Imagine you’re about to play a high-stakes game of poker, but instead of cards, you’re dealing with cloud services, and your chips are millions in IT spend. That’s what negotiating an AWS Enterprise Discount Program (EDP) feels like. But here’s the kicker: it’s a game you might be better off not playing at all.

1. The EDP Trap: Your Last Resort, Not Your First Choice

Let’s cut to the chase: EDPs should be your financial instrument of last resort, not your go-to strategy. It’s like using a sledgehammer to hang a picture – sure, it might work, but at what cost?

I was recently chatting with a company who jumped into an EDP with both feet. They were thrilled with their discount and couldn’t wait to tell their teams about all the AWS services they could now use “for cheap.” Fast forward six months, and their cloud infrastructure looked like a toddler’s toybox – overflowing, disorganized, and with half the stuff never even used.

Insider Strategies:

  • Be prepared for EDPs to go against AWS’s “customer obsessed” culture. In EDP negotiations, you’ll hear sales teams say things that would make Jeff Bezos cringe. But outside of EDP talks, every interaction we’ve had with AWS teams over the last 15 years has been genuinely customer-obsessed. The service teams will have your back, even if the EDP folks seem more focused on your wallet.
  • Be wary of the false sense of abundance. EDPs can make your team complacent, saying things like, “But we have a commitment to spend X – so why are we optimizing?”
  • Understand that EDP commitments can anchor you to inefficient, lower-order services like EC2, EBS, and RDS, keeping you from the cost-effective promised land of serverless and higher-order services.

Action Steps:

  1. Before even considering an EDP, exhaust all other optimization strategies. Make it your last resort, not your first choice.
  2. For example, other optimization strategies include CSPs, CRIs, MAPS 2.0 Credits, Service level credits, and usage based discounts.
  3. If you do pursue an EDP, aim to commit as little as possible while maximizing your discount. It’s a tightrope walk, but it’s possible.
  4. Implement strict governance and continuous optimization practices to counteract the “we already paid for it” mentality that EDPs can breed.
  5. Create a clear roadmap for moving to higher-order services, and make sure your EDP doesn’t penalize you for this shift.

2. The Commitment Conundrum: The Decreasing Spend Ladder

Picture this: You’re sitting across the table from the AWS team. They’re smiling, you’re smiling, but make no mistake – this isn’t a friendly chat. It’s a battlefield. AWS will push hard for increased spending commitments, typically aiming for a 20% increase year-over-year. Their playbook is clear: lock you into ever-increasing commitments that align with their growth projections, not necessarily your business needs. It’s a strategy that works wonders for their revenue predictability but can be a straitjacket for your cloud flexibility. However, here’s where the game gets interesting – you don’t have to play by their rules. In fact, you shouldn’t.

However, here’s where the game gets interesting – you don’t have to play by their rules. In fact, you shouldn’t.

Insider Strategies:

  • Negotiate a decreasing spend ladder. Yes, you read that right – decreasing, not increasing.
  • Understand the crucial difference between “spend” and “commitment”. Your commitment should never be more than 60% of your projected spend.
  • Leverage the fact that AWS account managers get heat when large customers don’t have EDPs. It’s your secret weapon in negotiations.

Action Steps:

  1. Determine the total commitment you’re willing to make over the entire contract period.
  2. Structure your commitment to decrease each year. For example, if you’re committing to $10M over 3 years, aim for something like:
    • Year 1: $4.5M
    • Year 2: $3.5M
    • Year 3: $2M
  3. Push for the shortest commitment period possible. One year is ideal, three years is the max you should consider.
  4. Be ready to walk away. Sometimes, the best EDP is no EDP at all.

3. The Optimization Paradox: Don’t Let EDPs Make You Lazy

Now, you might have heard whispers that you shouldn’t optimize too much before EDP negotiations. That’s like being told not to practice before a big game. Ignore that advice. Aggressive optimization isn’t just good practice – it’s your secret weapon.

The truth is, EDPs can breed a dangerous complacency in your organization. When you have a big commit to hit, it’s tempting to let inefficiencies slide. “We’ve already paid for it,” becomes the mantra, and suddenly, your once-lean cloud infrastructure starts to look more like a bloated legacy system. But optimization isn’t just a pre-negotiation tactic – it’s a continuous process that should be at the core of your cloud strategy, EDP or not.

Insider Strategies:

  • Use your optimization efforts as leverage in negotiations. Show AWS you’re serious about efficiency.
  • Keep your EDP discounts out of your showback and chargeback mechanisms. Including them fosters the wrong FinOps culture.

