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120 changes: 62 additions & 58 deletions content/en/cloud_cost_management/planning/commitment_programs.md
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text: "Learn about Cloud Cost Management"
---

<div class="alert alert-info">CCM Commitment Programs supports Reserved Instances and Savings Plans, for EC2, RDS, and ElastiCache on AWS, and Virtual Machines on Azure.</div>
<div class="alert alert-info">CCM Commitment Programs supports Amazon EC2 and RDS Reserved Instances, Amazon EC2 Savings Plans, and Amazon ElastiCache Reserved Nodes.</div>

## Overview

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- Target high {{< tooltip text="on-demand" tooltip="Cloud resources billed at standard rates, without any commitment or discount program." >}} spend with additional commitments
- Monitor expirations and plan timely renewals

{{< img src="cloud_cost/planning/planning-commitments-overview.png" alt="Dashboard showing filters, KPIs (Effective Savings Rate, Absolute Savings, Coverage, Utilization), a cost-over-time bar chart, and a table of on-demand hot-spots by region, instance family, and database engine." style="width:100%;" >}}


## Getting started

Use Commitment Programs to understand and optimize your cloud commitments.

1. Go to [**Cloud Cost > Planning > Commitment Programs**][1] in Cloud Cost Management.
2. Use filters to focus on specific accounts, regions, or services.
2. Use the product selector to choose a commitment type and the time frame selector to set the reporting period.
3. Gain insights into your KPIs, commitment costs, and renewal recommendations:
- Review KPIs in the [Commitments Overview](#commitments-overview) section.
- Explore the [Costs Overview](#costs-overview) to analyze utilization and coverage.
- Check expiration dates and renewal recommendations in the [Commitments Explorer](#commitments-explorer).
- Review KPIs in the [Commitments overview](#commitments-overview) section.
- Analyze areas of on-demand spend to understand how to improve your coverage in the [On-demand hot-spots](#on-demand-hot-spots) section.
- View active commitments by type in the [Commitments inventory](#commitments-inventory) table.
- Identify savings plans generating the most waste in [Least used savings plans](#least-used-savings-plans).
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4. Take action based on these insights:
- Adjust workloads to better use your commitments and avoid extra on-demand charges.
- Update commitments by buying or changing them based on your usage data.
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Review these Key Performance Indicators (KPIs) for your cloud providers and services:

{{< img src="cloud_cost/planning/commitments-overview.png" alt="Dashboard summarizing cloud commitment KPIs, providing a quick overview of savings performance and highlights areas needing attention." style="width:100%;" >}}
{{< img src="cloud_cost/planning/commitments-inventory.png" alt="Commitments Overview dashboard showing key savings metrics and a bar chart comparing commitment costs to equivalent on-demand costs over time." style="width:100%;" >}}

- **Effective Savings Rate (ESR):** Percentage of cost savings achieved by your discount programs compared to on-demand prices, factoring in both utilized and underutilized commitments.
- **Effective Savings Rate (ESR)**: Percentage of cost savings achieved by your discount programs compared to on-demand prices, factoring in both utilized and underutilized commitments.
- _Example: Your RIs may offer a 62% discount, but if your ESR is only 45%, underutilized commitments are reducing your actual savings._
- **Absolute Savings:** Total dollar amount saved by using commitment programs versus on-demand rates.
- **Realized Savings**: Total dollar amount saved by using commitment programs versus on-demand rates.
- _Example: You spent $10,000 on cloud services last month, but would have spent $14,000 at on-demand rates, so your absolute savings is $4,000._
- **Coverage:** Proportion of your usage protected by a discount program (such as Reserved Instances, Savings Plans, or {{< tooltip text="Committed Use Contracts" tooltip="Agreements with cloud providers to use a certain amount of resources for a discounted rate over a set period." >}}).
- _Example: If EC2 compute coverage is 50%, half of your usage is on-demand. Increasing coverage to 80% could reduce your bill._
- **Utilization:** How much of your purchased commitments are actually being used.
- _Example: If a 1-year GCP Committed Use Contract is only 70% utilized, 30% is going unused and may need adjustment._

## Costs overview
## On-demand hot-spots

On-demand hot-spots highlight areas with high on-demand costs, which may indicate opportunities to purchase additional commitments.

Costs overview summarizes your spending on commitment programs, helping you understand where your cloud costs are going and how commitments impact your overall spend. In this section, you can:
{{< img src="cloud_cost/planning/commitments-on-demand-2.png" alt="On-Demand Hot-Spots table for AWS RDS showing region, instance family, DB engine, coverage percentage, and on-demand cost." style="width:100%;" >}}

{{< img src="cloud_cost/planning/commitments-rds-costs-overview.png" alt="Bar chart of RDS costs from March 1 to March 31, grouped by cost type, region, and instance family, with a highlighted total of $20.55k." style="width:100%;" >}}
Use the **Cost** and **Hours** tabs to toggle between on-demand spend in dollars or usage in hours. Use the available filters to narrow results—filters vary based on the selected product.

