Are hidden or hard-to-understand licensing costs cutting into the profitability of your enterprise’s cloud investments? If the answer is yes (or even “I’m not sure”), this blog is for you.
In a previous blog, we covered a fundamental dilemma of cloud computing: It can allow unprecedented flexibility for your business, but it can also unleash runaway costs that can be hard to visualize, let alone control. Ternary’s FinOps platform is designed to help you optimize the value of your cloud investments and unlock the highest potential profitability, including by helping you visualize costs that would otherwise fly under the radar. (Two specific types of under-the-radar costs we covered in that post were data egress charges and snapshot fees.)
In this blog, we’ll take a closer look at licensing costs. These can also contribute significantly to cloud costs, but they can be hard to understand. Once you know the pros and cons of different licensing approaches, you’ll be in a better position to make smart choices that boost your profitability.
Microsoft SQL Server on AWS: An optimization case study
To explore how licensing costs work, we’ll use the example of running Microsoft SQL Server software on AWS, using Amazon Elastic Compute Cloud (EC2). Amazon EC2 gives you a choice of licensing models: License Included or Bring Your Own License.
If you’ve read this far, you probably know that Microsoft SQL Server is relational database software that allows you to store and retrieve data in the cloud. But before deploying Microsoft SQL Server on AWS, it’s crucial to understand how AWS charges for different licensing models. Those differences can change your overall costs substantially, either boosting profits or bogging down budgets.
License Included
License Included (LI) SQL Server instances are pay-as-you-go, meaning that server licensing fees are bundled into the AWS hourly instance pricing, whether you are operating in a self-managed environment (such as Amazon EC2) or a managed environment (such as Amazon RDS, which we will discuss below). Eliminating the need for purchasing licenses separately, this approach simplifies the deployment process and allows you to pay only for the cloud resources you use.
But such convenience comes at a premium, potentially leading to higher long-term expenses compared with other licensing options. Plus, because the cost of LI instances is built into the AWS pricing, this approach limits flexibility. (For example, you can’t optimize costs when business conditions change.)
Bring Your Own License (BYOL)
Alternatively, you may choose to bring your own license to your SQL workloads. If so, you can choose between two options: shared tenancy and dedicated hosting.
• Shared tenancy: With shared tenancy, you run your business’s instances on hardware shared with other AWS users. This solution has potential benefits as well as drawbacks. You can save on infrastructure costs (paying less for Amazon EC2 instances relative to what you’d pay for dedicated hosting). On the other hand, you might experience fluctuations based on the activity of other organizations with which you’re sharing hardware.
Deploying SQL Server on shared tenancy Amazon EC2 instances also requires active Microsoft Software Assurance with License Mobility. Without active Software Assurance, organizations cannot legally utilize their existing licenses in this environment, potentially incurring additional costs to obtain or renew their Software Assurance.
• Dedicated hosting: AWS hardware reserved for your business allows you to use your own software licenses, without having active Software Assurance. But watch out: Because dedicated hosts are typically more expensive than shared tenancy instances, the cost benefits of BYOL may be offset by the higher infrastructure expenses.
Managed or self-managed?
We’ve covered how your choice of license type affects your cloud costs in a self-managed environment like Amazon EC2. But you should also understand the cost implications of using a managed service, like Amazon Relational Database Service (RDS).
Amazon RDS simplifies database management by automating tasks such as backups, patching, and scaling to meet demand. Sounds convenient, right? Yes—but that convenience comes with cost considerations, too. You pay nearly twice as much hourly for on-demand than for Amazon EC2 instances with BYOL.
Leveraging Amazon Reserved Instances (RI) can potentially reduce your cost by 50%–60%. Doing so can offset overhead costs of administering the self-hosted SQL Server option. But it also requires your organization to understand and implement that strategy.
Fortunately, Ternary can help with that: Our FinOps platform allows you to see your existing Amazon RDS commitments and to model purchasing additional commitments from AWS, as shown in the screenshot below:
Ternary also allows you to model the impact of purchasing additional Amazon RDS RI layered with your existing coverage, as shown in this screenshot:
Finally, you can use Ternary to analyze your existing coverage and compare your usage of on-demand hours vs. reserved hours, with high-level metrics such as total recommendations, potential savings, etc. The screenshot below shows Amazon RDS RI recommendations, which provide savings compared with the on-demand rate of running Amazon RDS:
4 ways to manage cloud licensing costs
Now that we’ve discussed the differences between licensing types, it’s time to identify how you can ensure your approach works best for your organization. Here are 4 steps to help ensure that your licenses are working hard for you while not introducing unnecessary costs:
- Inventory your licenses. Ensure you absolutely need each of the license types you’re using, when you’re using them. (For example, you can use SQL Server Developer to build and test your infrastructure, right up until the time you enter production; at that point, you can start paying for SQL Server Standard or SQL Server Enterprise licenses.)
- Rightsize your SQL Server instances. Often, these servers can be over-provisioned for “peak” usage. But the advantage of cloud is that you can dynamically scale based on demand—so don’t neglect this opportunity to aligning your resources with your real-time needs. Ternary provides rightsizing recommendations for over-provisioned RDS and EC2 instances. By rightsizing, you can reduce the need for licensing per virtual core, saving additional costs beyond just the per-hour cost of running the instance.
- Analyze whether it makes sense to use managed services vs. self-managing with BYOL. Although a BYOL approach can bring immediate savings, it also brings administrative overhead. In some cases, it may make sense to use the managed service offering, even if you have existing licenses. For example, if your organization is mature enough in your cloud journey, you may already have a routine practice of analyzing and purchasing Reserved Instances, which can significantly reduce the cost of managed services.
- Take advantage of Reserved Instances. This strategy can help drive costs down (as shown above).
Ready to assess your license strategy and save money in the cloud?
We hope you’ve found this exploration of licensing types useful in illuminating how costs can creep into your cloud bill. By carefully assessing these hidden costs and aligning them with your organization’s licensing entitlements and usage patterns, you can select the most cost-effective (and also compliant) deployment option for SQL Server Enterprise on AWS.
Ternary’s FinOps platform is designed to help you visualize your cloud costs and maximize the value of those investments. To learn more, book a demo today.