Action Steps:

  1. Implement and document aggressive optimization strategies across all services before negotiations.
  2. Prepare case studies of major product optimizations to justify lower commitment levels.
  3. Set up internal processes to ensure ongoing optimization efforts, even after signing an EDP.

4. Know AWS’s Playbook: The Game Behind the Game

Understanding AWS’s tactics and motivations is crucial. They’re not just trying to lock in your business – they’re trying to predict and protect their future revenue. It’s a complex dance of competing interests. On one side, you have AWS’s sales team, driven by quotas and the constant pressure to show year-over-year growth. On the other, you have your organization, trying to balance the allure of discounts with the need for flexibility and efficiency.

Knowing how to read between the lines of AWS’s offers, understanding their internal pressures, and leveraging your position can turn the tables in your favor.

Insider Strategies:

  • Be prepared for AWS to conflate your “spend” and your “commitment”. Don’t fall for it.
  • Assemble your A-team for negotiations. Include technical experts who understand your architecture, finance pros who can dissect the numbers, and strategic decision-makers. This diverse skill set will help you counter AWS’s specialized sales team and spot opportunities they might gloss over.

Action Steps:

  1. Always distinguish between your projected spend and your committed spend in discussions.
  2. If you have any presence on other cloud platforms, subtly mention it during negotiations.
  3. Be prepared to discuss potential migration scenarios, even if you don’t intend to follow through.

5. Beyond Discounts: The Hidden Treasures

When most people think about EDP negotiations, they focus on the headline discount number. But that’s like judging a book by its cover – you might miss out on the really good stuff inside.

The world of AWS is vast and complex, filled with a myriad of services, programs, and opportunities. While AWS might be rigid on certain aspects of the EDP, they often have more flexibility when it comes to specific services, credits, or strategic initiatives.

This is where the art of negotiation truly comes into play – knowing where AWS has wiggle room and how to leverage it to your advantage.

Insider Strategies:

  • Push for credits instead of higher overall discounts. AWS is often more flexible with service-specific credits.
  • Look for opportunities to negotiate custom pricing for your highest-spend services.
  • If you’re betting big on AI, explore co-development or early adopter programs.

Action Steps:

  1. Identify your highest-spend services and push for custom pricing on these.
  2. Ask for AWS credits for proof of concepts or migrations instead of overall discounts.
  3. Negotiate for participation in co-development programs, especially for emerging technologies like AI.

6. Craft Your Narrative: It’s Not Just About Numbers

Your EDP negotiation isn’t just about numbers. It’s about telling your company’s story and aligning it with AWS’s interests. This is where many organizations falter. They come to the table armed with spreadsheets and projections but forget the power of narrative.

AWS isn’t just selling you cloud services; they’re investing in your success story. They want customers who aren’t just big spenders, but innovators and industry leaders. Your job is to show them how investing in your success – on your terms – aligns with their long-term goals. It’s about painting a picture of mutual growth and success, but without overcommitting or sacrificing your flexibility.

Insider Strategies:

  • Emphasize how your success translates to AWS’s success, especially in terms of potential case studies or public references.
  • Use your growth story to justify a more flexible and customer-friendly EDP structure.

Action Steps:

  1. Prepare a compelling presentation that showcases:
    • Your company’s growth trajectory
    • How you’re leveraging AWS to innovate
    • Your commitment to cloud adoption
  2. Highlight any publicity or case studies you can do for AWS.
  3. Show how your success directly benefits AWS, but don’t overcommit to future growth.

The Bottom Line: Sometimes the Best Deal is No Deal

Navigating an AWS EDP negotiation is part art, part science, and part high-stakes poker. Yes, you need to know your numbers cold. But you also need to understand the broader context of your business strategy and AWS’s goals.

Remember:

  • EDPs should be your last resort, not your default choice.
  • Push for decreasing commitments, not increasing ones.
  • Optimization is your friend, before, during, and after EDP negotiations.
  • Look beyond discounts to credits, custom pricing, and strategic programs.
  • Sometimes, walking away from an EDP is the best decision you can make.

Your cloud strategy shouldn’t be dictated by an EDP. It should be driven by your business needs, your innovation goals, and your commitment to efficiency. An EDP, if you choose to pursue one, should support these goals, not hinder them.

So as you prepare for your negotiation, keep your eyes on the bigger prize. Don’t ask “How big a discount can we get?” Ask “Does this EDP truly serve our long-term interests?”

Because at the end of the day, the goal isn’t to get the biggest discount. It’s to build the most efficient, flexible, and innovative cloud infrastructure possible. And sometimes, that means saying “No, thanks” to an EDP altogether.