Cost is a metric that should be tracked and monitored like any other when you build a FinOps Engineering plan. This includes resizing cloud resources to better match the workload requirements, allocating container costs, finding unused storage, and computing.
When creating your plan, two key questions to ask are: What metric will we use to understand cost efficiency, and where will we manage the cloud cost optimization process?
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Northwest Industries, a Chicago company that was an early adopter of technology for strategic advantage, built the first executive dashboards. (Their staff literally wrote the book on making business data useful.)
One of their early insights was to do transaction cost analysis (TCA). This simple approach takes the amount you’re spending on something and divides it by the volume of business transactions over a given period. This metric is great for showing changes in productivity using time series analysis. It’s also an input to “unit economics” and profitability analysis.
Using TCA allows engineering teams to understand the maintenance costs and efficiency of their cloud architecture at delivering client transactions.
Below are real-world examples from teams that ly divided their cloud spend and labor by their transaction metric:
Video Streaming Provider → Hours of Transcoding Sold to Customers Vacation/House/Apartment Rental → Page Views with Ads Project Management SaaS → Number of Customer Projects Created Car Insurance → Number of Quotes
But, to make this work at any kind of scale, you need API-first FinOps tooling like the cloud cost optimization tool Ternary, which is built on Google Cloud Platform for Google Cloud clients.
Ternary provides the ability to group applicable spend, import transaction metrics, and make time-series transaction cost analysis visible to all stakeholders. It also provides cost optimization recommendations for major Google Cloud Services, including:
Where will you manage the cloud cost optimization process?
In the same way that Google teaches engineering organizations about its Site Reliability Engineering (SRE) best practices, Google is now also helping us all understand how to do FinOps Engineering.
The Google Cloud Platform console has many suggestions and recommendations to reduce costs. The challenge is that making those changes is not a “one-click task.” It requires collaboration across finance — who generally will be paying attention to those recommendations — and engineering to say whether it’s feasible and an effort to implement, make change requests and approvals, deploy scheduling, and close it out. This is a mini-project to make a single right-sized server change.
Ternary was designed and built by engineers and finance teams who have lived this management challenge and built collaboration and management at the core of their system to solve this problem.
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Talk to our team about how you can drive cost optimization within your organization using tools like Ternary.