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If your company has a spending commitment with AWS in order to get a few percent savings, and it's just barely hitting the contracted amount, it may not be wort

If your company has a spending commitment with AWS in order to get a few percent savings, and it's just barely hitting the contracted amount, it may not be worth the effort to pursue any cost savings. Suppose your company has committed to hit 5M in spend, and they're just barely inching over the line at 5.01M. You might spend a bunch of time and labor expense knocking it down to 4M of usage and not really move the bottom line at all. > (2) I can do this on my own time and keep some % of the savings for myself as a reward This is a textbook case of perverse incentives.

deepsun 3y ago
Yep, that's how AWS sales make money. Theoretically, your company could reduce their commitment to 4M next year, but the AWS sales would start negotiating hard against it, like "you will not get the same discount with less commitment".
- kthejoker2 3y ago
  Not only will you not get the discount you won't get the commit at all, AWS only reups commits with incremental growth. You can spend less; you just don't get commit pricing.
mk89 3y ago
I agree with this comment. Ironically, I was asked by a manager some time ago if we can imagine using some (more) resources from AWS to reach the next spending commitment. If you're just below the threshold, it's probably inconvenient. EDIT: To give some context: you can only do this, of course, when you know that you're not really wasting resources, otherwise you end up with just burning money to save little to no money :)
caeril 3y ago
Spending commitment on AWS? Are you referring to ec2 reserved instances? Even if you have one year reservations on your instances, starting service migrations/deprecations now would pay off quickly enough. Your commitment expires in 6 months, on an average basis.
- nevon 3y ago
  When you're a large enterprise customer you get private pricing in exchange for committing to spending a certain amount over a few years. This is unrelated to reserved instances and such.
echoangle 3y ago
Can you explain how this is perverse incentives? Wouldn’t this actually be a good way to align incentives of the employee and the company (it makes both of them want to save money)? Or do you mean it makes the employee increase cost unnecessarily from time to time so he can reduce it later?
- throwaway883322 3y ago
  I am not the parent poster, but I think your last sentence covers it well.

deepsun 3y ago

Yep, that's how AWS sales make money. Theoretically, your company could reduce their commitment to 4M next year, but the AWS sales would start negotiating hard against it, like "you will not get the same discount with less commitment".

kthejoker2 3y ago
Not only will you not get the discount you won't get the commit at all, AWS only reups commits with incremental growth. You can spend less; you just don't get commit pricing.

mk89 3y ago

I agree with this comment. Ironically, I was asked by a manager some time ago if we can imagine using some (more) resources from AWS to reach the next spending commitment. If you're just below the threshold, it's probably inconvenient. EDIT: To give some context: you can only do this, of course, when you know that you're not really wasting resources, otherwise you end up with just burning money to save little to no money :)

caeril 3y ago

Spending commitment on AWS? Are you referring to ec2 reserved instances? Even if you have one year reservations on your instances, starting service migrations/deprecations now would pay off quickly enough. Your commitment expires in 6 months, on an average basis.

nevon 3y ago
When you're a large enterprise customer you get private pricing in exchange for committing to spending a certain amount over a few years. This is unrelated to reserved instances and such.

echoangle 3y ago

Can you explain how this is perverse incentives? Wouldn’t this actually be a good way to align incentives of the employee and the company (it makes both of them want to save money)? Or do you mean it makes the employee increase cost unnecessarily from time to time so he can reduce it later?

throwaway883322 3y ago
I am not the parent poster, but I think your last sentence covers it well.