What are the benefits and challenges of using reserved or spot instances in the cloud?

Cloud cost optimization strategies are essential for any business that wants to leverage the benefits of cloud computing without breaking the bank. In this article, we will explore one of the most common and effective ways to reduce your cloud expenses: using reserved or spot instances. We will explain what they are, how they work, and what are the pros and cons of each option.

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1 What are reserved instances?

Reserved instances are a type of cloud service that allows you to reserve a certain amount of computing capacity for a fixed period of time, usually one or three years. By committing to a long-term contract, you can get a significant discount on the hourly or monthly rate of the instance, compared to the on-demand price. Reserved instances are ideal for workloads that have predictable and steady demand, such as web servers, databases, or analytics applications.

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2 What are spot instances?

Spot instances are a type of cloud service that allows you to bid on the unused or excess capacity of the cloud provider, and pay only for the time that you use it. The price of spot instances fluctuates based on the supply and demand of the market, and can be much lower than the on-demand price. However, there is a catch: the cloud provider can terminate your spot instance at any time, with a short notice, if the demand for the capacity increases or your bid is outbid. Spot instances are ideal for workloads that are flexible, fault-tolerant, and non-critical, such as batch processing, testing, or development.

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Zach Wheat, CISSP, CCSP

Senior Security Engineer at Wintrust Financial
When deciding on whether to use a spot instance, it is important to perform an evaluation of the activities that will be processed with the instance. If the instance terminates while in the middle of processing certain tasks a significant downstream effect may be noticed.
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3 How to choose between reserved and spot instances?

When deciding between reserved and spot instances, there are several factors to consider, such as budget, performance, availability, and scalability requirements. To make the best decision, ask yourself how predictable and stable your workload is, how tolerant it is to interruptions, and how scalable it is. If your workload is consistent and long-term, reserved instances can offer a lower and fixed cost. If it is variable and short-term, spot instances can offer a lower and flexible cost. If it is mission-critical or time-sensitive, reserved instances can offer a guaranteed and reliable service. If it can handle or recover from interruptions, spot instances can offer a cheaper and opportunistic service. If it can easily adjust to the changing capacity and price of the cloud, spot instances can offer a more efficient and dynamic service. If it requires a fixed or minimum capacity and price, reserved instances can offer a more stable and predictable service.

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Kabir Sharma

Business Capability Transformation I Consulting Leader I SAP & AI Enthusiast
In my experience, it also depends on the criticality of the application which has a bearing on the nature of workload. For example, SAP applications tend to be mission critical and hence selecting reserved instances for SAP apps can be a great benefit. You do need to cater to some amount of variability but that can be managed by predicting the uptime for your productive loads and reserving that for starters.
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Greg Powell

Creator, ThoughtfulTechy Cloud | Helping You Easily Navigate Your AWS Cloud & Tech Journey
There's another cost model called Compute Savings Plans. Compute Savings Plans aggregate spend (measured in $/hour) across EC2, Fargate, Lambda and have additional flexibility over Reserved Instances. Compute Savings Plans should be part of the overall decision criteria.
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DJ 🎙 Eshelman

I'm your next 🎤 Event Speaker/Podcast Guest! Also: 🖥️ EUC Consulting & Services| Evangelism as a Service |👂Coach: Individuals, Teams & Business Leaders |📽️YouTuber, ☕Podcaster, 📖Author, ✝️🧔♂️Husband, 🐈Kitty Daddy
Now that End User Computing is firmly "cloud first" there are a host of challenges specific to these kinds of workloads. For example, with Citrix DaaS you may find that utilizing a combination of AutoScale and Ephemeral disk, your pooled (non-persistent) workloads are faster and more cost-effective, as many customers are finding their true workloads for these may only cover a few hours of the day. In these cases, we are finding that simply having VMs active for under 12 hours of the day is CHEAPER than what the cost of a reserved instance would be. Keep in mind that on Azure, for example, a "reserved" instance is more of a pattern-matching discount for certain machine types, not assured availability! Caveat Emptor!
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4 How to combine reserved and spot instances?

One of the best practices for cloud cost optimization is to use a hybrid approach that combines reserved and spot instances, depending on your workload characteristics and objectives. For example, you can use reserved instances for your baseline and essential demand, and use spot instances for your peak and optional demand. This way, you can benefit from both the lower and fixed cost of reserved instances, and the lower and flexible cost of spot instances, while minimizing the risk of interruptions and overpaying.

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Tamilventhan Jayabalan

AWS Data Engineer at Intuit (Passionate about #AWS #AI #Ml #H1B #careerpath #cricket #tekken #MK #Tamil #book #entrepreneurship )
In my experience , spot instances are not always available, in cases where we need medium or large instances like m5.2xlarge or r5.8xlarge , these instances are always scare in spot . The best approach is to use instance fleet with reserved instances to make sure our job always runs without interruption. This approach is best for non critical pipelines for data lake jobs . If there are any SLA , please avoid using spots when you know that it requires big instances
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5 How to monitor and optimize your cloud cost?

Using reserved or spot instances is not a one-time decision, but a continuous process that requires constant monitoring and optimization. You should regularly track and analyze your cloud usage, performance, and cost, and adjust your instance types, sizes, and bids accordingly. You should also leverage the tools and services that your cloud provider offers, such as cost calculators, reports, alerts, and recommendations, to help you optimize your cloud cost and efficiency.

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What are the benefits and challenges of using reserved or spot instances in the cloud?

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1 What are reserved instances?

2 What are spot instances?

3 How to choose between reserved and spot instances?

4 How to combine reserved and spot instances?

5 How to monitor and optimize your cloud cost?

Cloud Computing

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What are the benefits and challenges of using reserved or spot instances in the cloud?

1

2

3

4

5

1 What are reserved instances?

2 What are spot instances?

3 How to choose between reserved and spot instances?

4 How to combine reserved and spot instances?

5 How to monitor and optimize your cloud cost?

Cloud Computing

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