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When AWS Goes Down, Procurement’s Leverage Goes Up
On October 20, 2025, AWS suffered a serious global disruption impacting the US-East-1 region. Services across dozens of applications – from Snapchat and Venmo to Fortnite – were degraded or unavailable for hours. The root cause: a DNS resolution issue in AWS’s internal network of load-balancer health monitoring, causing error cascades for many upstream services.
This event offers a powerful reminder to sourcing/procurement/IT leaders: resilience matters — not just for uptime, but for contractual positioning, cost management, and negotiating leverage. Below are key takeaways.
Resilience Matters for Cost and Contracts
Your cloud spend isn’t just about the sticker price. It’s about what you will get when things do go wrong. The AWS outage underscores how even top-tier cloud providers can experience “failure” windows that ripple across business-critical operations.
For enterprises, this means the contract with your cloud vendor isn’t just a procurement document: it is a risk-mitigation tool. If functions stop, the contract should define what happens next. Key questions clients should audit:
What are the SLA availability guarantees?
- What happens in terms of service credits or compensation if the SLA is breached?
- Are business continuity/disaster-recovery clauses built in (or at least referenced)?
- Does the pricing reflect “all-in” availability, or is it the lowest-cost option that assumes “some risk of downtime”?
You goal is to evaluate beyond the hourly/usage cost. Factor in what an outage costs you, and whether your contract gives you recourse.
Leverage Negotiation to Reduce Risk and Costs
Major outages = moment of increased supplier vulnerability and thus negotiating leverage for you. When the supplier has just demonstrated that even their “best” infrastructure isn’t infallible, the customer has stronger grounds to ask for better terms. At the contract renewal or new-purchase point, strongly consider:
- Asking for improved SLAs: higher availability thresholds, faster recovery times.
- Demanding better compensation: larger service credits, or other remedies.
- Negotiating deeper discounts or improved pricing tiers in exchange for the risk you’re assuming (e.g.: “single-region reliance” risk).
- Benchmark your terms and pricing against market standards.
Remember: AWS’s position is entrenched, and it rarely budges on SLAs or downtime credits. But outages change the dynamic. Even if improvements are often a non-starter, this is the moment to push and see what’s possible.
Multi-Cloud and Hybrid Strategies
If your architecture is built on a single cloud provider, this outage should raise serious alarm bells. The root “single-vendor/single-region” dependency is the source of large risk—both operational (when the supplier falters) and commercial (weak negotiation position).
A multi-cloud or hybrid cloud strategy can improve resilience (failover across providers or regions) and create competitive pricing opportunities. Use this recent AWS event as the impetus for a portfolio review of all cloud/spend items and competitive bids to test other providers.
Optimize for Recovery and Redundancy
Cost-optimization isn’t just about reducing spend. It’s about reducing risk and ensuring continuity. The AWS outage reinforces that cost savings gained by skimping on disaster-recovery, failover, backup are false economy. When something goes wrong, the indirect costs (lost revenue, brand damage, remediation) massively outweigh incremental savings.
Customers should achieve clarity around how their vendor supports disaster-recovery or continuity (are DR-sites in different regions, zones) and what the failover mechanisms are (and how they’re tested and quantified). Following that, it’s important to understand what
pricing/contract terms are tied to those resilience components (can you negotiate better terms for DR services?).
Tactical Notes for IT Procurement
AWS occupies a deeply entrenched position in the enterprise cloud ecosystem. Their brand and scale give many companies a high switching cost. Switching clouds entirely may be impractical—but that doesn’t mean you’re powerless. The recent outage is your leverage moment. Use it!
- Push for better terms, credits, stricter SLAs, more flexibility (region-failover, multi-region architecture). What may have been a non-starter during your last AWS deal negotiation could be leverage right now.
- Don’t accept “lowest cost single‐region” arrangements and expect zero risk. Single-cloud reliance is the root of all evil: it hurts your operations and your negotiating table.
- Frame the conversation with senior stakeholders as: “We experienced an event like this recently; if our vendor cannot support us appropriately, we must explore alternatives.”
- Embed resilience and contractual flexibility as part of your procurement scorecard (not just price).
In short, turn this moment into opportunity. When the next outage happens, you want your contract, your architecture and your terms to be ready.
Interested in learning more? NPI’s cloud cost and contract optimization experts can help. Contact us.
