Unit Metric – The Touchstone of your IT Planning and Evaluation
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Throughout your IT planning and evaluation cycle, you will have questions about how much you should budget for your IT projects and how well your IT investments perform and contribute to your businesses. AWS provides you with tools and resources, such as AWS Pricing Calculator, AWS Budgets, AWS Cost Explorer, to help you estimate, budget, and analyze your costs. But it still takes some time to make sense of these data. By grouping these cost and usage data into self-defined categories with AWS Cost Categories is one way of interpreting and mapping these data back to business units, projects, and other entities as needed. These segmented cost information can raise cost awareness and accountability for your internal teams, however, they can’t necessarily evaluate the efficiency of your technology resources utilization, because different entities have different resource capacity requirement and contribute differently to your business outcome. These segmented cost information can’t be used to project the future spend, either, as they represent your historical spend and you still need to consider other factors, such as changes in business priorities and new initiatives.
You need to normalize your cost and usage information to a common ground, and tie them back to your business outcome. The answer to this is a Unit Metric. A unit metric is the touchstone of truth. These normalized metrics bring consistency, fairness, and clarity to your IT planning and evaluation cycle. You can use the unit metric to gauge how efficient your team uses technology resources, and you can also use the unit metric to forecast how much you need to invest, as your business grows. It’s straightforward to get buy-in and tell your IT value story inside your organization. That is why we’ve seen many customers adopted this practice. Lyft implemented the unit metrics, AWS cost per ride, to help internal teams, especially engineering teams, to understand the amount of cloud infrastructure cost is required to support a ride. Wildlife Studios normalized their unit metrics as AWS cost per game session, or AWS cost per active user, so the teams can see how their cloud investment translates to the business output. Both customers used the unit metrics to evaluate and guide teams’ cloud resources utilization; as a result, both were able to successfully improve the efficiency of how teams use cloud resources and drive down their unit cost.
You may be already convinced and ready to create your own Unit Metrics for your business, or want to learn more about this topic and why you should consider implementing it in your IT Financial Management process. To help you research on this topic, we’ve prepared a series of blogs that will go into details of the definition, design, things to look out for, and objectives of unit metrics. You can learn more about this topic from real-life examples and lessons. We’d love to hear from you and learn about how your team uses Unit Metrics to achieve your IT Financial Management targets.
- What is a unit metric?
- Selecting a unit metric to support your business
- Unit metrics in practice – lessons learned
- How unit metrics help create alignment between business functions
- Further thoughts on unit metrics