Cloud cost management lifecycle part1

by INVOKE Team

Based on recent surveys, for the users who adopted cloud, cloud cost management (or) cloud FinOps becoming a highest priority activity in year 2020. Before you can properly control and optimize your public cloud costs, you need to understand where costs originated from.

Cloud Cost Management should be a series of steps which could be iterable (in other words “lifecycle”) instead of one-off work, because this activity needs to be done over time (and repeatedly) by looking at different components and aspects while carefully performing trade-offs between architecture and performance considerations.

While working on cloud cost optimization, primarily it happens in 3 phases, in other words, lifecycle of cost optimization activity is:

  1. Monitor the spend
  2. Identify the waste in spend
  3. Act on waste in spend
For this blog post, we will limit discussion to phase one of the life cycle “how to monitor the cloud spend” and cover remaining phases in subsequent posts.

Monitor the spend

While we deal with “cost” and “savings” related to a business, a quote by infamous management guru, Peter Drucker, applies aptly: "What gets measured, gets managed." The easiest way to understand this quote is by inverse it, "If you can't measure it, you can't manage it."

Be it business metrics or technology metrics, if you don’t start with measuring and quantifying them, it would be very challenging to fix and get expected value out of the initiative. These same principles apply for Cloud Cost Management (or) “Cloud FinOps” too.

Visibility into the full spectrum of costs is critical to accurately understand organizational spending patterns. Best place to start is, look at “billing”. All cloud providers provide detailed “billing” on the services used, duration of the services used and associated costs. Studying this information will tremendously help in identifying where your money is going.

AWS Cost Explorer:

AWS Cost Explorer has an easy-to-use interface that lets you visualize, understand and manage your AWS costs and usage over time. This tool comes with a set of default reports that you can use as the starting place for your analysis.

While using cost-explorer, here are a few tips you can apply to have better understanding of usage and costs.

  1. Leveraging usage type groups
  2. Usage types are the units of usage that AWS services track for individual resources. Usage type groups are a bundle of related usage types that Cost Explorer bundles into a single filter, making it quicker and easier to examine specific facets of your AWS usage.

  3. Understanding the EC2-Other service category
  4. The EC2-Other category includes multiple service-related usage types, tracking costs associated with Amazon EBS volumes and snapshots, elastic IP addresses, NAT gateways, data transfer, and more.

  5. Diving deeper into your tagged costs
  6. AWS provides you with the ability to define and apply resource tags from the Tag Editor or individual service consoles. You can activate these tags for cost allocation purposes in the Billing console. Those tagged groups are essential to understanding key facets of your organization’s cost footprint.

You can read more about these tips and tricks on AWS Tips and Tricks for Exploring your Data in AWS Cost Explorer blog post .

Azure Cost Management and Billing:

Azure Cost Management is a cost management solution that helps you monitor and control Azure spending.

Here are few common cost analysis use case (These are similar to AWS Cost Explorer tips):

  1. Cost breakdown by Azure service
  2. Viewing costs by an Azure service can help you to better understand the parts of your infrastructure that cost the most. For example, VM compute costs might be small. Yet you might accrue significant networking costs because of the amount of information emitting from the VMs.

  3. Cost breakdown by Azure resource
  4. Azure services are built with Azure resources. Reviewing costs based on resources can help you quickly identify your primary cost contributors.

  5. Costs per day or by month
  6. Looking at daily and monthly costs can help you to better understand if there’s a time of the week or year where your costs are higher. If you have more customer traffic in a holiday period, does that lead to a corresponding increase in your Azure costs? Is Friday a more costly day than Monday?

  7. Costs for a specific tag
  8. Many Azure users apply tags to their resources such as a cost center or development environment (production and test) to better categorize charges.

Though these tips are not a comprehensive list, these will help you get a good understanding on which services are being used and how much they are costing. Equipping with this information will help you to be well prepared for the next phase of cost optimization, “identifying the waste in cloud spend”.