Why
ESR is the single metric that tells you whether your commitment strategy is actually saving money. A commitment portfolio with high coverage but low utilisation wastes money. Without ESR, you’re flying blind on whether RIs, Savings Plans, and CUDs are delivering value.
What
Calculate the Effective Savings Rate (ESR) — comparing what you pay with commitments vs what you would pay at on-demand rates.
How
Pull Commitment Data
| Provider | Data Source |
|---|---|
| AWS | Cost Explorer → “Savings Plans Utilization” + “RI Coverage” reports. Or CUR: filter for line_item_type = SavingsPlanCoveredUsage / DiscountedUsage |
| Azure | Cost Management → Reservations → Utilization report. Or FOCUS export: CommitmentDiscountId column |
| GCP | Billing export → filter for CUD/SUD covered usage. Compare cost vs list_cost |
Calculate ESR
Formula: ESR = (On-Demand Equivalent Cost − Actual Cost) / On-Demand Equivalent Cost × 100
Example: if on-demand equivalent is $100K and you pay $78K with commitments, ESR = 22%.
Build a monthly ESR dashboard showing: current ESR, trend over 6–12 months, ESR by commitment type (RI vs SP vs CUD), and utilisation rate per commitment.
Set Target and Monitor
Industry benchmark: 15–25% ESR is typical for mature organisations. Set your target based on workload mix (steady-state workloads enable higher ESR; variable workloads limit it).
Deliverable Checklist
- Commitment data extracted per provider
- ESR calculated (current month + 6-month trend)
- ESR dashboard live with utilisation breakdown
- Target ESR set (wave KPI target: 20%)