Commitment Nomenclature Definitions

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General Terminology

  • Commitment-based Discounts : A commitment-based discount is a pricing model where customers commit to using a certain amount of cloud resources for a specified period in exchange for lower prices compared to pay-as-you-go rates.

  • Commitment : A commitment is the vendor agnostic, shorthand term used to describe these discounts across Cloudability.

  • Commitment Type : A commitment type is the Cloudability term chosen to describe the different offerings of these discounts. Explicitly used to differentiate the pricing model from the underlying service name.

  • Commitment Category : A term used to specify the means in which you formally commit, resource or spend.

  • Resource–based Commitments : Provides a discount in exchange for a commitment to a certain amount of usage on a product or service (Reserved Instance, CUD).

  • Spend-based Commitments : Provides a discount in exchange for a commitment to a certain amount of spend on a product or service (Savings Plan, Flexible CUD).

  • Committed Use Discounts (CUDs): GCP’s generic name for a commitment.

  • Sustained Used Discounts (SUDs): A GCP specific term for the discounts offered on Compute Engine resources that are used for more than 25% of a billing month and are not receiving any other discounts.

  • Commitment Portfolio : The single page used to provide an inventory of existing commitments and provide insight into the performance and risk of the commitments you currently own. This is the new page name for the combined Reservation and Savings Plans Portfolio.

  • Commitment Recommendations : The single page used to surface what is recommended that you purchase in pursuit of maximizing net savings. Called Recs for short in the left hand navigation menu. Previously this page was called the Reserved Instance Planner but was changed to reflect vendor agnostic terminology.

Commitment Portfolio Terminology

  • Performance Indicators : Metrics that quantify financial performance of commitments by measuring savings and accounting for all costs and pricing adjustments.

  • Risk Indicators : Metrics that assess the effectiveness and potential risks of your portfolio.

  • Net Savings : The first of two performance indicators, the portfolio net savings is the sum of savings minus the waste. For most types, the commitment is billed hourly, on a use-it-or-lose-it basis. This metric is used at both the individual commitment as well as the aggregate KPI level.

  • Effective Savings Rate : The second of two performance indicators, the effective savings rate is the portfolio-wide savings rate. It encompasses realized savings rate across commitments, uncovered eligible spend, and is net of custom pricing.

  • Savings Rate : The savings rate is the individual commitment realized discount rate given utilization.

  • List Savings Rate : The list savings rate is the individual commitment discount rate at full utilization.

  • Utilization : The rest of three risk indicators, utilization is the extent to which commitments are used compared to what was covered. This metric is used at both the individual commitment as well as the aggregate KPI level. For the KPI level, utilization is weighted and then aggregated across all commitments. High utilization indicates effective use of resources paid for.

  • Coverage : The second of three risk indicators, coverage, given as a percentage, demonstrates the relationship between what amount of usage was covered and what could have been covered. The relationship is represented in a modal and in terms of on-demand equivalent amounts.

  • Remaining Commitment Cost : The thirds and final risk indicator, the remaining commitment cost is what is owed from the current day until all commitments have expired, regardless of the reporting range selected. This metric is used at both the individual commitment as well as the aggregate KPI level.

Coverage Terminology

We have introduced several terms to help facilitate an understanding of how coverage is calculated and understood. The following terminology are used exclusively in the coverage modal. Note that it is important to understand that all values in the coverage modal are in terms of on-demand equivalent (ODE) costs.

  • Covered Amount : The amount commitments covered and was utilized. Note that all amounts are normalized in terms of ODE.

  • Resource Covered : The amount covered and utilized by a resource commitment.

  • Spend Covered : The amount covered and utilized by a spend commitment.

  • Spend covered, Resource Eligible : The amount covered and utilized by a spend commitment, that was eligible to be covered by a resource commitment.

  • Resource covered, Spend Eligible : The amount covered and utilized by a resource commitment, that was eligible to be covered by a spend commitment.

  • Total covered amount : The amount was covered by the given type or types.

