Introduction

It’s often hard to know where to start with cloud cost optimization and management. It’s such a broad area that an entire “FinOps” discipline has emerged to describe it. Although no organization moved to the cloud to develop its FinOps expertise, ignoring FinOps will limit the value cloud delivers. The important thing is not to get bogged down in ALL the detail from the outset. Instead take time to identify your biggest cloud cost challenges, that will provide the biggest returns, and build out from there.

The State of FinOps survey by the FinOps Foundation includes a summary of key cloud cost management pain points. We’ll use that to highlight the FinOps pain points that we address. If any of these sound familiar, hopefully we’ll have given you a pointer on where you could start, or go next, on your FinOps journey.
 

A bit of Strategic Blue Context:

Our role in cloud cost optimization is best simplified with the equation:

Cost = What you use * the rates you pay

If you’re using only what you need, when you need it and paying the lowest rates achievable then you’re doing a pretty good job. We optimize the rates you pay using AWS Reserved Instance and Savings Plan commitments. AWS provides discounts that can exceed 70% in exchange for these commitments to use particular resources or spend certain amounts on 1 or 3-year terms. These commitments provide a great way to make savings that involve no engineering effort or technical changes to implement.

We enable access to these rate optimization discounts:

• without the need for detailed forecasting, 
• without the typical 1/3 year constraints that risk large, long-term financial liabilities and 
• without limiting technical freedom to adjust your use of the cloud in the future.

FinOps Pain Points we address

Empowering engineers to take action

 What prevents action is likely to depend on the nature of action needed and will vary from one organization/engineering team to the next but we empower engineers to act by:

• saving time so they can focus on areas that make the best use of their expertise, interest and authority to act
• saving money that can fund testing and new initiatives and demonstrate good financial control to help future cloud budget approvals
• building flexibility to ensure that cost savings do not come at the expense of being able to change their use of the cloud.

Expertise and interest

Engineer expertise and interest is in cloud technology, not cloud pricing. We enable cloud usage optimization to be separated from cloud rate optimization to give engineers freedom and time to take technical action that makes full use of their expertise and interest.

With so many cloud services available, all of which can be switched on and off very dynamically, often through code written by engineers, it’s natural to turn to engineering teams for any question about your cloud bill. The urge to do that is one you should avoid if you want to avoid distracting them from doing what they do best.

They know, and need to keep up, with the ever-changing technical landscape and what functionality, security, availability and performance your organization needs now and in the future. This is enough of a challenge so let them stay focused on it.

Lack of authority

Savings Plans and Reserved Instances represent a financial commitment and engineers are rarely authorized to act entirely independently in making them. This creates barriers to taking such “rate optimization” actions and also limits the extent automation is allowed (State of FinOps by FinOps Foundation). We remove these barriers and the responsibility to manage commitments, to release time, which empowers engineers to take action in other areas.

Even if engineers have the authority to act without these controls, and no matter how clear the potential benefits are, the personal risk of making expensive mistakes can create a hesitation to act. This may result in more time spent analyzing and forecasting to increase confidence, more conservative actions that fail to access the best discounts or a failure to take any action. None of this is empowering engineers and certainly not in a way that makes the best use of their expertise and interest.

Access to Budget 

Testing and exploring new initiatives will likely require cloud resources and hence money to pay for those resources. Without the approval to spend that money, engineers are not empowered to act. 

By making savings on existing cloud spend we release money to be used elsewhere and demonstrate good cloud financial management which often makes obtaining approval for future funding easier.

Enabling technical freedom

While AWS Savings Plans and Reserved Instance commitments can provide big savings, overly simplistic, poorly considered use can produce lock-in to particular spending levels or use of specific resources. This can limit choices or negate the benefits of re-architecting, rightsizing or migrating as organizations may end up paying their committed spend level or paying for both the old and new resources.

By removing, or at least minimizing, this lock-in we empower engineers to use the resources they need, no matter how those needs change.

Supporting organizational adoption of FinOps

We help you clearly and quickly demonstrate a valuable return on investment in one significant area of FinOps to help overcome the challenge of gaining executive buy-in (State of FinOps by FinOps Foundation). With this success under your belt, it should make it easier to promote the value of adopting wider FinOps best practices.

Implementing FinOps governance and policy at scale

 We reduce the scope of implementing FinOps governance and policy by managing the rate optimization side of FinOps for you. 

• We define and manage your commitment strategy at a centralized, organizational level. 
• We provide you tools that transparently show the effects and value of our actions alongside the policy we’re implementing for you. These should be useful for those wishing to make greater use of KPIs on cost (State of FinOps by FinOps Foundation).
• With clearly defined, and communicated benchmarks on the impact, we ensure clear governance through ownership and accountability. This is tightly aligned with our contractual obligations which include shared, well-aligned, incentives.
   

We have over 10 years of working with organizations across a full range of industries, scales of cloud adoption and maturity in their approach to FinOps. Our consultants can share this expertise to help you implement good FinOps governance and policy that works for you.

Reducing waste or unused resources

Our portal provides you access to cost and usage trends and insights using the “CUDOS framework” developed by AWS. This allows you to make use of AWS best practice reporting and visibility on top of our rate optimization expertise. AWS updates this regularly to reflect changes in available cost and usage data, feedback from users and harness updates to the underlying dashboard technology (Quicksight). We pass on these updates through our portal.

We can also help you set up these dashboards in your own environment so you can customize them to your specific needs and integrate them with other reporting tools if needed. 

Accuracy of forecasting

Forecasting is often given as an area requiring improvement and a high priority for development (State of FinOps by FinOps Foundation).

While we do not help to address the issue of forecasting directly, our approach to commitment management at least reduces its importance in helping reduce the rates you pay. 

Each of the different types of AWS Reserved Instances and Savings Plans has its own characteristics, best use cases and varying levels of flexibility (Understanding AWS Commitments). We make use of all these types to maximize your savings whilst minimizing your lock-in. This reduces the need for highly accurate forecasting that provides the level of certainty needed for traditional commitment management approaches.

Where forecasting information is available we can incorporate it in our approach for you. This reduces the issues often seen when relying entirely on past trends to forecast the future.
 

Conclusion

It is interesting that managing commitment-based discounts  (“rate optimization”) has risen close to the top of FinOps Practitioner Key Priorities (State of FinOps by FinOps Foundation).

In the seemingly endless drive to do more with less it’s difficult to know whether it is time or money that is the more scarce resource. When you can’t prioritize everything, all at once, you have to make careful judgments on where best to focus your efforts. Each of those decisions comes with its own opportunity cost – what are you missing out on by doing what you’re doing?

Our free savings review shows the potential rate optimization savings with a data-driven assessment. From this, organizations can make an informed decision on whether to reprioritize internal team focus or realize savings by allowing us to manage it for them.