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Question: I work for a vendor that provides enterprise-grade Software-as-a-Service (SaaS). I’m not clear on how our customers can retire their spending commitments with major cloud service providers (hyperscalers) such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). What determines which products and services can be purchased to buy down a spending commitment? Does a vendor’s/supplier’s status with the cloud service provider play a role?
Answer: First, let’s clarify what we mean by commitment spend, commonly known as “burn” or “retirement.”
The major CSPs, which also include Oracle Cloud, offer customers deep discounts in exchange for their commitment to spend a minimum amount over a specific period (typically called the contract term). Commitment burn refers to the process of spending that agreed-upon amount by purchasing eligible cloud services and third-party marketplace solutions.
Allowing customers to retire their spending commitments in this way delivers a number of benefits. End users can meet their spending targets, optimize their cloud spending, enjoy a simplified procurement process, gain access to a wide array of solutions, and leverage existing relationships.
For hyperscalers, allowing customers to retire spending commitments through third-party application purchases is a strategic lever that generates revenue through transaction fees while boosting the utilization of their cloud infrastructures. By hosting these third-party applications directly on their platforms, CSPs make customers more reliant on their ecosystems, creating a “flywheel effect.” Increased application usage leads to higher consumption of underlying compute and storage resources. Ultimately, this makes it more difficult for customers to migrate to competitors.
The eligibility of solutions doesn’t hinge on vendors’ status or commitment with a CSP. Rather, in most cases, a purchase counts toward commitment retirement as long as the purchased application or solution is hosted by the hyperscaler.
While that condition applies across all four CSPs, there are some differences among them when it comes to commitment retirement.
AWS: The CSP offers two commitment-based discount programs: the Enterprise Discount Program (EDP)/Private Pricing Addendum (PPA) and Savings Plans. While the EDP and PPA are geared at organizations with substantial, predictable AWS usage — offering customized discounts for commitments of one to five years — the Savings Plans deliver a more flexible option, requiring commitments to consistent usage measured in dollars per hour over one- or three-year terms. Third-party application purchases made through the AWS Marketplace can offset a maximum of 25% of a customer’s total annual spending commitment.
Microsoft Azure: The Microsoft Azure Consumption Commitment (MACC) gives organizations a structured approach to optimizing their cloud spending. Under MACC agreements, which typically span one to three years, customers commit to predetermined spending levels in exchange for discounts, credits, and access to premium support. The purchased applications must be hosted on the Azure infrastructure. In addition, only those tagged as “MACC Eligible” — specific services that are listed in the Azure Marketplace and approved by Microsoft — will earn credits.
Google Cloud: Google Cloud offers Committed Use Discounts (CUDs) that come in two varieties — resource-based and spend-based, or flexible. The former are ideal for predictable, steady-state workloads, while the latter are more adaptable. For customers to spend down their commitments, the applications they purchase must be hosted on the GCP infrastructure and integrated with Google’s billing system.
Oracle Cloud: Oracle operates primarily through its Universal Credits model — specifically, the Annual Flex program for committed spending. This model provides customers with a pool of credits that can be applied to any eligible IaaS or PaaS offering, providing significant flexibility to shift workloads as needed. To retire spending commitments via the ecosystem, purchases must be for “Paid” listings within the Oracle Cloud Marketplace. However, Oracle applies a stricter cap on this third-party usage than its competitors: A maximum of 15% of a customer’s total active Universal Credits commitment can be used to purchase third-party solutions.
While these are the conditions laid out publicly by AWS, Microsoft Azure, Google Cloud, and Oracle Cloud, it’s important for customers (and their channel partners) to consult the official documentation provided by each CSP. This will explain in detail which services, offers, and purchase models (for example, payment options) count toward their annual spending commitments.
For more information on hyperscalers and spending commitments, take a look at a couple of our primers on the topic:
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