AWS Cloud Financial Management

Empower your engineers to take an active role in cost optimization

A vital element of proactive cost optimization is empowering engineering teams, since they are owners of the AWS resources and services deployed. This is one of our customers’ biggest cloud financial management challenges, echoed by the State of FinOps 2022 survey for the past 2 years, and by IT leaders who ask us, “How can get our engineers to take a more active role in cost optimization?”

Traditionally, engineering teams prioritize developing and releasing high quality software in a timely manner, without having to consider infrastructure costs. They typically don’t have visibility or access to historical cloud usage and spend data.  From our experience, engineering teams are willing to take a more active role, but may be hindered by a lack of education, tools, time, and incentive. A culture change is required.

Build trust and partnership between CFM and Engineering teams

Many organizations are starting to identify Cloud Financial Management (CFM) or Cloud FinOps as a key function. The CFM team (one or more specialists) is responsible for evangelizing and implementing capabilities that enable cloud cost management. Building partnerships with cross functional teams is a critical success factor for CFM within an organization. The CFM team should be a trusted advisor to the engineering teams, and empower them with the right set of tools to play a more active role in cost optimization.

The CFM team should ensure Engineering knows they are there to help, and how they can help them. Engineering teams will have limited bandwidth, so the CFM team should do the heavy lifting by conducting in-depth, up-front analysis. This involves reviewing historical spend and utilization metrics, top spending applications and services, and estimating utilization requirements. Then the CFM team can share their analysis and findings with Engineering to jointly develop tailored recommendations such as rightsizing, automation, or architectural changes.

Doing this will help the CFM team understand the pain points of Engineering, and which optimization measures are low hanging fruit vs. longer term projects. Additionally, Engineering can provide guidance on optimization efforts that may negatively impact performance or customer experience. By doing this, Engineering can gain insights into data analysis and overall cloud cost management processes. This creates a vital and collaborative feedback loop and cost optimization recommendations process.

While this may require hand holding to start, it must not turn into a dependency that Engineering develops with the CFM team. Let’s explore the ways you can help your engineering teams mature independently to identify anomalies, analyze data, and take proactive corrective actions.

Enable teams with cost management tools and data

We recommend introducing cloud cost management early in the software development lifecycle. This can be achieved by making cloud costs a non-functional requirement during release planning. Educate your engineering leads on how to use tools such as the AWS Pricing Calculator to estimate AWS costs (based on technical requirements) for building the next product, or new features of an existing product. These cost estimates can drive meaningful conversations on system design during gate review meetings, potentially resulting in a more cost-efficient architecture. Over time, the scope may be expanded to include AWS cost estimates for Quality Assurance (QA), pre-production, and production environments. These data points can be used by the finance teams for initial budgeting purposes, refined over time to establish a baseline, and used to create a guideline for an AWS Budget to ensure developers can check if they are going over their planned costs.

Engineering teams can lack visibility into ongoing cloud costs consumption of their respective applications. It is unrealistic to expect them to act on something they cannot see. We recommend building AWS Cost and Usage Reports (CUR) dashboards using tools like AWS Cost Explorer (CE) or the AWS Cloud Intelligence Dashboard (CID). This will give all relevant stakeholders access to near-real time data, and ultimately increase accountability through the proper cost allocation models. The purpose of the dashboards should be showback, not shameback. These dashboards must be simple, so that users can access the data they care about quickly, and at the right level of granularity. With this data, engineering teams will be better equipped to do dive deep analyses like determining usage patterns, finding top AWS resource spend, or performing root cause analysis of a cost anomaly. They’ll also be able to make more timely and informed decisions related to architectural changes and cost optimization.

Establish educational opportunities and mechanisms

It is equally as important to implement a mechanism for continuous education, internally or using AWS specialists. Example topics include how to identify top spending applications/services/resources, specific cost optimization strategies, and general CFM best practices. Include all relevant stakeholders from cross functional teams (Engineering, Operations, and Finance) so everybody understands the nuances of what drives cloud costs up or down. Maintain an easily accessible internal repository of lessons learned, quick wins, and long-term cost optimization strategies. You can also track and address Key Performance Indicators (KPIs), such as Savings Plans utilization and tagging coverage with desired target levels, by building playbooks that explain what to do when these KPIs move in the wrong direction. These repositories and documentation can be used for new team member onboarding, too, so they’re setup for success from the beginning.

Celebrate success

Employee recognition can improve motivation, accountability, and productivity. Celebrate CFM wins by recognizing and rewarding the individuals or teams involved in delivering positive business outcomes. You can use existing mechanisms or create new ones to celebrate CFM success such as cost optimization achievements. Some examples are success story features in internal newsletters or public acknowledgements in company-wide meetings. Such recognition includes the names of team members involved, actions they took, and the impact made in terms of cost savings, efficiency, or automation. Most importantly, they share how others can follow in their footsteps.

Another great mechanism is gamification. It encourages friendly competition among different application teams spanning over a few days or weeks, and rewards those with the highest optimization impact proportional to their spend, to ensure all projects have an equal opportunity to win. You can measure the impact across cloud efficiency accomplishments, such as reducing waste spend, increasing tag coverage, or designing cost optimization architecture. Rewards may include free lunch, team outings, or gift cards.

Final thoughts

In summary, IT or CFM leaders can earn trust across the organization by empowering engineering teams with the tools, time, and data to view, understand, and manage their cloud spend, while celebrating successes (even if small) to improve employee engagement. It’s important to understand the challenges your engineering teams face, and provide them with what they need to play a more active role in cost optimization. Improving their access to and awareness of data, resources, and education related to AWS cost optimization bestows ownership and accountability. By doing so, you’ll promote a cost-conscious culture and mature your engineering teams into making cost optimization not only a priority, but an imperative.

💡Discover: Do your engineers know how much they’re spending? Do you have insight into the details of your cost and usage on AWS? Are you taking advantage of all your cost optimization opportunities? Watch this re:Invent 2022 session to learn how organizations are using the Cloud Intelligence Dashboards to start their FinOps journeys and create cost-aware cultures within their organizations.

Himanshu Kapoor

Himanshu Kapoor

Himanshu is a Cloud Financial Management specialist in the AWS Cloud Economics team. He is a subject matter expert in guiding customers through governance and control mechanisms to best manage their spend as they scale with AWS. His team helps customers by building migration business cases, and educating them on CFM best practices including Measurement & Accountability, Cost Optimization, Planning & Forecasting, and Cloud Financial Operations. Previously, he was a CFM lead for a Big Four consulting firm.