- **Show RI fee:** Toggle the display of RI fees to change reserved capacity to commitments making it easier to distinguish between on-demand and commitment-based spending.
- **Group By options:** Organize and analyze your costs by cost type, region, instance family, or database engine. Identify which regions or services are driving the most spend, compare costs, and pinpoint areas for additional commitments or strategy adjustments.
- **Total commitment spend:** View how much you are spending on reserved capacity versus on-demand, helping you assess the effectiveness of your commitment strategy.
- **Savings breakdown:** See the savings achieved through commitment programs compared to on-demand pricing.
- **Service-level details:** Analyze costs by service, region, or account to identify where your commitment programs are delivering the most value and where there may be opportunities for further optimization.
The table columns correspond to the filters for the selected product, showing the dimensions that characterize the on-demand usage (such as region, instance family, or database engine), along with **Coverage** (percentage of usage covered by commitments) and **On-Demand Cost** (sorted in descending order to surface the highest-spend hot-spots first).

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Use this section to make informed decisions about purchasing, renewing, or adjusting your commitments to maximize savings and minimize waste.
## Commitments inventory

## On-demand hot-spots
Commitments Inventory provides a detailed view of commitments active during the selected time frame, organized by commitment type. This includes commitments expiring soon (within 30 days) and commitments that have already expired at the time of viewing.

On-demand hot-spots highlight areas with high on-demand costs, which may indicate opportunities to purchase additional commitments.
{{< img src="cloud_cost/planning/commitments-inventory-1.png" alt="Commitments Inventory section showing the Savings Plans tab with a utilization chart and a table of EC2 savings plan commitments." style="width:100%;" >}}

Use the **Savings Plans** and **Reserved Instances** tabs to switch between commitment types. Each tab shows:

{{< img src="cloud_cost/planning/commitments-on-demand.png" alt="Table of AWS RDS on-demand hot spots, listing regions, instance families, and database engines with 0% coverage and their associated high on-demand costs." style="width:100%;" >}}
- **Utilization**: Percentage of the commitment type being used during the selected period.
- **Unused spend**: Total spend on unused commitments.
- **Daily chart**: Tracks used and unused commitment spend alongside the utilization rate over time.

- **Identify high on-demand usage:** Quickly spot services, regions, or accounts with significant on-demand spend.
- **Estimate potential savings:** See how much you could save by converting on-demand usage to commitment-based pricing.
- **Take action:** Adjust workloads or purchase new commitments to reduce future on-demand costs.
Use the **Only show Expiring** checkbox to filter the table to commitments nearing their end date.

## Commitments Explorer
The table lists your active commitments. Columns vary depending on the product and commitment type, but common columns include:

Commitments Explorer provides a detailed, interactive table of all your cloud commitment contracts, such as database reserved instances. Browse, search, filter, and sort your commitments by key attributes to track your inventory, monitor expiration dates, and identify opportunities to optimize usage and savings.
| Column | Description |
|---|---|
| Savings Plan ARN or Reservation ARN | Unique identifier for the commitment. |
| Payment Model | Payment option (for example, No Upfront, Partial Upfront, All Upfront). |
| Term | Duration of the commitment (for example, 1 Year, 3 Years). |
| Type | The commitment type (for example, `ComputeSavingsPlans`). |
| Committed Spend/HR | Hourly spend committed under the plan. |
| End Date | Date the commitment expires. |
| Utilization | Percentage of the commitment used during the selected period. |

{{< img src="cloud_cost/planning/commitments-explorer-3.png" alt="Table of AWS RDS Reserved Instance commitments, highlighting the 'Columns' button, an expired commitment, and a commitment that is expiring soon." style="width:100%;" >}}
Use the **Columns** button to show or hide additional columns.

