Top 10 Things to know about AWS Cloud FinOps

Updated 09/19/2022

AWS Cloud FinOps is all about creating and presenting the financial impact of a managed cloud service over the business.

With A Cloud FinOps practice, companies are in a position to know their clear picture of AWS cloud finance management.

Note that Cloud FinOps is not limited to companies who have started in the cloud but even more critically enterprises that are fully in the cloud.

In fact, it is best suited for companies who have made the shift to the cloud in recent years due to both cultural and outcomes that must be considered.

FinOps can be intergraded in parallel with the procurement team of such companies who are not born in the cloud.

Cloud FinOps, essentially is born I the cloud, and thus, it is dynamic and scalable by nature. Once challenge has been around cloud adoption shifts.

With Cloud Computing our IT spending moves from from Capital Expenditure (CapEx) to Operational Expenditure (OpEx) with on-demand pay-as-you-go services.

Budgets, forecasts and reporting processes that were used internally for years may not be suited for the cloud since cloud is based on variable spend.

Companies who have deployed AWS cloud can safely use AWS Cloud FinOps when proper knowledge and investment.

Here are the top 10 things you need to know regarding AWS Cloud FinOps cost optimization and AWS cost management. Teams need collaboration around cloud spend

Using Cloud FinOps, the organization is a better position to understand finance accounting divides, technology team work and leadership charts.

This way, all the teams can be on the same page before beginning with any meeting or taking any organizational decision around cloud spending.

AWS has tools such as the AWS Cost and Usage Reports (AWS CUR) which contains the most comprehensive set of cost and usage data available.

Ensure your organization has a reporting structure such as Chargeback or Showback.

A Cloud FinOps best practice is to have a centralized FinOps team which should have a wide range of skills.

The Cloud FinOps team needs to communicate with business executives, speak to and understans IT finance, have meaningful conversations about AWS cloud costs and architectures with application teams, analyze large volumes of data, and be FinOps advocates to educate and inspire the wider company.

Decision must be based on Core business value of cloud

Since the teams collaborate effectively, it is a big plus while making financial decisions.

AWS products are defined to make the organization better and build a stronger infrastructure on the cloud.

For example, while refactoring an application for ECS or Lambda, you may require an initial investment of your development team’s resources. Or perhaps you may need different EC2 instance types to get the application tested from production. Engage the teams and collaborate with both experience and resources.

AWS Has a newer capability called “AWS Compute Optimizer” that can really help you understand your workloads and how to match them to the correct instance type.

These decisions may result in a better, faster application which may make it more popular amongst the users.

If this is the outcome of it, it sure is a good decision despite getting over budget.

Consider getting certified in FinOps with the industry leading FinOps Certifcation.

To stay adept, enterprise professionals both technical and managerial today opt for top notch training and certifications such as the Cloud FinOps Practitioner (FinOps) from the Linux Foundation.

Ownership is managed based on cloud usage

With AWS, organization can easily take decisions to spin up resources whenever needed.

The flexibility of cloud is the biggest benefit one can make use of.

For the overall better results, it is necessary that teams take responsibilities of what part of cloud they use.

Teams can work together to use the right type of resource but also the right cost structure.

For example, AWS has Savings Plans that can be utilized for compute services that are flexible for teams.

For example, if a team leaves an exception in the application process and it results in a spike in EC2 consumption, the team must be willing to take up the responsibility to fix it.

Cost Management is critical. Manage costs for Chargeback

Teams need to review the “Cost Optimization” pillar of the AWS Well-Architected Framework, which promotes cloud financial management. The Framework includes great advice and best practices, including creating “a partnership between finance and technology”, which is in strong agreement with the best practices from the FinOps community.

FinOps requires a centralized but collaborative Team

To make the maximum utilization of AWS cloud, cost optimization tools like Saving Plans and Reserved Instances do come in handy.

Reserved Instances allow an enterprise to purchase compute commitments for a period of 1 or 3 years.

Many organizations who have large work requirements can contact AWS and make out requests for plans that work best for them.

FinOps, however goes beyond cost optimization.

With a company-wide culture of FinOps, you can make cost maintenance and management way easier than you think.

A centralized team handles all the FinOps activities and provides a go to signal for any new thing that is being taken up by the business.

The variable cost model is a plus

A single resource can be billed is a number of ways the key is to take decisions based on the most optimized way of billing. AWS and cloud make statistical predictions a piece of cake.

The financial decisions need to be operated on same level as that of the cloud infrastructure. Variable costs can be taken advantage of.

Budgets are an important way to keep control of your spending and identify cost overruns.

For example, companies can make use of Amazon Cloud watch to make best utilization of near-real-time cost and usage data.

FinOps Certified Practitioner Crash Course with Practice Questions on TechCommanders

Don’t let performance problems to build up

While working with AWS cloud and FinOps, a good idea is to never wait to upgrade when you need it. infect, you need to make decisions beforehand.

This definitely doesn’t mean to start overspending.

If you have upscale to a higher level and gaining good performance as compared to upscaling to a normal level and gaining the same level of performance, then you may be overspending.

Resizing at the right time is beneficial

EC2 Instances and storage volumes must be resized in time. This reduces performance of storage volumes.

Cloud optimization also reuses sitting down unused applications, unused storages and unused instance must be removed.

If it is not possible to remove, make sure to resize the instances.

Use AWS Cost Explorer Resource Optimization to get a report of EC2 instances that are either idle or have low utilization. You can reduce costs by either stopping or downsizing these instances. Use AWS Instance Scheduler to automatically stop instances. Use AWS Operations Conductor to automatically resize the EC2 instances (based on the recommendations report from Cost Explorer).

Upgrading instances to the latest Gen

Experts at AWS Cloud constantly make new decisions on new features, functionality and scalability options.

In fact, they make constant announcements on upgrading of products and with new features so we should always be monitoring these posts.

Teams using FinOps must take these notices/posts seriously and be informed of all the new features of financial cost management

Visibility is the key to optimization

Ultimately, the main factor to improve cloud cost optimization is Visibility. FinOps provides that level of clarity which is essential for cloud cost management.

Teams must take the responsibility and set trends of forecasting benefits and budget costs.

This setup helps in streamlining the changes that bring out the better in AWS cloud cost management with FinOps.

AWS provides every account with graphics and a Cost Explorer to really help you dive into your AWS Cloud Spending.

Did you know that Compute Savings Plans automatically apply to EC2 instance usage regardless of instance family, size, AZ, region, OS or tenancy, and also apply to Fargate and Lambda usage?

Use one year, no upfront Compute Savings Plans to get a discount of up to 54% compared to On-Demand pricing.

Use the recommendations provided in AWS Cost Explorer, and ensure that you have chosen compute, one year, no upfront options.

AWS

FinOps provides timely reports that are accessible

There is no point making all the cloud management analysis and forecasting statistics when you can’t get hands on the current state in due time.

In fact, FinOps streamlines this and makes financial reports available to everyone who is the FinOps team within the organization.

AWS has a great capability for providing reports and visibility called Cost Management.

Final thoughts…
Cloud FinOps is in demand. Cloud cost management is just one aspect of how companies have adopted automation for mitigating cloud spend.

To manage the financial aspects of the cloud and to know the impact of cloud spend, FinOps is essential.

AWS provides cloud services that enhance the cloud spend visibility and also provides options to mitigate costs. However, AWS requires businesses to know their billing details while they make business decisions for tomorrow.

FinOps brings together technology team, business decision makers, and the finance teams. FinOps is a combination of people, processes and tools.

With Cloud FinOps training, one can get a better understanding of it.

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