Contrary to a commonly held misconception, optimizing the value realized from public clouds, such as Google Cloud Platform (GCP), Amazon Web Services (AWS), and Azure, doesn’t necessarily mean minimizing spend on their services. In fact, growing cloud bills can be positive insofar as the consumer maximizes the value received per dollar spent, and the value realized exceeds that of alternative technologies. The goal should, therefore, not necessarily be to spend less on the cloud but rather to maximize the efficiency of cloud consumption. This is a critical distinction, especially for organizations that are in a growth phase and may be wary of any cost reduction initiatives that threaten to constrain operational flexibility.
Both growth- and margin-centric cloud consumers can maximize efficiency without inhibiting the attainment of their business goals. Here are some tips on how to do it.
Developing strong capabilities around the visibility and reportability of public cloud spend is by far the most important foundational pillar of FinOps. Metadata on billing line items such as tags, labels, or account naming conventions should be comprehensive enough that the organization can segment its cloud spend by business dimensions, better helping them understand their cloud economics. Examples of such segmentation might include segmentation by department, geographic region, customer segment, or by products and services. Although these dimensions will vary from organization to organization, there is one segmentation that nearly every organization must be able to implement: spend by technical owner. To meet this requirement, an organization should be able to trace every dollar of cloud spend to the person or people who incurred the cost.
Only with cloud spend comprehensively segmented can the other pillars of sound FinOps practices be applied. For example, with the ability to group cloud resources, technical owners can be consulted about the feasibility of downsizing or eliminating specific resources in their deployments. Similarly, cloud vendors offer a variety of commitment-based discount programs such as AWS Savings Plans and GCP Committed Use Discounts, the management of which falls under the pricing efficiency FinOps pillar. Optimizing participation in these programs requires accurate forecasts of future consumption by vendor SKU or product category. Compiling those forecasts accurately depends on an ability to track spend directly to technical owners so they can be consulted about their plans.
With careful planning, workload placement, and cost management, consumers of public cloud can maximize the value they realize from these services even when their bills are increasing month-over-month. So long as they are maximizing the value they get for those dollars, and the value received exceeds that offered by alternative technologies, rising cloud bills can be a very good thing.
By Rich Hoyer, Director of Customer FinOps at SADA