Navigating CSP commitments: Securing discounts without sacrificing independence
Navigating Cloud Solution Provider (CSP) spending commitments can be a challenging exercise. By signing up for discount programs via spend commitments, companies can see benefits like cloud consumption discounts, enterprise support, partner cash credits, and more. But commitments come with risk and it’s important to understand how your risk tolerance compares to the overall value when signing a commit plan.
2024-05-13
Jared Parrish, Client Partner
What is a commitment?
A cloud solutions provider discount program can be an effective way for an organization to maximize its investment in the cloud. That said, discount programs often require a commitment of minimum cloud spend over a set period of time. Some offerings require scaled spending at specific milestones throughout the contract while others require year-over-year consumption growth. Many CSPs will over variable discounts based on minimum commitment and commit term length.
Common decision points
Because many discount programs require a commitment larger than your current annual spend, the best time to sign up for a discount program is generally before you reach your normal cloud running rate.
Understanding the commitment term and minimum spend level is an exercise of measuring the overall value of the discount program and your personal risk tolerance. It can be challenging to predict future cloud spend as your business grows and you look for cost optimization activities. If you sign up for too low of a commitment, you could be leaving value on the table. Too high of a commitment means you could be scrambling at the term milestones to find extra consumption.
How Ollion helps
At Ollion, we work with clients to identify the optimal commit value and term length for a discount program. By partnering with the client to analyze their key cloud consumption drivers, we can estimate how consumption will change over time and then create risk-adjusted predictions on reaching commitments at various time intervals. Confidence intervals allow customers to use their own judgment to get the best value according to their risk tolerance.