Allocate costs based on workload metrics

Establishing policies to allocate costs based on workload metrics is essential for understanding and improving the cost efficiency of your AWS workloads. By linking costs to specific usage metrics or business outcomes, organizations can gain insight into where their resources are being utilized effectively and identify areas for improvement.

Best Practices

Implement Usage-Based Cost Allocation

• Identify key workload metrics that align with business outcomes to determine how costs should be allocated.
• Utilize AWS Cost Explorer to analyze historical cost and usage data to understand spending patterns and identify areas for optimization.
• Establish tagging policies to categorize resources based on teams, projects, or environments, providing clearer visibility into costs associated with each workload.
• Integrate analytics services like AWS Budgets and AWS Cost and Usage Report into your workflows to automate reporting and alerts on spending thresholds.
• Conduct regular reviews of your cost allocation metrics to ensure they remain aligned with changing business objectives and workloads.

Questions to ask your team

• What tools are you using to monitor and analyze your AWS cost and usage data?
• How frequently do you review your cost allocation based on workload metrics?
• What specific usage metrics do you track to assess the cost efficiency of each workload?
• Do you have any automated processes in place to alert you to unusual cost spikes or trends?
• How do you ensure that your teams are aware of the cost implications of their workloads?
• Have you implemented chargeback or showback practices to promote accountability for costs within your organization?

Who should be doing this?

AWS Cost Manager

• Monitor AWS costs and usage reports regularly.
• Establish cost allocation policies based on workload metrics.
• Analyze cost and usage data for insights on efficiency.
• Work with teams to implement chargeback models based on usage metrics.
• Coordinate with finance to align cost management with business objectives.

Data Analyst

• Utilize analytics services to evaluate cost and usage data.
• Generate reports that provide insights into workload cost efficiency.
• Collaborate with AWS Cost Manager to refine cost allocation methodologies.
• Identify trends in cost and usage data for proactive cost management.

Cloud Architect

• Design workloads with cost optimization in mind.
• Ensure that monitoring tools are integrated with workloads for accurate data collection.
• Advise on the best practices for deploying resources cost-effectively.
• Collaborate with the AWS Cost Manager to align architectural decisions with cost strategies.

Finance Officer

• Review cost allocation reports to ensure accuracy and compliance.
• Work with the AWS Cost Manager to analyze financial implications of cloud usage.
• Provide budget forecasts based on workload metrics and analysis results.
• Assist in developing financial policies and chargeback procedures.

What evidence shows this is happening in your organization?

• Cost Allocation Policy: A document outlining the organization’s policy for monitoring and allocating costs based on workload metrics, including the procedures for regularly reviewing and adjusting cost allocations.
• Cost and Usage Monitoring Dashboard: An interactive dashboard that visualizes cost and usage metrics in real-time, allowing stakeholders to track spending by workload and identify areas for cost optimization.
• Monthly Cost Analysis Report: A detailed report generated monthly that analyzes the cost and usage trends across different workloads, highlighting insights and recommendations for improving cost efficiency.
• Chargeback Model Guide: A guide detailing the chargeback model used by the organization to allocate costs based on workload metrics, including methodologies for calculating costs based on usage data.
• Checklist for Cost Monitoring Procedures: A checklist that outlines the critical steps for establishing and maintaining effective cost monitoring practices, including data collection, analysis, and reporting procedures.
• Workload Cost Efficiency Strategy: A strategic document that describes the organization’s approach to measuring workload cost efficiency, incorporating usage metrics, analytics services, and business outcome metrics.

Cloud Services

AWS

• AWS Cost Explorer: AWS Cost Explorer enables you to view and analyze your costs and usage patterns over time, allowing for better cost allocation based on workload metrics.
• AWS Budgets: AWS Budgets allows you to set custom cost and usage budgets, alerting you when thresholds are breached, making it easier to allocate costs effectively.
• AWS Cost and Usage Report: The AWS Cost and Usage Report provides the most detailed information about your AWS costs and usage, which can be used for analytics and chargeback.

Azure

• Azure Cost Management + Billing: Azure Cost Management helps you monitor and control your cloud costs, providing insights to analyze spending and optimize your cloud usage.
• Azure Advisor: Azure Advisor provides personalized best practices and recommendations, helping you optimize your costs based on usage metrics.

Google Cloud Platform

• Google Cloud Billing: Google Cloud Billing provides detailed billing reports and a robust dashboard for monitoring your cloud costs and usage by workload.
• BigQuery: BigQuery allows for in-depth analysis of your cost and usage data by querying the billing datasets for insights into your cloud expenditure.

Question: How do you monitor your cost and usage?
Pillar: Cost Optimization (Code: COST)