Cloud Cost Optimization

What is Cloud Cost Optimization?

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Cloud cost optimization refers to the process of reducing and optimizing cloud spending, while ensuring optimal resource utilization and maintaining desired performance levels. It ultimately involves managing cloud costs without compromising business objectives or user experience.

What is a SaaS stack?

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A SaaS stack is a collection of software-as-a-service (SaaS) applications and tools that are used across an organization. While the specific contents of any SaaS stack will vary depending on the nature of the business, it will typically consist of communication, collaboration, sales, marketing, HR, finance and data analytics software.

What is an auto-renewal clause?

‍Auto-renewal is a term often used in SaaS agreements referring to the automatic renewal of a user’s subscription plan at the end of their contract term. These auto-renewal clauses will automatically extend the user’s subscription for another period, typically the same duration as the initial term, unless the customer explicitly cancels or modifies their subscription by a specified date. This is often referred to as a termination window and is typically either 30, 60 or 90 days prior to the renewal date.

What are reserved instances?

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Reserved Instances (RIs) are a pricing and capacity reservation offering provided by AWS for their EC2 (Elastic Compute Cloud) and RDS (Relational Database Service) services.

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They specifically allow users to commit to using a specific instance type in the same region for either a one or three-year term, in exchange for discounts of up to 72% – the exact discount is ultimately dependent on the commitment term, instance type, availability zone and region.

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There are various types of Reserved Instances available, each with different terms and levels of flexibility. Standard Reserved Instances provide the highest cost savings but are the least flexible, whereas Convertible Reserved Instances offer more flexibility by allowing you to change instance families within the same instance type.

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In contrast, Scheduled Reserved Instances offer a lower discount, but allow you to reserve capacity for specific time windows, such as business hours or weekends, providing cost savings for predictable workloads.

What are pricing benchmarks?

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In SaaS, price benchmarking often refers to the process of comparing the cost of software to that of an alternative provider. Using this insight, buyers may be able to leverage a more favorable counteroffer from their vendor of choice. The most effective approach to benchmarking prices and securing the best possible deal on any subscription, however, is to find out what other similar companies are actually paying for the software.

What is decentralized procurement?

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Decentralized purchasing in SaaS refers to the process of allowing individual departments or teams within an organization to make their own purchasing decisions for software applications. This is in contrast to a centralized purchasing model, where all purchasing decisions are approved by a single procurement team or a department such as finance.
While a decentralized purchasing model can provide teams with the flexibility to select and purchase the tools that best meet their needs, without having to wait for approvals or navigate bureaucratic purchasing processes, it can create challenges for the company. This can include reduced buying power, higher costs, lack of control over vendor relationships, and increased compliance and legal risks.