Tech the Heck? Archera
I warned you this would be a recurring feature
As you may recall from the first edition: Tech the Heck? is a recurring feature in which I try to explain in plain language what a particular tech startup’s product does - despite it being non-obvious on their own product page.
Today’s sponsor / victim stepping into the arena is Archera, a Freeman & Forrest client. Kudos to them for being good sports about this - I only do these write-ups with permission, but Archera has no editorial control over what I say.
As far as I can tell, there are two types of cloud cost management products.
The first kind, like CloudHealth and its many “FinOps” alternatives, primarily focuses on planning and reporting. Their value prop is that they give you better tools to figure out where your IT budget is going, and how to allocate it, than the AWS Billing console does.
The other kind promises to sell you cloud at a discount, and those products tend to have a red flashing warning label on them that goes SCAM SCAM SCAM SCAM. Either they’re playing weird arbitrage games with resource reservations, or they’re asking you to give them way too much control over your billing accounts, or they’re charging you a massive 15-40% fee for “savings” you could probably get on your own with a few hours of effort.
There’s a reason AWS is cracking down on some of these shady practices. Products that promise to charge a percentage of what they “save” you by booking EC2 instances on your behalf have a fundamental incentive mismatch: the more cloud you buy, the more money they make. This is the opposite of what you want your cloud cost management partner to be rooting for.
So when I landed on Archera’s homepage, my sketchiness antennae were way, way up.
At first glance, Archera looks like it could be another “we book your AWS Savings Plans and charge you a fee for it” vendor. The buzzwords are all there on their homepage: flexibility! Discounts! Usage! Commitments! Incentives!
It took me a minute to realize that Archera is not a cloud reseller at all. Actually, it doesn’t fit into either of the cloud cost management categories I defined up top. They do have a basic FinOps platform that can book native AWS savings plans in your own account for you, but it’s free to use, no fees at all.
Archera is up to something a lot weirder and more surprising. It turns out that Archera is an insurance product.
This is where cloud architects get bored and tune out, because insurance is boring. But it’s where finance people should get really interested.
As I understand it, Archera’s main thing is not selling you cloud discounts, but selling you peace of mind. The founder/CEO came from AWS and has seen first-hand that people are understandably squeamish about ponying up tens or hundreds of millions of dollars for a three-year cloud commitment when they have no idea how much cloud they will actually need by then.
Archera’s solution to this problem is simple, much simpler than the buzzwords on the homepage might make you think.
Step 1: you pay Archera a premium, like an insurance premium, to book shorter-term cloud savings plans and reserved instances directly in your AWS or Azure account1. Way shorter than 3 years, as low as 30 days in some cases. The shorter the commit term, the higher the premium.
Step 2: you use your committed resources.
Step 3: if for some reason you DON’T consume all your committed resources, Archera automatically pays you back to cover the difference. With real money.
Step 3 is the wild part. There are a few other cost management products out there that throw around words like “cloud commitment insurance”, but what they mean is something like “here is store credit you can use to buy even more of our knockoff savings plans, since you didn’t use all of them last time.” Archera, by contrast, puts actual dollars back in your bank account. I genuinely don’t think I have seen any other FinOps tool that does this.
Again, the reason they can pull this off is that they are not really a developer tooling product; they are a financial product, like car or boat insurance. Archera relies heavily on “reinsurance”, which is a jargon term meaning insurance for insurance companies. Somewhere, an actuary has figured out how likely it is that Archera will have to rebate all its customers overnight because us-east-1 got attacked by direwolves, and has spread that risk among other insurance companies so you will get your money back either way.
I like what Archera is doing because I think they have fixed the incentive problem we talked about that plagues so many reseller-type companies. You are not paying Archera to “save you money”, you are paying them to take the risk out of not knowing how to forecast your cloud spend. This is a useful thing.
I do not particularly like their marketing website, though. It’s long on high-level jargon (“Why Archera?”) and short on explanation (“How does Archera actually work?”). I would foreground the extremely clear and well-written docs that are currently buried in the site footer, probably with an architecture diagram that shows how Archera interacts with your AWS account.
My advice to Archera is to stop using the same buzzwords that the cloud resellers do. You don’t want to be confused with those people because SCAM SCAM SCAM SCAM.
Talk about yourself like what you are: travelers’ insurance for the cloud.
My wife and I took a 10th anniversary trip to Scotland recently. I bought trip insurance ahead of time. Not because I especially wanted to spend hundreds of additional dollars, but because I wanted to zero out the risk of losing the larger amount of money we spent on airline and hotel bookings if, oh I don’t know, Crowdstrike decided to push out another minor Windows update.
The trip went great (thanks for asking!), and we enjoyed it even more knowing that our bookings were insured.
A product like that should exist for CFOs who are staring at their cloud forecasts and imagining what would happen if … well, if Crowdstrike decides to push out another minor Windows update. It seems to me that Archera has built that product. They should publish more content showing exactly how it works.
If you would like your product explained in a future edition of Tech the Heck?, let me know.
Links and events
I’ll be back at AWS re:Invent this fall for the first time in several years. Let me know if you’d like to grab coffee!
Emily and I recently appeared on The Cloudcast to explain why we started Freeman & Forrest and what we have been up to lately.
It is mid-October, which means you probably have about 30 days left to accomplish whatever goals you set yourself this year before the holidays kick in. Seems like a good time to redeem your 30 free days of learning from Cloud Resume Challenge sponsor Pluralsight.
"commitment insurance": didn't even know such a thing existed, especially in something as ephemeral as the cloud - thanks for the heads up, Forrest!
(Now you got me curious about travel insurance, too...)