  • Uncovered Amount : The amount a commitments did not cover. Note that these amounts are both ODE and cost since they were charged at on-demand prices.

  • Spend exclusive uncovered : On-demand usage (cost) that could have only been covered by a spend commitment.

  • Resource exclusive uncovered : On-demand usage (cost) that could have only been covered by a resource commitment.

  • Non-exclusive uncovered : On-demand usage (cost) that could have only been covered by either a resource or spend commitment.

  • Total uncovered amount : The amount that could have and was not covered by the given type.

  • Vendor Coverage Summary : Section in the coverage modal demonstrates coverage across the vendor to keep materiality into context.

  • Commitment ineligible : Cost which cannot be covered by a commitment. These costs arise from service costs or usage types that are not compatible with the terms of commitment agreements.

  • Total Service Amount : The total costs of a given service.

  • Sustained use discount Credits : A GCP specific construct that rewards monthly discounts for sustained usage. Minor but nevertheless should be considered.

Commitment Recommendations Terminology

Terms specific to the Recommendations page in Cloudability. These terms are directly comparable to the terms used in the portfolio.

  • Recommendations Summary Page : The landing page for commitment types where applicability is not simply at the account level. Most commitment types require this page to show all permutation of criteria such as region and instance/ machine type.

  • Recommendations Details Page/ Panel : The page/panel per recommendation that surfaces details and provides the user the ability to adjust the recommendation where applicable.

  • Net Savings : Savings of the recommendation(s) minus the estimated wastage. The waste is calculated off the estimated utilization based on the usage range provided.

  • Savings Rate : The estimated savings rate of the commitment(s) given the estimated utilization. This metric is used at both the individual commitment as well as the aggregate KPI level. At the aggregate level, it is weighted proportionally to the magnitude of the recommendations provided

  • Utilization : The estimated extent to which the commitments are used compared to what was covered. Similar to the portfolio utilization is weighted and then aggregated across all commitments. This metric is used at both the individual commitment as well as the aggregate KPI level.

  • Coverage : The current coverage is identical to the portfolio coverage percentage. It demonstrates the relationship between what amount of usage was covered and what could have been covered. The optimal coverage percentage KPI is expected future coverage rate if all recommendations were taken.

  • Cost : The total, lifetime, expected cost of the recommendation. This metric is used at both the individual commitment as well as the aggregate KPI level.

Commitment Recommendations Details Terminology

  • Optimal Recommendation : The default recommendation we provide. This recommendation uses our proprietary algorithm to maximize net savings.

  • Adjusted Recommendation : The recommendation post adjustment inputs.

  • Resource Commitment Cost : The hourly cost currently spent on resource commitments.

  • Spend Commitment Cost : The hourly cost currently spent on spend commitments.

  • Uncovered Cost : The on-demand hourly costs that is or was eligible to be covered by the current commitment type.

  • Recommendation Cost : The hourly cost of the recommendation.

  • Covered Cost : The total cost of all existing and recommended commitments.

  • Total Cost : The total cost of all commitment eligible spend.

  • On-demand Equivalent (ODE): The cost a given amount of cloud resources at on-demand rates.

  • Breakeven: Break even occurs when theoretical cumulative monthly on-demand payments exceed lifetime commitment cost. This value is provided in terms of months.

Vendor Specific Commitment Terminology

While we look to use vendor agnostic terminology when it makes sense, we will use vendor specific terms where it makes sense to avoid any confusion.

Units : AWS reserved instances/ capacity use predefined instance sizes or capacity quantities. When purchasing these commitments, users select the number that they would like to include in a single commitment contract. AWS uses the term units while Azure uses the term quantity. Units is specified in the portfolio because this is an important criterion of a commitment.

Quantify : Azure reservation use predefined instance sizes or capacity quantities. When purchasing these commitments, users select the number that they would like to include in a single commitment contract. Azure uses the term quantity while Azure uses the term units. Quantity is specified in the portfolio because this is an important criterion of a commitment.