Trending topics from the AWS re:Invent CFM kiosk
The global cloud community has convened at AWS re:Invent 2022 (Nov. 28 – Dec. 2) to share news, knowledge, and inspiration. All week long, our Cloud Financial Management experts have been speaking with customers and CFM practitioners from around the globe, and a few trending topics have emerged.
Here are some of our most frequently asked customer questions direct from the CFM kiosk at re:Invent 2022:
1. How do I start my CFM journey?
To get started, its key to identify an owner (individual or team) responsible for driving cloud financial management activities as well as create a Finance and Technology partnership, and establish a regular communication cadence to create and maintain alignment. This will allow you to accelerate and guide the CFM practice maturity within your organization.
Next, implement an account structure and tagging strategy to enable allocation of cost to lines of business, products, or teams. This will ultimately help raise cost awareness and establish efficiency KPIs for finance, technology, and business stakeholders. Remember that “A deal is a deal”, so don’t forget to implement cost forecasting and monitoring to better predict spend variances.
Last but not least, leverage services and tools to identify and implement cost savings opportunities.
🏁 Getting Started with Cloud Financial Management
2. How do I handle cost allocation and chargebacks?
The best way to raise cost awareness is to make users accountable for their own cost and usage–a process that starts by making costs visible internally. Customers take different approaches to tracking and allocating costs. To get started, you need to establish a cost allocation model with these basics in place: account structure, tagging strategy, and shared reporting.
- Account structure: Whatever your cost allocation approach, you need to start with a clean AWS account structure. Ideally, you’ll have a designated person or team to design and implement the account structure and policies throughout your organization. Choose an account structure that establishes the hierarchical account order and groupings that align with and support your overall business objectives.
- Tagging strategy: Once this structure is in place, you need to create and implement your own tagging strategy. These tags are where you assign metadata to your AWS resources so that you can easily manage and filter your resources, and give granular access control to users. With the proper tagging strategy, you can understand where usage is coming from and where you’ll have opportunities to save.
- Shared reporting: Finally, even with a proper cost allocation strategy in place, you can run into difficulties identifying owners for certain shared costs like data transfer costs or AWS Support fees. This is where consistent collaboration and alignment on cost allocation and reporting is vital. With comprehensive stakeholder awareness and buy-in, you can implement AWS chargebacks, which let you apply the cost of bills to specific cost centers in a business unit. Transparent chargebacks help your teams and business units not only increase accountability, but contribute to normalizing and, ultimately, optimizing costs.
For chargebacks to specific business units, customers tend to either use the AWS Cost & Usage Reports (CUR) or AWS Cost Explorer as the basis to apply their internal logic. Customers implement AWS Cost Allocation Tags and AWS Cost Categories to allow them to view the usage against the different business units, then process any unassigned credits or untagged spend according to their own standards. Many separate the credits and apply them back based on percentage of the total AWS Bill assigned to each Business Unit.
In the case of Savings Plans and Reserved Instances, the credit may be applied to the specific BUs that paid for them. For some companies, this tends to be a process that is done as a monthly job when the bills are finalized using processing against the API, CSV download from AWS Cost Explorer or the CUR report via Amazon Athena, AWS Glue or other processing.
3. How can I find ways to optimize my AWS costs?
Before taking any action to reduce cost, you need to know the costs of the AWS services you are consuming. Establish measurements and monitors for accurate visibility and continuous cost optimization. You can set this up by defining and enforcing cost allocation tagging and defining unit metrics to evaluate your business cost performance. Use AWS Cost Explorer to view and analyze your AWS costs and usage. This tool provides default reports that help you visualize cost and usage at a high level (e.g. AWS accounts, AWS service), or at the resource level (e.g. EC2 instance ID).
Next, focus your cost optimization efforts on these 3 key areas:
- Match capacity with demand- Matching the resources you provision with your requirements and needs is essential to optimize your costs and usage of AWS. Start identifying Amazon EC2 instances with low-utilization to reduce cost by stopping or rightsizing. Monitor Amazon RDS and Amazon Redshift instances with low utilization and reduce cost by stopping (RDS) and pausing (Redshift). Finally, analyze Amazon DynamoDB usage and reduce cost by leveraging autoscaling or on-demand.
- Implement processes to identify resource waste- The cloud enables you to optimize costs by meeting dynamic needs, turning resources off when you no longer need them. You can start identifying Amazon EBS volumes with low utilization and reduce cost by snapshotting then deleting them, analyzing Amazon S3 usage and reduce cost by using lower cost storage tiers, and reviewing networking and reduce costs by deleting idle load balancers.
- Choose the right pricing models- AWS offers various pricing models, including on-demand pricing, Spot Instances, Reserved Instances, and Savings Plans. Choosing the right pricing model will help you optimize costs based on your workload’s needs.
Are you at re:Invent and have a question or an experience you want to share with our CFM experts? Drop by the AWS Cloud Financial Management kiosk at the AWS Expo center and chat with one of our team members. Or, you can join our remaining breakout sessions, chalk talks, builders’ sessions, or workshops. Check out our list of re:Invent 2022 offerings.
If your team prefers a more in-depth discussion with AWS CFM leaders and experts, you can contact your account teams and request customer meetings at re:Invent. We will assign speakers for your meetings so your team can have a 1:1 conversation with us in a private setting.
Also, don’t miss CFM Peer Connect right after re:Invent (Dec.7: 8AM Pacific Time and 5PM Pacific Time) for its end-of-year CFM Leadership session, where you’ll hear from AWS leadership and multiple industries who’ll share their CFM journeys. Then, you can ask questions or share your own journey in discussions with your peers.