COST 1: How do you implement cloud financial management?

Implementing Cloud Financial Management enables organizations to realize business value and financial success as they optimize their cost and usage and scale on AWS.

Resources

AWS News Blog

Best Practices:

• Establish a cost optimization function: Create a team that is responsible for establishing and maintaining cost awareness across your organization. The team requires people from finance, technology, and business roles across the organization.

• Establish a partnership between finance and technology: Involve finance and technology teams in cost and usage discussions at all stages of your cloud journey. Teams regularly meet and discuss topics such as organizational goals and targets, current state of cost and usage, and financial and accounting practices.

• Establish cloud budgets and forecasts: Adjust existing organizational budgeting and forecasting processes to be compatible with the highly variable nature of cloud costs and usage. Processes must be dynamic using trend based or business driver-based algorithms, or a combination.

• Implement cost awareness in your organizational processes: Implement cost awareness into new or existing processes that impact usage, and leverage existing processes for cost awareness. Implement cost awareness into employee training.

• Report and notify on cost optimization: Configure AWS Budgets to provide notifications on cost and usage against targets. Have regular meetings to analyze this workload's cost efficiency and to promote cost aware culture.

• Monitor cost proactively: Implement tooling and dashboards to monitor cost proactively for the workload. Do not just look at costs and categories when you receive notifications. This helps to identify positive trends and promote them throughout your organization.

• Keep up to date with new service releases: Consult regularly with experts or APN Partners to consider which services and features provide lower cost. Review AWS blogs and other information sources.

Improvement Plan

Establish a cost optimization function

Define key members : You need to ensure that all relevant parts of your organization contribute and have a stake in cost management. Common teams within organizations typically include: finance, application or product owners, management, technical (DevOps). Some are be engaged full time (finance, technical), others periodically as required.

Define goals and metrics : The function needs to deliver value to the organization in different ways, these goals are defined and continually evolve as the organization evolves. Common activities include: creating and executing education programs on cost optimization across the organization, developing organization wide standards, such as monitoring and reporting for cost optimization, and setting workload goals on optimization. It also needs to regularly report to the organization on the organizations cost optimization capability.

Establish regular cadence : The group needs to come together regularly against their goals and metrics. A typical cadence involves reviewing the state of the organization, reviewing any programs currently running, then review overall financial and optimization metrics. Then key workloads are then reported on in greater detail.

Establish a partnership between finance and technology

Define key members : Ensure that all relevant members of your finance and technology teams participate in the partnership. Relevant finance members will be those having interaction with the cloud bill, this will typically be CFOs, financial controllers, financial planners, business analysts, procurement and sourcing. Technology members will typically be product and application owners, technical managers and representatives from all teams that build on the cloud. Other members may include business unit owners, such as marketing that will influence usage of products, and third parties such as consultants to ensure alignment to your goals and mechanisms, and assist reporting.

Define topics for discussion : Define the topics that are common across the teams, or will need a shared understanding. Follow cost from that time it is created, until the bill is paid. Note any members involved, and organizational processes that are required to be applied. Understand each step or process it goes through and the associated information, such as pricing models available, tiered pricing, discount models, budgeting, and financial requirements.

Establish regular cadence : The group needs to come together regularly against their goals and metrics. A typical cadence involves reviewing the state of the organization, reviewing any programs currently running, then review overall financial and optimization metrics. Then key workloads are then reported on in greater detail.

Establish cloud budgets and forecasts

Update existing budget and forecasting processes : Implement trend based, business driver based, or a combination of both in your budgeting and forecasting processes. Perform regular reviews in line with changes in business direction and usage.

Implement cost awareness in your organizational processes

Identify relevant organizational processes : Each organizational unit reviews their processes and identifies processes that impact cost and usage. Any processes that result in the creation or termination of a resource need to be included for review. Also look for processes that can support cost awareness in your business, such as incident management and training.

Update processes with cost awareness: Each process is modified to be made cost aware. The process may require additional pre-checks, such as assessing the impact of cost, or post checks validating that the expected changes in cost and usage occurred. Supporting processes such as training and incident management can be extended to include items for cost and usage.

Report and notify on cost optimization

Configure AWS Budgets : Configure AWS Budgets on all accounts for your workload. Set a budget for the overall account spend, and a budget for the workload by using tags.
Well-Architected Labs: Cost and Governance Usage

Report on cost optimization : Set up a regular cycle to discuss and analyze the efficiency of the workload. Using the metrics established, report on the metrics achieved and the cost of achieving them. Look to identify any negative trends to be able to fix them. Also look for positive trends that you can promote across your organization. Reporting should involve representatives from the application teams and owners, finance, and management.
Well-Architected Labs: Visualization

Monitor cost proactively

Report on cost optimization : Set up a regular cycle to discuss and analyze the efficiency of the workload. Using the metrics established, report on the metrics achieved and the cost of achieving them. Look to identify any negative trends to be able to fix them. Also look for positive trends to promote across your organization. Reporting should involve representatives from the application teams and owners, finance, and management.
Well-Architected Labs: Visualization Well-Architected Labs: Advanced Visualization

Keep up to date with new service releases

Subscribe to blogs : Go to the AWS blogs pages and subscribe to the what's new and other relevant blogs.
AWS Blog
AWS News Blog
AWS Cost Management

AWS events and meetups : Attend your local AWS summit, and any local meetups with other organizations from your local area.

Meet with your account team : Schedule a regular cadence with your account team, meet with them and discuss industry trends and AWS services. Speak with your account manager, architect and support team.