Stage I of AWS cost efficiency: Basic cost visibility
The FinOps Journey:
(EDITORIAL NOTE – Annotated in 2019 to show this post’s role on the path to the FinOps cloud operating model.)
Cost visibility has always been an essential part of cloud cost management, but over the years it’s been further codified and refined as part of the development of the cloud operating model FinOps. Under FinOps, visibility goes to the next level with:
- Visibility into IT spend
- Granular cost allocation
- Team-level budgets & tracking
In FinOps, this is called “Understanding Fully Loaded Costs.” Find out more by reading FinOps: A New Approach to Cloud Financial Management.
Visibility into daily cost trends is instrumental in catching and preventing unexpected spikes. That same visibility also encourages accountability among engineering teams, making your move to the cloud much easier to swallow—and to sell internally. That’s why the first step of optimizing your cloud infrastructure is ensuring insight into your costs as you accrue them.
Get daily AWS cost visibility fundamentals
Start with the basics: aim to provide daily visibility into month-to-date costs, a trend on your rolling average, and an estimate of what your end of the month spending will be, so that your costs are never a surprise.
Keep accounts in mind
If you’ve got multiple cloud accounts, be sure you’ve got daily visibility into a breakdown of major accounts. Seeing this will help provide a glimpse into which accounts are spending efficiently and—arguably more importantly—which are not.
Setting up per-account budgets at this stage ensures that the spenders under each can plan and maintain appropriate levels of spending— and can be alerted when they’re at risk of going over-budget.
If your accounts are organized into logical business groupings, that will enforce clean lines between spending—but more on that topic during Stage II.
Identify changes quickly
When there’s spike in your spending, you’ll want to look for a way to easily compare time periods to see what’s changed. There are two dimensions to compare: biggest net change, and biggest percentage change. The former will be your go-to when looking for the culprit after a spike, and the latter will be important for understanding trends.
Be good to Finance
Your Finance Department will thank you— and be much more supportive of your cloud use— if you can provide end-of-month estimates early in the month. This will help them with accruals, cash management, and financial reporting explanations, both internal and external.
Good news: achieving AWS cost visibility is the easiest of the stages of cost efficiency to nail, and our tool can help you every step of the way. Here are the steps to get up and running:
– Process and store the Detailed Billing Reports (or use a tool like Cloudability)
You can log in or start a free 14-day trial of Cloudability Pro to get started on these steps today. Done? Give yourself a pat on the back, let your finance and executive teams know they can breathe a little easier, and get ready for Stage II.
For more information about the Five Stages of AWS Cost Efficiency, check out these blog posts: