Practical AWS FinOps for Cloud Success

On-Premises vs. Cloud Technology Consumption

• On-premises: Procurement cycles, fixed spend, use until hardware fails or contract ends.
• Cloud: Pay-as-you-go model, potential for bill shock, cost increases with usage.
• Cloud offers low cost of failure, instant procurement, and real-time cost data access.

FinOps Introduction

• FinOps is akin to DevOps, amalgamating finance, technical operations, and technical aspects.
• FinOps requires cross-business unit sponsorship and buy-in from executive, finance, procurement, engineering, and operations teams.

Key Considerations for FinOps

• Education is crucial for adopting the FinOps mindset, especially for those transitioning from on-premises models.
• Clear accountability and ownership for cloud resource usage and billing are essential.
• Emphasizes the need for widespread organizational buy-in for smooth FinOps implementation.

Risk of Losing Control Over Spend

• Without proper FinOps practices, organizations risk losing control over their cloud spending.

Cost Optimization on AWS

• Starting resources on AWS is simple, but optimizing for cost requires different considerations.

Importance of Cost Tracking

• Cost tracking is vital for effective FinOps.
• AWS uses a "see, save, run" cycle with customers for cost management.

Problem: Visibility for Costs

• Without visibility into spending and the ability to break down costs meaningfully, meaningful cost management is difficult.

Education and Reviews

• Education about FinOps is key.
• Regular reviews are crucial, and AWS TAMs are responsible for organizing these with customers.
• Reviews help identify spend patterns and suggest cost-saving options.

Concept of Ownership

• AWS provides constructs to help define ownership and cost accountability.
• Using a single AWS account with a corporate credit card for all users is discouraged.

AWS Organizations

• AWS Organizations is a powerful feature for billing, cost management, and security.
• It helps in setting up guardrails and managing what users can and can’t do.
• It is valuable for new AWS users and has minimal associated cost.

Organizational Units (OUs) and Linked Accounts

• Within AWS Organizations, OUs can be set up similar to directory structures.
• Linked accounts can be created for departments or projects to segregate costs and simplify accounting.

Problem: Granular Level of Resources

• At the most detailed level, resources like EC2 instances, Lambdas, and VPCs can become difficult to track.
• Organizations may have tens of thousands of these resources, complicating cost management.

Subdivision Within Constructs

• Even with constructs like Organizations, OUs, and linked accounts, further subdivision is often needed.
• Cost allocation tagging is used for this purpose.

Cost Allocation Tagging

• Tagging is crucial for cost management, with examples provided (e.g., project, customer, accounts).
• There is no right or wrong way to tag, as long as it works for the business.
• Emphasis on creating a tagging dictionary to avoid confusion and ensure consistency.
• Example: Differentiating between "Project," "project," "project-name," and "project_name" due to case sensitivity and varying formats.

Tagging Dictionary

• A tagging dictionary is simple but vital to prevent mix-ups and ensure clear cost allocation.
• Helps decipher spending by project or cost center.

Cost Visibility

• At the end of the month, AWS sends a bill with a total number, which is a starting point for cost visibility.

Ensuring Cost Control

• Importance of oversight to determine if spending is appropriate and to identify potential shadow IT projects.
• Questions to ask and monitor regarding AWS spend.

AWS Cost Explorer

• A free tool similar to Excel graphing, allowing detailed filtering and data diving.
• Highly recommended for its power and ease of use.

AWS Cost and Usage Reports

• For more detailed data than Cost Explorer, with a small cost associated for storing data in S3 and using tools like Athena.
• Useful for complex setups and specific internal accounting metrics (e.g., vCPU hours).

Cloud Intelligence Dashboards

• Free, open-source dashboards that cut data in various ways and present it digestibly.
• Allow breakdown of instance, storage, and networking spend.
• Available on GitHub for deployment, with cost mainly being the deployment in Quicksight.
• Dashboards range from high-level (suitable for executives and finance) to granular (for fin practitioners and engineering).
• Value depends on the user's role within the business.
• https://docs.aws.amazon.com/guidance/latest/cloud-intelligence-dashboards/dashboards.html

Awareness and Usage

• The goal is to raise awareness of these tools and their suitability for different business levels.
• Significant engineering effort has been put into creating these dashboards for appropriate use cases.

