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Commitments & Reservations

Commitments and reservations exchange flexibility for lower prices. his guide describes how to use Cloudaware Cost Management to analyze coverage, utilization, and effective cost for AWS Reserved Instances and Savings Plans, Azure Reservations, and Google Cloud Committed Use Discounts (CUDs).

Use this guide to understand the main commitment types, track key KPIs, and plan purchases that reduce cost without creating underused or overcommitted spend.

Why Commitments Matter​

Used well, commitments can deliver substantial savings compared to on‑demand pricing. Used poorly, they can lock in spend on under‑used resources or obsolete architectures.

Key questions include:

  • How much eligible usage is covered by commitments?
  • Is existing purchased commitment fully utilized?
  • Where should more or less commitment be purchased?

Types of Commitments​

Examples by provider include:

  • AWS: EC2, RDS, Redshift, and OpenSearch Reserved Instances; Compute and EC2 Savings Plans.
  • Azure: Reservations for VMs, databases, and other services.
  • Google Cloud: Committed Use Discounts (CUDs) for compute and other services.

Cloudaware ingests commitment usage and coverage data from provider billing and cost-management exports to calculate effective cost, coverage, and utilization metrics.

Coverage and Utilization KPIs​

Important metrics include:

  • Coverage — percentage of eligible usage hours or spend covered by commitments.
  • Utilization — percentage of purchased commitment that is actually used.
  • Effective cost — amortized cost per unit of usage, including upfront and recurring commitment charges.

Dashboards and reports in Cloudaware can show these KPIs by provider, service, region, and scope (BU, app, customer) to guide planning. For example, see the AWS SP Coverage & Utilization dashboard.

Planning and Managing Commitments​

Use the following workflow to evaluate commitment opportunities, plan purchases, and monitor whether commitments continue to deliver expected savings:

  1. Assess current state.
    • Review coverage and utilization across providers and services.
    • Identify underused commitments and areas with low coverage but stable usage.
  2. Forecast future usage.
    • Use Cost Management forecasts and knowledge of upcoming projects to estimate baseline usage for the next 1–3 years.
  3. Design the commitment strategy.
    • Choose commitment types, such as instance-specific reservations or flexible Savings Plans, and terms, such as 1-year or 3-year commitments.
    • Balance savings potential against overcommitment risk.
  4. Execute purchases.
    • Coordinate with finance and procurement where required.
    • Document the rationale for each purchase for future reference.
  5. Monitor and adjust.
    • Track utilization and coverage over time.
    • Adjust future purchases or architectural choices if usage patterns change.

Use commitment dashboards and KPIs as a standard part of optimization reviews.