Describing Reserved Instance behavior in AWS Organizations

In AWS Organizations, the RI benefits can be shared across the accounts within the organization, optimizing costs at an aggregated level. Here’s an overview of how Reserved Instance behavior works in an AWS Organization setting.

Reserved Instances Basics

Before we delve into their behavior in AWS Organizations, let’s quickly review what RIs are. When you purchase an RI, you’re committing to use a specific instance type for a predetermined period. This commitment comes with up to a 75% discount compared to on-demand rates. RIs can be purchased in three payment options:

• All Upfront: You pay for the entire RI term with one upfront payment.
• Partial Upfront: You pay a portion of the RI upfront, and the rest is billed monthly.
• No Upfront: You do not pay anything upfront but commit to a monthly payment for the term of the RI.

Reserved Instance Types

There are two primary types of RIs in AWS:

• Standard Reserved Instances: These offer the most significant discount but are less flexible. You can’t change the instance type, although you can modify the Availability Zone, scope (regional or Availability Zone), and networking type.
• Convertible Reserved Instances: These provide a lower discount but allow you to change the instance attributes (e.g., instance family, OS, etc.), as long as the exchange leads to Reserved Instances of equal or greater value.

Reserved Instance Benefits in AWS Organizations

When part of an AWS Organization, Reserved Instances purchased by any account in the organization can potentially apply to the usage of other accounts within the same organization. This is called “RI pooling” or “RI discount sharing” and helps to maximize the utilization of RIs and the cost benefits associated with them. Here’s how it works:

• Reserved Instance Pooling: Unused RI hours can be applied to usage in other accounts within the organization, allowing flexibility and centralized management of computing resources.
• Scope: Reserved Instances can have a regional scope, which means they apply to any instance of the specified type launched in that region across the organization, instead of being tied to a specific Availability Zone.
• Billing: The account that purchased the RI receives the discounted rate for the capacity they use. If there is excess capacity, other accounts benefit from the discount, but the charges appear on their own billing statements.
• Visibility and Control: Management accounts have visibility into all RIs owned across their organization and can centrally manage these instances.

Practical Example

Imagine an AWS Organization with two accounts – Production and Development. The Production account purchases a set of m5.large RIs with regional scope for 1 year with partial upfront payment. If the Production account’s m5.large usage doesn’t consume all of the reserved capacity, and the Development account launches an m5.large instance in the same region, the RI discount would automatically apply to the Development account’s instance.

This automated discount application without the need to manually transfer or re-allocate the RI makes cost management more streamlined.

Considerations for RI Use in AWS Organizations

• Consolidated Billing: Only accounts within an organization that has consolidated billing enabled can share RIs.
• Coverage and Utilization: To maximize savings, you should track RI coverage and utilization across your organization and adjust your purchasing strategy as necessary.
• RI Marketplace: RIs can be sold on the AWS Reserved Instance Marketplace if you have excess capacity, adding flexibility to your purchasing strategy.
• Policies and Permissions: Use service control policies (SCPs) to govern who can purchase RIs within your organization to ensure alignment with your budget and cost optimization strategies.

Monitoring and Management Tools

AWS provides tools such as AWS Cost Explorer to report and analyze the utilization and impact of RIs within your organization, and AWS Budgets to set custom cost and usage budgets.

In conclusion, leveraging Reserved Instances within AWS Organizations can offer substantial cost savings. By effectively managing RI purchases and understanding the benefits and rules governing RI behavior across accounts, organizations can optimize their AWS costs while maintaining the flexibility required by different teams or departments.