AWS EDP: How It Works and Why Automation Will Give You Better Results
AWS offers several discount programs that promise cost savings. One of them is the AWS Enterprise Discount Program (EDP), which comes with specific conditions based on the level of predicted growth in your cloud spending.
What is AWS EDP, how does it work, and how can you qualify? This article dives into the topic to help you understand the challenges of AWS EDP and see why alternative solutions may be a better option.
What is the AWS Enterprise Discount Program (EDP)?
The AWS Enterprise Discount Program (EDP) is a savings program aimed at enterprise cloud users with a proven track record of considerable AWS cloud consumption, often $1 million or more per year.
It provides a discount on total AWS billing that increases with total spend and the length of the commitment period, which is typically 1 to 5 years. The actual discount is flexible and based on specific agreements.
The idea behind this and many other discount programs is to encourage long-term, high-volume use of AWS resources and greater involvement with the AWS ecosystem through incentive pricing structures.
The greatest benefit of an Enterprise Discount Program is that it enables large-scale, high-volume businesses to save more money on AWS services that they already use.
How does AWS EDP differ from AWS Private Pricing Agreement (PPA)?
The AWS Private Pricing Agreement (PPA) and AWS Enterprise Discount Program (EDP) are quite similar. AWS account managers often use both terms when talking with eligible users about a committed spending discount.
Both programs are designed to deliver discount benefits to clients who commit to a certain level of spending over a set time period. The underlying premise remains the same: provide a pricing advantage to clients who make a significant, long-term commitment to using AWS services.
What are the Eligibility Requirements for AWS EDP?
The standard eligibility for the EDP is generally determined by a customer’s historical or future AWS spending, which is $1 million or more per year.
AWS requires that your annual commitment not be less than the pledge from the prior year. For example, if you committed to $3 million in 2024, you can’t lower your commitments to $2.75 million by 2025.
Another important condition to note is that EDP discounts don’t count towards your overall annual commitment. For example, if you spend $2 million but receive $200,000 in benefits, your total annual commitment is $1.8 billion.
AWS also asks companies that participate in the AWS EDP program to sign up for AWS Enterprise Support, which considerably increases their user fees.
Negotiating AWS EDP: four key points
Keep these points in mind when preparing for contract negotiations:
Forecast growth, compute, and use demands
Your product and engineering growth goals may significantly impact AWS expenses for various services. Working with your finance and engineering teams to accurately predict compute and consumption demands over the next few years is critical to cost management.
Examine your previous AWS spending and consider the elements and variables that may influence future user requests. These considerations may include user and market trends, the cost of cloud services, legal and compliance needs, security issues, and others. Needless to say, this goes for a wide range of services, such as Amazon S3, EC2, RDS, and others.
Understand workloads and AWS costs
Estimate the total cost of ownership (TCO) of AWS services through the EDP program. How do they compare to your alternatives?
Understand where your usage patterns are heading. How can external variables influence your network traffic and demand spikes? What is the ROI of your business plan to increase AWS EDP commitments?
Take AWS Marketplace applications into account
Examine the programs your engineering team uses and look in the AWS Marketplace. Spending on AWS Marketplace apps might contribute to your committed expenditure.
Optimize EDP targets
Optimize your EDP targets to prevent incurring additional expenses resulting from underspending or overpaying on your EDP commitment. Set your commitment thresholds just below your expected usage demands to avoid losing money due to service underconsumption.
Use these points to prepare for negotiations on the AWS EDP to significantly lower your AWS bill.
Alternatives to AWS EDP
AWS provides cost-effective payment structures based on frequency, volume, and commitment tenure. Here are two example alternatives to AWS EDP:
Reserved Instances (RI) provide significant savings (up to 75% off on-demand) but have the least flexibility. Standard RIs need a commitment to a specific compute type (e.g., instance family, region, operating system).
An AWS Savings Plan (SP) provides discounts (up to 72% off on-demand) in exchange for a commitment to use a specific amount of compute over a one- or three-year period. SPs provide more flexibility than RIs and are automatically applied by AWS to the spend that will result in the highest discount.
Whether you’re considering AWS EDP or its alternatives, remember the challenges and risks of committed cloud spending.
Why is committed spend risky?
Here are the risks associated with committing to a specific level of usage or spend in AWS:
Forecasting challenges
Making accurate usage estimates is a massive challenge, even for large teams equipped with cost forecasting tools. When faced with a new issue, your team may need to commit to even more or risk being stuck with unused capacity that you have already paid for. Either way, you’re on the losing end.
High cost for changing requirements
When you commit to specific resources or levels of usage, you expect that your needs will remain the same throughout the contract. However, in the cloud world, a year’s commitment is an eternity.
Vendor lock-in
Another risk is getting locked into an agreement with one cloud service provider. What if three years from now, your engineering team won’t find a solution that supports them in launching a new project?
Save on the cloud without sacrificing flexibility
AWS EDP or Savings Plans can help you lower your AWS bill, but you’re still in charge of infrastructure optimization. And if you do it right, you might not need discounts at all.
If you manage a large cloud environment, you’ll need a system that automates VM and workload rightsizing. It takes time to determine which resources are in use, which families own them, and which teams control them. Trying to make sense of all 500+ EC2 instances offered by AWS is no easy feat. It may take many days or weeks to assess your inventory and utilization to determine which instances can be lowered.
An AI-powered cloud cost optimization solution can instantly detect unused components of your infrastructure and degrade or terminate assets without you having to lift a finger.
Cast AI will automatically optimize your configuration for the best cost and performance, allowing you to obtain more value from your cloud resources, even if you already have AWS EDP or Savings Plans in place.
If you use Kubernetes, connect your cluster and run a Savings Report to find how much you could potentially save by rightsizing your cloud resources.