- Customize the table view to show or hide columns so you can focus on the most relevant information.
- The table highlights commitments that have recently expired or are expiring soon, helping you plan renewals and avoid paying on-demand prices.
## Least used savings plans

The columns displayed in Commitments Explorer vary depending on the product (for example, Amazon RDS or EC2) and the specific commitment program. Here are the available columns:
Least Used Savings Plans helps you identify which savings plans are generating the most waste. Use this section to determine when that waste occurs and take action to improve utilization.

| Column | Description | Product |
|---|---|---|
| Reservation ARN | Unique Amazon Resource Name (ARN) identifying the Reserved Instance commitment. | All |
| Payment Model | Payment option for the Reserved Instance (for example, No Upfront, Partial Upfront, All Upfront). | All |
| Term | Duration of the Reserved Instance commitment (for example, 1 Year, 3 Years). | All |
| Region | AWS Region where the Reserved Instance is applied. | All |
| Instance Type | Type and size of the instance covered by the commitment (for example, `db.r6g.large` for RDS or `m5.large` for EC2). | All |
| Start Date | Date when the Reserved Instance term begins. | All |
| End Date | Date when the Reserved Instance term ends. | All |
| Instance # | Number of instances covered by the Reserved Instance. | All |
| NFU # | Number of Normalization Factor Units (NFUs) covered, which standardizes instance sizes for comparison. | All |
| Utilization | Percentage of the Reserved Instance used during the selected period. | All |
| DB Engine | Database engine used by the instance (such as PostgreSQL, MySQL, SQL Server). | Amazon RDS |
| Multi-AZ | Indicates whether the Reserved Instance covers a multiple availability zone deployment (Yes/No). | Amazon RDS |
| OS | Operating system of the instance (such as Linux or Windows). | Amazon EC2 |
| Offering Class | Class of Reserved Instance (Standard or Convertible). | Amazon EC2 |
| AZ | Specific Availability Zone where the Reserved Instance is located. | Amazon EC2 |
{{< img src="cloud_cost/planning/commitment-programs-least-used-savings-plans-1.png" alt="Least Used Savings Plans section showing a bar chart of daily average unused savings plan spend by day of week, a table of the most wasteful savings plans with waste amount, utilization, and ARN, and a heat map of hourly unused committed spend percentage by day of week." style="width:100%;" >}}

**Daily average unused Savings Plans**: A bar chart showing the average daily cost of unused savings plan spend for each day of the week. Use this to spot patterns, such as higher waste on weekends when workloads may be lower.

**Savings Plans with most waste**: A table listing underutilized savings plans, sorted by total waste. Columns include:

- **Waste**: Total dollar amount of unused committed spend during the selected period.
- **Utilization**: Percentage of the savings plan being used, shown as a percentage and progress bar.
- **Savings Plan ARN**: Unique identifier for the savings plan.

**Hourly unused committed spend percentage**: A heat map showing the percentage of committed spend that went unused, broken down by hour (UTC) and day of week. Darker cells indicate higher unused percentages, making it possible to identify specific time windows where commitments are consistently underused.

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## Example use cases

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**How to use commitment programs**:
1. Go to the **Commitments Overview** and check the utilization KPI.
2. Filter by account, region, or instance family to pinpoint which commitments are underutilized.
2. In the **Commitments inventory**, sort by utilization in ascending order to identify the least-used commitments. For savings plans, also check the **Savings Plans with most waste** table in the [Least used savings plans](#least-used-savings-plans) section.
3. Reallocate workloads to use these commitments more effectively, or consider modifying or selling unused commitments if your cloud provider allows it.

### Plan for expiring commitments

**Scenario**: Several Reserved Instances are set to expire next month, and you want to avoid unexpected on-demand charges.
**Scenario**: Several Reserved Instances are expiring soon, and you want to avoid unexpected on-demand charges.

**How to use commitment programs**:
1. In the **Commitments Explorer**, review the list of commitments and their expiration dates.
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### Target high on-demand spend
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**Scenario**: Your cloud bill shows consistently high on-demand usage for a particular service or region.
**Scenario**: Your cloud costs show consistently high on-demand usage for a particular service or region.

**How to use commitment programs**:
1. Use **On-demand Hot-Spots** to identify which services, regions, or accounts have significant and steady on-demand costs.
1. Use **On-demand hot-spots** to identify which services, regions, or accounts have significant and steady on-demand costs.
2. Analyze usage patterns to confirm they are predictable.
3. Purchase new commitments to cover the consistent usage and reduce costs.

## Further Reading
### Reduce waste by shifting workloads to cover unused savings plans

**Scenario**: You have underutilized savings plans and high on-demand costs running in parallel.

**How to use commitment programs**:
1. Use the **Least used savings plans** section to identify recurring patterns of low utilization—for example, consistently unused capacity on certain days or hours.
2. Identify on-demand workloads that could be scheduled during those low-utilization windows to take advantage of unused savings plan coverage.
3. Shift or reschedule those workloads to reduce on-demand spend and improve savings plan utilization.

## Further reading
{{< partial name="whats-next/whats-next.html" >}}

[1]: https://app.datadoghq.com/cost/plan/commitment-programs
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