Cloud Instances

What are spot instances?

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As with any cloud service provider, AWS will have spare capacity available to support surges in customer demand. To offset the loss, AWS offers this excess EC2 capacity – in other words, spot instances – at a heavily discounted rate.

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To benefit from these spot instances, users must bid on this unused EC2 capacity in their desired region. The capacity is then allocated to the highest bidder. While it can be a great way to reduce costs by as much as 90%, it is only suitable for workloads that can tolerate interruptions and don’t require continuous availability. This is because AWS will terminate the instance after a two-minute notification in the event that it needs to reclaim the resources, or because the spot price exceeds the bid price. In other words, when other customers are willing to pay more.

What is an ELA?

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An Enterprise License Agreement (ELA) is a contract between a software vendor and an enterprise customer that sets out the terms and conditions for the licensing of software products across an enterprise. Unlike a Master License Agreement (MLA) which is a more comprehensive business agreement that can cover a range of products and services, an ELA is often used for specific software products.

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While the specific terms and conditions of an ELA can vary, it will typically outline the number and type of licenses covered under the agreement, restrictions or limitation on usage, the duration of the agreement, the fees associated with the license, renewal terms and termination clauses.

What is auto-scaling?

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Auto-scaling refers to the automatic adjustment of cloud computing resources based on an organization’s current demand and workload. It dynamically adjusts the allocation of resources to match the evolving requirements of an application or system without the need for manual intervention.

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There are a number of benefits to using auto-scaling, the first being cost efficiency. By ensuring that resources are scaled up or down as and when needed, organizations can avoid over-provisioning and subsequently reduce unnecessary expenses. It also helps maintain consistent performance levels by automatically adding resources during peak demand periods.

What is tail spend?

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Tail spend refers to the unmanaged purchases made within an organization that fail to pass through an official procurement process. On account of their low value, the costs incurred by these purchases are seldom monitored by financing teams as they are generally too small to be deemed “strategic”. The problem, however, is that they can make up as much as 20% of a business’ total spend.

What is a reduction clause?

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A reduction clause refers to a provision in a software agreement that allows customers to reduce the number of licenses or users covered by their subscription during the term of an agreement. This provides customers with flexibility to adjust their plan to meet evolving business needs, while avoiding paying for licenses or users they no longer require or needing to terminate the contract. The specific terms and requirements of a reduction clause may vary depending on the SaaS provider and the subscription agreement, for example it may be subject to a minimum number of licenses or users.

What is meant by outsourced SaaS procurement?

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Outsourced procurement in SaaS refers to the process of hiring a third-party vendor to manage some or all aspects of a company’s procurement process. This can involve negotiating with vendors on your behalf to secure the best possible price and terms on any SaaS contract, while also refining, implementing and enforcing procurement processes that ultimately protect your business.