"Cloud cost management and optimization" is not a one-time project but a system project covering the entire lifecycle of using the cloud for an enterprise, relating to the internal management mechanism of the enterprise and is a recursive and continuing operation. According to the description on the FinOps official website "What is FinOps", "FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions." FinOps is a coined term from "Finance" and "DevOps", which emphasizes communication and cooperation between the business team and the engineer team. FinOps achieves the visibility, optimization, and continual operation of cloud costs through the Inform, Optimize, Operate stages of its lifecycle, encourages the practice of the six major FinOps principles, divides many FinOps capabilities into six major areas, and ultimately measures the maturity of practice through Crawl, Walk, Run stages. "FinOps" common alias in the industry include "cloud cost management", "cloud cost optimization", "cloud financial management" and others.
Alibaba Cloud Cost Management and Optimization Framework
Based on the core concept of FinOps and integrating their own practical experience, Alibaba Cloud proposed a more refined and localized "Cloud Cost Management Implementation Framework" for enterprise customers to reference for implementation.
Cloud Cost Management Runs Through the Entire Lifecycle of Using the Cloud
From the course of an enterprise using the cloud, can roughly be divided into planning, execution, monitoring analysis, cost optimization stages, and cost management runs through each stage and focuses on different points.
Planning stage: including using cloud for the first time, incrementally going on the cloud, restocks.
Do good organizational planning: Includes the organization structure sorting of the enterprise going on the cloud, planning of account system, permission system, enterprise rights (such as discounts, risk control), planning of the settlement relations of funds.
Do good financial planning: Includes compilation and planning of budgets, planning of financial assets (such as cash, vouchers), planning of costs (such as cost rights and responsibilities, allocation rules), understanding and selecting the billing methods of the cloud service provider (such as pay-as-you-go, saving plans, preemptive instances, resource packs, etc.).
Do good resource planning: Includes planning labels, capacity planning of resources, quota planning of resources.
Execution stage: including procurement execution, execution of rules for using the cloud (including setting of financial rules, setting of resource quotas, etc.), execution of business performance (including reconciliation, recharge, invoicing, etc.). In the execution stage of using the cloud, cloud cost management needs to be done well from the perspectives of financial management and resource management.
Financial Management: Need to do unified management of funds, bills, invoices well, and use the enterprise-level financial management capabilities provided by the cloud service provider to achieve unified settlement management and financial asset management across organizations with multiple accounts, to make the cost clear to monitor and analyze, need to set up cost account allocation rules through financial units.
Resource Management: Choose appropriate technical solutions and resource specifications to procure, can ensure the effective acquisition of resources with capacity reservation and other capabilities provided by the cloud service provider, and implement cloud resource procurement control through quota setting.
Monitoring and Analysis stage: Corresponding to the Inform stage of FinOps, mainly to solve the problems of cost allocation and cost visualization.
Cost allocation: Achieve effective cost allocation (including amortization, separate accounting, etc.) with the platform capabilities and allocation rules set up in the preceding stage, which is the premise of monitoring, analysis and even optimization.
Cost monitoring: Monitor cost and resource data through various monitoring means and effectively notify related personnel of warnings, there are generally two kinds of monitoring means, based on business rules (for example, warnings set by humans on thresholds such as budgets, cost amounts, resource usage rates) and based on AI algorithms (for example, anomaly detection intelligently identified by algorithms without the need for human setting of thresholds).
Cost visualization: When cost changes are perceived through monitoring warnings, conduct cost analysis with a variety of visualization tools to find problem points or optimization opportunities, commonly seen visualization analysis tools include all kinds of cost or resource reports, comparative analysis of budget and actuals, multi-dimensional cost statistics analysis tools, etc., future trends can also be observed with cost forecasting algorithms.
Cost optimization stage: Corresponding to the Optimize stage of FinOps, mainly to execute through billing method optimization, resource usage optimization and architecture optimization.
