Cloud financial management
Cloud adoption has magnified during the pandemic year, many enterprises have moved to multi-cloud , Cloud financial management has become key focus on their journey.
Financial management were never a talk decade ago in IT industry as most of the investments were CAPEX. Deep discussions, planning and budget allocation would have already completed prior to the project start. However the cloud billing are based on the usage and most organization sees dynamic cloud billing monthly hence organization has to cultivate a financial management for cloud to control the cost/billing proliferation.
How to create a cloud financial management
Cloud financial management is a team of economics enthusiast and cloud SMEs who can work together for the enterprise to bring a strategy to monitor, align and control cloud spend. Most likely this would be part of the Cloud Operations or part of the CCOE.
Why cloud financial management is in spot light
While there can be many reason for cloud financial management be on spot light, the prime reason it to curb the cost increase.
As workloads are being deployed for applications , owned by respective departments/business units (BU), a proper tagging/ownership would be needed for each of the cloud elements that contribute to the cloud consumption. This will be accomplished through TAG management or dedicated accounts/subscription for each projects/BU/Verticals. Tags are metadata that can be assigned with a cloud resource to enable understanding about the functional properties of that particular resource.
Example:- Project:- Portal
Owner:- email@example.com .
There are handful of tools/services provided by from each of the hyper-scalers to make this task more efficient.
Manage Billing and Control Costs
Manage billing is the prime use case for cloud financial management. While it is essential to have charge back capabilities available, consolidating them for larger visibility and avail volume discount is another use case .
What are cloud financial management tasks
Choose the right purchase model
One of the objective of cloud financial management is to reap the economies of scale benefits. This team is responsible for choosing the right purchase model of cloud services for the entire organization . As this is focused team, they would need to have deep knowledge about the purchase models available and how to select the right purchase model for workloads based on their usage.
Identify resource wastage.
The team can create a strategy to early identification of resource wastage and control cost associated. Hyper scalers provides tools such as AWS Trusted advisor and Azure Advisor to monitor those wastage. There may be certain tuning needed to configure alert mechanism for these suggestions.
Budgeting and forecasting
It is paramount to set the budget for each accounts based on their baseline values, these values need to be revisited every time when there is a change in the workloads characteristics , projects or traffic pattern. Setting up a budget and leveraging the alerts provides you a proper knowledge of the cloud spend. Any deviation in the usage pattern can be early identified and enable us to take corrective actions.
Based on the cloud spend, forecasting helps us to understand what can be the real consumption monthly based on the actual usage pattern.
While budgeting allow to alert and control the cloud spend during the monthly spend clock, forecasting helps us for financial predictability.
Secure executive sponsorship
It is imperative to have a sponsorship for each project/account/BU, who would own the financial authority. He should be aware of the monthly billing model and the variation that could visible as cloud adoption progress. It is the cloud financial management's task to ensure this contact is intact and aware of the model for a smooth operations.
Partnership between technology and finance
In cloud , there should be a good gel between technology and finance team as there would be many obstructers from the finance team on the bill variation. It is the financial management team to ensure bills are validated and secured required approvals from finance team for the payment.
When do I need a cloud financial management
As your enterprise embark on the cloud journey, setting up a cloud financial management should be part of Cloud Center For Excellence (CCOE) itself as this team should work hand-in-hand with the CCOE team. Relative these are the initial team to setup before the cloud deployment.
This year key note, AWS CEO Andy jassy stressed about the important and dynamics of cloud finainancal management.
The intention of this blog is to shed light on the importance of Cloud financial management team and how these team can add value on your cloud adoption. In the next blog i would like to walk through tools and techniques these hyper-scalers provide to make this function seamless.