Giving IT, Operations and Finance teams the means to build a strong cloud cost management practice

INTRODUCTION

THE COSTS OF RUNNING your AWS infrastructure can add up if left unchecked. While companies can create killer apps to serve their users well, they can also leave a lot of savings on the table without the right tools to optimize their spending.

Having worked with some of the biggest AWS spenders in the world, Cloudability has identified notable trends in the way the most successful companies monitor, manage and mitigate their AWS costs. Following these guidelines will allow you to scale your own cloud infrastructure efficiently.

We collected all the winning trends that we know of and boiled them down into what we call The Five Stages of AWS Cost Efficiency.

STAGE 1 Gaining Basic Cost Visibility
STAGE 2 Managing Cost Allocation and Chargeback
STAGE 3 Optimizing Usage Efficiency
STAGE 4 Developing a Reserved Instance Purchasing Strategy
STAGE 5 Understanding the Business Value of Increasing Cloud Spending

Use this e-book as a guide to learn and understand each of these stages, and apply the key tips, visualizations and reports to drive better cloud cost management for your own organization.

STAGE 1 GAINING BASIC COST VISIBILITY

Putting an end to surprises in the AWS bill

THE FIRST STEP IN EFFICIENT CLOUD USE for any size of company is to be able to see and understand what it’s spending and whether that spending is going up or down. This goes beyond the monthly statement and into a much more granular view.

First of all, anyone trying to wrangle their company’s AWS accounts needs to make sure that ALL of the company accounts are known and included in this process. Secret projects kick off, new resources spin up to take care of overflow work—this is just the way business gets done in the world of tech. But getting every known AWS resource and its billing into one place is the first winning step toward efficient cloud cost management.

So to reiterate, even within an individual company there can be multiple master payer AWS accounts. To understand the total cloud costs of your business, these accounts must be identified and their data aggregated into the same cost management tool.

Daily monitoring of month-to-date costs, rolling averages and estimates of end-of-month spending delivers accountability and confidence to operational teams and management. This visibility into cloud cost and usage data are foundational pieces of information that teams can use to optimize their cloud spending.

TRANSFORM THE MONTHLY VIEW INTO A DAILY ONE

Even at the monthly view, poring over an AWS bill is an intense process. Breaking down those numbers across all the products and services into a daily view adds a few layers of complexity.

Breaking the bill down into a daily view is a great first line of defense against unwanted cloud spending anomalies. For instance, finance and operational teams can learn of spiked usage within days or weeks instead of finding out a whole month later. This allows teams to adjust their cloud spending and provision operational teams to accommodate for these spikes in usage.

AWS Detailed Billing Report
The AWS Detailed Billing Report can be quite long and detailed. Parsing specific billing information is a big task when done by hand.

SEPARATE CLOUD SPENDING BY ACCOUNTS

Along with a granular, daily view of their cloud spending, businesses can organize cost and usage data by accounts or teams. This means organizing and breaking down the monthly AWS bill into specific teams and their projects. This financial and operational accountability gives teams the confidence to know where to scale operations up, where to tone things down and to truly understand where cloud investments are going.

In addition to identifying spikes in cloud cost in usage by the day or hour, businesses now have the means of detecting and classifying anomalies and spikes in usage to specific operational teams. This requires proper tagging of cloud resources to get the most mileage, which we’ll cover later in the guide.

Separating cloud spending by accounts also provides a way to deliver consistent reporting and accountability to team leads and relevant stakeholders. As the business scales its operations, and likely increases its cloud spending, no one is left with a surprising bill if proper cloud cost management reporting and visibility are in place.

WHAT’S NEXT? Transitioning from a default monthly bill into a daily view by accounts is the first step toward building a culture of cloud cost management. Once this foundation is in place, IT and operations teams can start to identify which parts of their AWS spending can improve and grow.

Financial teams can now have visibility into what is typically a complex billing process. Reducing surprises and being able to add context to spikes in the AWS bill is music to the ears of any financial department.

STAGE 2 MANAGING COST ALLOCATION AND CHARGEBACK

Everyone sees what they’ve spent, and where they spent it.

NOW IT’S TIME TO VISUALIZE and understand where the dollars are going. Proper tagging and classification of AWS resources are not default features. But businesses willing to do the tagging work upfront yield massive visibility and tracking benefits later on.

Getting management and teammates around a common cost allocation strategy, developing a programmatic and repeatable tagging policy and delivering specific reporting views for specific budget holders are key elements toward building a sustainable cost allocation and chargeback plan.

BUILD A COST ALLOCATION STRATEGY AND TAXONOMY THAT SUITS EVERYONE

Before creating and sending reports to budget owners and stakeholders, AWS users should bring operations, IT, and finance together to create a cloud cost taxonomy that everyone agrees with. This taxonomy becomes the common ground and language to deliver cloud cost management reports and insights.

This taxonomy should assist teams in visualizing cloud cost and usage data and answering questions like, “How much are we spending on staging, dev and test environments?” While finance might not typically be involved in those areas of the business, a common cost allocation strategy and plan should include a working knowledge of terms and definitions so all stakeholders can understand why operations spends what it needs to to keep building, developing and testing new apps and products.

This also empowers finance to ask questions about how teams and projects can improve the return on their spending, such as identifying which teams or projects are most efficient, and which may need some help getting there. The ability to break a master AWS account into smaller, understandable chunks enables clear, transparent communication so all teams can work toward improving the return on their cloud investment.

 

To read full download the whitepaper:
Mastering the Fundamentals of AWS Cost Efficiency

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