2022 CFM Peer Connect recap: What are customers doing to allocate shared costs?
If you know me, you know that the AWS Cloud Financial Management Peer Connect events are the favorite part of my job. I love working with customers as we refine their stories, and I love hearing the conversations between customers in the discussion rooms. Our AWS hosts know they only have one job in those rooms: listen and stay out of the way!
Without fail, there was one question that surfaced at every monthly event this year: How should I allocate shared costs – security, support, networking and more? There are common tools customers use to support allocation (for example, account tags, cost allocation tags, and cost categories), but it comes back to what is important to your business.
Based on what customers have shared at Peer Connect, here are the three most common ways they deal with allocating shared costs, in order of least to most effort:
- Central IT covers the costs. Customers decide they will pay for shared costs out of the central IT budget and account for it the same way as other centralized IT costs. These customers have a way to allocate central IT costs back to specific units, or have decided it is not important enough to invest in more detailed accounting.
- Proportion based on AWS spend. Other customers decide to allocate shared costs back based on a proportion of all non-shared AWS costs. For instance, if Marketing accounts for 20% of total non-shared AWS costs, it will pay for 20% of the shared costs. This becomes a monthly process that is determined after the bill is final for the month.
- Proportion based on usage. These customers track back usage to specific teams. There are no native services to do this. These customers invest in instrumenting their applications to track these costs, whether through logs or application code to account for usage. These customers may start with proportional AWS spend and incrementally track more and more shared costs by usage over time. They’ll determine when the value of additional tracking is no longer worth the additional effort to track it.
Here’s something else we know from the time we’ve spent talking to and listening to customers: there isn’t one right answer in these situations. The only right answer is what’s right for you. For instance, some customers simply move to accounts separated by project instead of shared accounts. The key to success is getting buy-in on the rules and execution, and overall consensus on how much investment you’ll make to allocate your costs.
✔️Check out more customer solutions in our past 2022 CFM Peer Connect events, and check back to join new events in 2023!