Practice 18.1 – Understand the payment and commitment options available for Amazon EC2

Consider the use of Reserved Instances and Savings Plans to provide a significant discount compared to on-demand pricing. They are available with 1-year and 3-year commitment terms with three payment options: All Upfront, Partial Upfront, and No Upfront.

Suggestion 18.1.1 – Understand the breakeven points between pricing models

Reserved Instances are categorized into Standard Reserved Instances (up to 72% discount off on-demand rates) and Convertible Reserved Instances (up to 54% discount off on-demand rates). Savings Plans are categorized into Compute Savings Plans (up to 66% discount off on-demand rates) and EC2 Instance Savings Plans (up to 72% discount off on-demand rates).

The discount off the Amazon EC2 on-demand hourly rate you can achieve will depend on the following factors:

  • Commitment term selected

  • Payment option selected

  • Reserved Instance or Savings Plan type selected

  • Instance family

Memory-optimized instance families, such as X2, X1, and X1e, provide higher savings for commitment. Therefore, understanding pricing options is important for SAP, particularly for SAP HANA workloads.

Use the advanced option within the AWS Pricing Calculator to determine the break-even point. You should be aware of the assumptions used by this calculator. To illustrate this, consider the example where we use the following formula to determine the point using a Reserved Instance or Savings Plan will provide a lower TCO than using on-demand for each instance family.

(Effective Hourly rate of Commitment / Hourly rate of On-Demand) * 730 hours

Reference the effective hourly rate for each RI commitment term and type and for each Savings Plan commitment period and type. Compare and contrast the following examples illustrating different break-even points:

Example 1: In North Virginia (us-east-1), for the M5 family, the breakeven where a 3 year no upfront Standard Reserved Instance or EC2 Savings Plan would offer a lower TCO is 315 hours per month (~16 hrs a day, Monday to Friday).

Example 2: In North Virginia (us-east-1), for the X1 instance family, the breakeven where a 3 year no upfront Standard Reserved Instance or EC2 Savings Plan would offer a lower TCO is 235 hours per month (~12 hrs a day, Monday to Friday).

Use comprehensive guidance on cost management and the Well-Architected Framework Cost Optimization Pillar. The following SAP on AWS Pricing Guide also provides guidance specific to SAP workloads running on AWS. When analyzing costs, be aware that all AWS pricing (with the exception of the AWS China Regions) is in US dollars (USD). However, it is possible to select an alternative currency for payment: currencies AWS currently supports.

Suggestion 18.1.2 – Understand the considerations of each pricing model relevant to SAP

In addition to the hourly rate discount, there are other benefits of Reserved Instances and Savings Plans you should consider. This AWS Documentation: Comparing Savings Plans to RIs table provides a comparison of Reserved Instances and Savings Plans.

Zonal Reserved Instances can be used to provide capacity reservations within a specific Availability Zone. Savings Plans do not provide a capacity reservation but you can combine with On-demand Capacity Reservations to provide the same features of a Zonal Reserved Instance. See [Reliability]: Best Practice 10.2 - Select an architecture suitable for your availability and capacity requirements, for further information on capacity strategies.

Amazon EC2 Spot Instances let you take advantage of unused EC2 capacity in the AWS Cloud. Spot Instances are available at up to a 90% discount compared to On-Demand Instance prices. Spot Instances can be reclaimed by AWS with two-minutes notice when AWS requires the capacity. Therefore, Spot Instances are not generally suited for running SAP workloads.

When using on-demand instances, you should consider the additional operational impact of stopping and starting the SAP systems and underlying EC2 instances based on the required operating hours in addition to application performance impact each time the system is started.

Suggestion 18.1.3 – Evaluate your enterprise strategy for consolidated billing and sharing of Reserved Instance and Savings Plans commitment

With Consolidated Billing, Reserved Instances and Savings Plans are applied to usage across all accounts within an AWS Organization. The management account of an organization can turn off the Reserved Instance discount and Savings Plans discount sharing for any accounts in that organization, including the management account. This means that Reserved Instances and Savings Plans discounts aren't shared between any accounts that have sharing turned off. To share a Reserved Instances or Savings Plans discount with an account, both accounts must have sharing turned on. This preference isn't permanent, and you can change it at any time.

A key factor that will determine your strategy for sharing of commitment will be the overall AWS account strategy your organization has adopted. Whether your SAP workloads are running in their own dedicated AWS accounts or along with other workloads hosted in AWS should also be considered. To understand how discounts for Reserved Instances and Savings Plans are applied across your organization’s consolidated bill refer to:

As detailed in SAP note: 1656250 - SAP on AWS: Support prerequisites [Requires SAP Portal Access], SAP on AWS is only supported if a fee-based AWS Support agreement (Business support or higher) is in place. Determine the appropriate support plan based on cost and requirements.

Be aware that AWS calculates support fees independently for each member account within an organization.