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Establish cloud budgets and forecasts

Establishing cloud budgets and forecasts is essential for managing and optimizing cloud expenditures. This practice helps organizations maintain financial control while adapting to the variable nature of cloud services and usage, ultimately driving cost efficiency and better resource allocation.

Best Practices

  • Dynamic Budgeting: Implement dynamic budgeting processes that leverage historical usage trends and business drivers. This approach allows organizations to be agile and responsive to fluctuating costs, ensuring budgets remain relevant and aligned with actual consumption.
  • Regular Reviews: Conduct regular reviews of budget forecasts against actual spending. This practice is crucial for identifying variances early, allowing for timely adjustments and ensuring that budgets reflect current business priorities.

Supporting Questions

  • Are current budgets flexible enough to account for shifts in cloud usage patterns?
  • How often are forecasts reviewed and updated to ensure accuracy?

Roles and Responsibilities

  • Finance Team: Responsible for establishing budgeting guidelines and ensuring they are followed across departments. They also analyze spending to identify areas for cost optimization.
  • Cloud Architect: Works closely with finance to understand usage patterns and provide insights that inform budget adjustments and forecasts.

Artifacts

  • Budgeting Templates: Pre-defined templates for cloud budgeting that assist in structuring cost estimates and forecasts while ensuring alignment with business objectives.
  • Cost Monitoring Reports: Regularly generated reports that provide visibility into current spending versus budgeted amounts, highlighting trends and anomalies.

Cloud Services

AWS

  • AWS Budgets: Allows organizations to set custom budgets that alert stakeholders when they exceed thresholds. It helps manage costs proactively and optimize spending accordingly.
  • AWS Cost Explorer: Provides detailed insights into AWS spending patterns, allowing organizations to analyze costs over time, forecast future spending, and identify opportunities for savings.

Question: How do you implement cloud financial management?
Pillar: Cost Optimization (Code: COST)

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