I find everything about this product confusing. What value does it provide? Seems you need to be an IT Director to understand it. What’s the relationship between pricing and value? Why is it advantageous to a company to make a minimum commitment? What are the risks in making such a commitment? And how do you mitigate that?
All materials I read on the subject, require a level of familiarity with IT management that I don’t have. Please ELI5! Hi hi.
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Usually if you make a spending commitment with a cloud provider, they give you a discount.
If you’re a big company, and you know you’ll need a certain amount of compute resources(to run your apps) in a year, it makes sense to commit to it. You get those resources cheaper, and the Microsoft gets a bit of valuable predictability: It helps them know how many computers they will need that year.
The main risk is that you overestimated how many computers you need – say your app suddenly became unpopular. Then you would be stuck paying for those resources, even though you no longer need them, and no longer have the revenue to support them. Mitigations for this include finding another use for the resources your committed to using. It’s also sometimes possible to sell that commitment to help recover some of the loss.
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