COMMITMENTS
Procurement Strategies for RIs, Savings Plans, and EDPs
When people hear the word commitment, they usually think about relationships or maybe a lease they cannot get out of. In cloud, commitments mean something different but just as serious. They are the finance lever that can either save millions or create massive waste if handled without care.
According to the FinOps Foundation, commitment waste is one of the most common problems enterprises face, with unoptimized commitments leading to “double-digit percentage overspend” across large cloud bills. That is not a margin any CFO or procurement team can ignore.
So how do we get smarter about cloud commitments? It starts by treating them not as one-off purchases, but as structured procurement strategies that balance financial discipline with technical realities.
Why commitments sit at the finance and procurement table
Cloud bills start off variable. The more you use, the more you pay. Commitments flip that model. Instead of paying full price each month, you lock in discounted rates for a set period of time in exchange for predictability.
The problem is that this predictability is only helpful if your procurement process is mature enough to forecast demand, negotiate terms, and manage renewals. If finance is forecasting one thing, engineering is deploying another, and procurement is just pushing contracts across the finish line, you end up with commitments that nobody can fully use.
The FinOps Foundation defines the goal of commitments as simple: increase savings while minimizing risk. The execution, however, requires alignment across teams.
The instruments: RIs, Savings Plans, and CUDs
Here is the quick landscape of what you can actually buy:
Note: AWS Reserved Instances are for those with preexisting portfolios and remain active for services like RDS, Redshift, and ElastiCache, but new EC2 commitments are now made through Savings Plans.
The key difference is resource-based versus spend-based commitments. Resource-based are cheaper but rigid. Spend-based are more flexible but slightly less discounted. Knowing which one fits your workload risk is a procurement decision as much as a technical one.
The second layer: enterprise-level commitments
Beyond resource and spend commitments, enterprises often negotiate commercial agreements with cloud providers.
AWS Enterprise Discount Program (EDP): Long-term spend commitments with discounts. AWS confirms that Marketplace purchases qualify against EDP commitments.
Microsoft Azure MACC: Contractual Azure spend commitment. The portal shows a MACC Remaining Balance, and Marketplace offers tagged as “Azure benefit eligible” apply directly.
Google Cloud enterprise commits: Similar structure, negotiated at the enterprise level, separate from CUDs.
This is where finance and procurement need to zoom out. It is not enough to optimize RIs or SPs in isolation. You need to understand how those commitments affect your ability to burn down enterprise-level discounts.
Metrics that make commitments measurable
Without numbers, commitments are just contracts. The FinOps Foundation highlights a few metrics every procurement and finance team should monitor:
Think of these like procurement KPIs. If your ESR is below target or waste is creeping up, it is a signal to review forecasting, contract terms, or purchasing policy.
Building a smarter portfolio
The smartest procurement strategies build a portfolio of commitments. That means mixing and matching instruments to balance savings with risk:
Cover the baseline: Use RIs, Azure Reservations, or resource CUDs for workloads that rarely move.
Hedge the variable layer: Use Savings Plans or spend-based CUDs for elastic or unpredictable workloads.
Guarantee capacity when needed: AWS Capacity Reservations or zonal RIs when the business cannot risk availability issues.
This is not unlike how finance manages investments. Some fixed, some flexible, some to cover edge cases.
Negotiating without over-committing
One of the biggest procurement challenges is not over-promising. Cloud providers encourage longer and bigger commitments, but you need to match terms to business realities.
Time enterprise commitments with major migrations.
Include ramp-up structures if spend will grow gradually.
Confirm what Marketplace spend counts. Azure, for example, is explicit that only Azure benefit eligible offers apply 100 percent toward MACC.
Every clause in these contracts matters. A missed carve-out or shortfall term can turn a discount into a liability.
Making commitments an ongoing process
Finally, commitments are not a “set it and forget it” deal. Procurement and FinOps teams should run this like a monthly program:
Monthly: Track utilization, coverage, ESR, and expirations.
Quarterly: Re-forecast spend, adjust purchasing, validate enterprise burn-down.
Annually: Negotiate renewals and align with long-term business planning.
This cadence gives finance the predictability they need, procurement the contract guardrails they want, and engineering the freedom to run workloads without overspend.
Conclusion
Cloud commitments are one of the most powerful financial levers we have in FinOps. But they only deliver real value when procurement, finance, and engineering align.
Reserved Instances, Savings Plans, and CUDs should never be viewed as siloed technical purchases. They are procurement strategies that tie directly into enterprise-level agreements with hyperscalers.
The FinOps Foundation says it clearly: the ultimate goal is to “maximize savings while minimizing risk.” Smarter commitments are how we get there.
NEWS
The Burn-Down Bulletin: More Things to Know
FinOps Breaks Out of Cloud – FinOps practices are expanding beyond cloud cost control, influencing broader enterprise finance strategies and reshaping how organizations manage technology investments.
Achieving FinOps Excellence – A playbook for enterprises aiming to advance cost control maturity, with strategies to align engineering, procurement, and finance around shared FinOps objectives.
What is Cloud Cost Management? – A straightforward guide to the fundamentals of cloud cost management, breaking down why it matters and how it supports FinOps adoption.
Cloud Gets Lean – Deloitte predicts that new FinOps tools will push cloud spending discipline to the forefront in 2025, driving leaner operations and stronger ROI from cloud investments.
WEEKLY MVP
Diana Lezcano
“Some people see cloud bills and panic. I see cloud bills and think 'Challenge Accepted!' Ten years and $5M+ in savings later, I'm basically the Marie Kondo of cloud spend; if it doesn't spark ROI, it's gotta go.”
That’s all for this week. See you next Tuesday!
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