Billing method optimization: Cloud service providers usually provide various billing methods, by switching between different billing methods, enterprises can get a lower actual discount, or improve the usage efficiency of rights assets, thus achieving cost savings. Common practices include pay-as-you-go matched with savings plans, by promising longer-term consumption, they can get lower prices; purchasing suitable resource packs can also deduct pay-as-you-go traffic, thus saving costs. Enterprises can use valuation tools provided by the platform, contrast purchased and not purchased billing methods, switch to more suitable billing methods.
Resource usage optimization: Optimizing the usage rate of cloud resources is an effective means to achieve cost optimization. Common methods include releasing idle resources, downgrading low load resources, upgrading high load resources, elastic scaling, etc., usually resource monitoring tools are used to find optimization opportunities, and cautiously executed after considering business traits, performance, costs, etc. in combination. More strategies and methods are detailed below.
Continuous Operation: Cloud cost management is a recursive and continuous operation, enterprises should continuously loop the above four stages, form an effective operational mechanism, make cloud costs can be effectively controlled, continued optimization.
Key Elements of Cloud Cost Management
Personnel
Personnel are the foundation. Business, Finance, and Technology must work in synergy. Cloud cost management team is the foundation of the enterprise implementing cloud cost management. Cloud cost management is not something that needs to be done by a certain role or a certain team but needs the participation of multiple roles, breaking the traditional IT management mode where everyone looks after their own, all roles work together to achieve the goal of long-term governance of costs. Cloud cost management team needs to propagate cost management awareness and culture, spur cloud cost management best practices, determine the direction of enterprise cost management, coordinate cost management work between all departments of the enterprise. For example, regular cost management meetings can be held, reviewing and post-morteming some problems encountered in cost management, thus spurring continuous improvements.
The establishing of cloud cost management teams by enterprises needs to satisfy the following three conditions:
Cross-functional composition: Cloud cost management team should be made up of stakeholders from various departments of enterprises such as finance, IT, operations, business, etc.
Complete knowledge system: Cost management team needs multidisciplinary methods, has capabilities in project management, data science, financial analysis, software / infrastructure development, etc., can measure the execution and delivery capabilities of each department against cost optimization goals.
Management teams's approve and support: Management level must be the advocates of the cost management concept, provide support for the cost management team, ensure activities are carried out according to the priorities determined by the organization, to ensure the enterprise can continually create business value while effectively using cloud resources.
Tools
Tools are the key. Monitoring, Analysis and Adjustment are necessary capabilities. Cloud cost optimization tools are the keys of implementing cloud cost management and optimization. Cloud cost management is a complex and long term process that requires the capabilities to precipitate into tools. On the one hand, due to the variability of cloud costs and complexity of multi-cloud environments, cloud cost optimization based on analysis results and optimization strategies is not all suitable for manual accomplish, so tools can effectively improve the level of management and optimization of cloud cost. On the other hand, cost optimization is often implemented in a project, switching from project-driven to systematic self-service optimization is particularly important. Therefore, cost management capabilities need to be imprinted as tools or platforms, build measurable indicators, drive practical related organizations to self-help cost reduction.
Mechanisms
Mechanisms are the guarantee. Cost-consciousness and rewards/punishments system drive together. The corresponding long-term operational mechanism plays a crucial role in cloud cost control. Faced with the unusual expenditure mode and bill structure of cloud cost, enterprises need to update a more suitable cloud cost management procedure system to ensure the optimization work can accurately and efficiently operate within the enterprise. The cloud cost management procedure system includes three aspects:
Authority control over the internal cloud cost of the enterprise, including expenditure procurement, allocation modification, etc.
Systematic management of various procurement accounts for cloud resources, including billing calculations, managed payments, etc.
Unified quota and budget management of all types of resources or costs, including resource opening, expenditure approval, etc.
Enterprises can implement cloud cost management procedures through raising cost consciousness and creating a system of rewards and punishments to drive and guarantee the daily operation and maintenance. On one hand, the cloud cost management team needs to propagate cost management awareness and culture, best practices, determine the direction, coordinate all departments to carry out cost management work. On the other hand, establish KPI rewards and punishments system, cloud cost management as a performance assessment project covers all related departments, based on actual situations to set reasonable optimization goals, such as idle resource rate, cost-saving quota, etc., uniformly quantify the resource use of various departments, and periodically carry out reward and punishment measures according to the optimization results.