Reducing AWS Bills and Saving Money

• The presentation covers a runbook for cost-saving strategies, focusing on cost savings impact (y-axis) and technical complexity (x-axis).

Simple Cost-Saving Measures

• Commitments: Using instance savings plans and reserved instances for resources running 365 days a year can provide significant discounts on on-demand rates.
• Elastic Workloads: Shutting down resources during periods of low usage (e.g., weekends) can lead to immediate cost savings.
• Identifying Underutilized Resources: Tools like Cost Explorer and Cloud Intelligence Dashboards help identify and delete idle resources.

Moderate Complexity Measures

• Serverless Architecture: Moving to serverless platforms (e.g., RDS) can reduce costs by paying only for compute time needed.
• Graviton Instances: Transitioning from x86 to ARM 64 architectures (Graviton) offers significant cost savings with no impact on software.
• EBS Volumes: Upgrading from GP2 to GP3 EBS volumes can save money.

High Complexity Measures

• Right Sizing: Optimizing instance types and resources to match actual usage.
• Cloud-Native Architecture: Moving away from static resources (e.g., EC2, RDS) to fully serverless, pay-per-use models.
• Long-Term Strategy: Adopting cloud-native architectures is the most powerful lever for long-term cost savings, though it requires significant engineering and development effort.

Unit Cost as a Metric

• Measuring unit cost (e.g., cost per transaction) rather than overall spend.
• Decreasing unit cost over time as a sign of efficiency.

Key Performance Indicators (KPIs)

• Suggest picking three KPIs tailored to business requirements.
• Examples: unit cost, customer satisfaction, and efficiency metrics.
• Importance of defining and understanding unit cost for optimization.

Feedback Loops

• Continuous feedback loops for ongoing optimization.
• Feedback should be a regular, iterative process, not a one-time event.

Prioritization and Communication

• Businesses should determine what to prioritize based on customer satisfaction and efficiency.
• Effective communication is crucial for complete feedback loops.
• Ensure open conversations between finance, procurement, and engineering teams.
• Concerns and insights should be communicated and integrated into the roadmap.
• Incomplete loops (lack of communication) indicate problems in the process.

Reviewing with Cloud Intelligence Dashboards

• Use dashboards for customer reviews, tailoring data to stakeholders’ needs.
• C-level executives require top-level data and KPIs, not detailed instance breakdowns.
• Consider the audience and format when communicating data.

Row-Level Security

• Out-of-the-box dashboards provide universal access; use row-level security for granular control.
• Restrict access to relevant data for specific departments to maintain security and relevance.

Education on Cost Management Tools

• Emphasize the importance of educating teams responsible for cost, especially engineers.
• Tools like Cost Explorer, budget settings, commitment recommendations, anomaly detection, and right-sizing recommendations are available.
• Anomaly detection and right-sizing recommendations help optimize resource usage.
• Cost and Usage Reports provide detailed data, though they incur a small cost.

Additional AWS Tools for Cost Optimization

• Compute Optimizer: A free tool worth exploring to further optimize EC2 instance costs.
• Trusted Advisor: Provides numerous recommendations, not just for cost optimization but also for security.
• AWS Config: Often needed by customers for various purposes.
• CloudWatch: Critical for gathering metrics within EC2 instances, as AWS cannot see into customer instances by default.
• S3 Lens: A powerful tool for visualizing and optimizing the use of S3 object storage.

Shared Responsibility Model

• AWS is responsible for the integrity of the cloud, while customers are responsible for what they run on the cloud.

Cost of Chargeable Services

• Tools like CloudWatch are essential for customers to gather metrics and optimize their resources, as AWS cannot access this data directly.
• Even chargeable services like Cost and Usage Reports have negligible costs, primarily due to S3 data storage.
• These tools are valuable for detailed cost optimization and should be considered despite the small associated costs.