Going to the cloud is often viewed by engineers as an exciting opportunity to iterate quickly, test and build great products more efficiently, and do things they could not do on-premises thanks to the elastic nature of the cloud. This opportunity also makes it necessary to keep track of cloud costs.
But, that excitement can quickly sour when it comes with a burden that engineers didn’t expect — that is, the scrutiny of managing their architecture because it has real-world cost impacts. Not only that, but management often expects engineers to be able to predict usage with very limited data (and attach dollar amounts to that usage) and be scrutinized if there are budget overruns. This shift puts engineering in a position that they might not necessarily have expected to be in as an externality of moving on to the cloud.
Keep Track of Cloud Costs
From the perspective of the engineers, the move to the cloud has resulted in an administrative burden that has nothing to do with delivering great products. And for finance, the shift from Capex to Opex signals a significant change in their process.
How do you keep track of cloud costs and bring the two teams together?
FinOps: Bridging the Gap Between Finance and Engineering
The biggest barrier we’ve seen within organizations facing this problem is a lack of communication between engineering and finance. Finance expects engineering to provide precise numbers — thereby, misunderstanding the complexity of cloud systems — while engineering often feels it’s a superfluous exercise.
To bridge this gap:
It’s essential that both engineering and finance meet in the middle and communicate often. Engineering should understand that they own the budget and should take pride in that. Finance needs visibility into usage and cost information trends. Finance has a pulse on architectural changes that might impact usage in the future.
But who is in charge of unifying these teams? More recently, engineering and finance teams have started working together, resulting in the growing field of FinOps. If you’re a finance professional or leader tasked with cloud reporting, you can leverage FinOps principles to get better visibility and control over cloud costs.
Questions to Ask to Keep Track of Cloud Costs
Tracking cloud costs is essential to track gross profitability and is a key input on how your investors view the sustainability of your business model. Missing the mark on this comes with severe consequences — losing credibility with stakeholders, inability to raise subsequent rounds of funding, miscalculating cash burn, and an undervalued share price for public companies.
That’s why it’s important to understand everything factored into cloud costs. When developing your plan, consider the following.
Making sense of the data:
How do I keep track of the potentially hundreds of cloud assets, and the thousands of products and services that are offered by the cloud service providers?
How do I tie that back to the operational activity that’s happening in my business?
Complexity in the budgeting process
What are the key inputs I need to develop my long-term plan?
Who are the key stakeholders I need to speak with to set an operating plan for my upcoming fiscal year?
How do I keep track of it all for my month-in-month-out forecasting?
Difficulty relating cloud bills to your operating plan and forecasts that exist within your financial reporting systems (Anaplan, Workday, etc):
How do I compare what I’m seeing in my billing console to what’s in my operating plan?
If I’m spending more than last month, did we already account for that in the latest forecast or operating plan?
Understanding operational reasons behind increase or decrease in usage:
If I see an increase in usage month-over-month, what’s driving those changes?
Is the impact a one-time anomaly or a recurring issue? How concerned should I be?
Ambiguity around risks, opportunities, and trade-offs for committed usage discounts and reserved instances:
I know that the cloud providers offer discounts if I commit to a certain usage amount, but how do I know what’s a “safe level” to commit to? What is the total risk I’m taking on if I don’t meet the commitment? Does it require a cash outlay? How can I incorporate changes that engineers will make to the tech stack to inform my decision?
Lack of common ecosystem and shared vocabulary between engineering and finance:
I know engineering is working on cost-saving initiatives How do I keep track of their status. Engineering speaks the language of usage. How do I translate those into dollars? How can engineering be held accountable for delivering on cost-saving opportunities?
So how do we turn these challenges into solutions? We know it’s possible to have the best of both worlds — an environment open to constant innovation, and a way to easily visualize and report on spending.
With Managed Cloud Optimization , clients gain visibility into their cloud finances using leading-edge, intuitive tools. New routines are then established for connecting technical services to business units, giving finance departments the information they need in a form they expect.