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What are overages in SaaS?

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In SaaS, overages refer to the additional costs or fees that are incurred when a user exceeds the contracted usage limits or terms of their plan. Examples of overages include user overages, storage overages, API usage overages, feature overages and support overages.

What is a Master Service Agreement?

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A Master Service Agreement (MSA) is a contract between two parties, in this case the software provider and the buyer, outlining the terms and conditions of the agreement. It will typically cover pricing, payment terms, service levels, intellectual property rights, confidentiality, liability, termination, and dispute resolution.

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Unlike a service level agreement (SLA) which outlines the specific performance metrics and criteria for the delivery of a particular service, for example uptime guarantees and support response times, an MSA covers the broader terms of the business relationship.

What is a single-tenancy environment in cloud computing?

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A single-tenancy environment, also known as dedicated hosting or a dedicated instance, refers to a situation where each user or tenant has their own dedicated infrastructure and resources, including servers, storage and network components. These resources aren’t shared with any other users, maximizing performance and control.

What is FinOps?

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FinOps refers to financial operations. In relation to cloud technology, Cloud Financial Operations is a practice that focuses on aligning cloud costs with business objectives and improving overall financial management in the cloud. When implemented correctly, it can provide you with a better understanding of your cloud spending patterns, enabling you to make more informed decisions on how to allocate and manage your costs.

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 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.