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Can’t see the difference between different types of discounts and commits in the Google Cloud ecosystem? please do not worry. This is a common source of turmoil in the market and Cloudbakers is here to clarify this. If you still need further assistance with this after reading this article, feel free to contact us for more information on our free FinOps evaluation and managed cloud optimization services.
CUD: Commitd Usage Discount If you run your application using a virtual machine and kubernetes (aka k8), Commitd Usage Discount (CUD) is worth a look to save a lot of money.
Think of the cloud from the perspective of the provider (Google, AWS, Azure). The cloud has insane inventory management issues. After all, IT outsourcing is a very low-margin business and has consistently burned down the data center business for 20 years. Improving server inventory management (when and how much to buy) can make a big difference.
You can guess how much difference this makes based on the crazy discount that Google promises to use a certain amount of server capacity for one year (XX%) or three years (YY%). Signing up for CUD gives Google a more accurate forecast of future demand.
SUD: Sustained use discounts As well as persistent server usage can help with that inventory problem. Keeping the server on and off (ironically one of the benefits of the cloud) exacerbates inventory issues. As a result, when you turn it on and run it consistently, Google offers a significant Sustained Use Discount (SUD).
They do this automatically and you don’t have to commit to anything or sign up for something. Just design your architecture with this in mind.
This is similar to what is called a design for manufacturability (sidebar story). I have a client trying to reduce manufacturing costs and found that one of the most costly steps in the process was to make a square hole in the curved surface. Manufacturing engineers liked this challenge, such as submerging parts in a special liquid or firing a laser to pierce one atom at a time. We went to the design engineer and asked if there was a special reason for the square hole. They changed the design and reduced manufacturing costs by 75%.
The same can happen in the cloud. Make sure your engineers understand and design how the behavior of your application affects the cost of running your application.
GCP Commit If you’re currently talking to someone on Google Cloud, it’s very likely that you’re discussing a commit agreement. It was an unfortunate language choice. These have nothing to do with CUD.
Again, it’s important to think about the situation from the perspective of your cloud provider. The cloud is “on demand” and is monthly. As a result, financial forecasting has become a nightmare, resulting in another historically low rate of return for data center operations. Another factor here is the expectations of enterprise IT purchases set over the last 30 years. Enterprise IT has to be purchased in bulk over the years, with the expectation of significant discounts on guaranteed volumes. A commitment contract is just a financial instrument, a commitment to spend X in Y years, and you will receive a Z% discount as a result of that commitment. Attractive discounts for businesses where spending is growing as expected, especially if you’re moving your workload from another provider (poor customer service on AWS or unreliable on Azure) to GCP You can also negotiate and get discounts customized to your spending pattern (eg exit) for MediaTek business.
Another benefit of commit agreements is that discounts apply to all GCP spending. Therefore, there are also benefits to a more mature application architecture that uses serverless for applications and databases.
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