Implement goals and targets

Establishing clear cost and usage goals as well as measurable targets is critical for effective governance. This approach allows teams to align their innovations with financial responsibilities, ensuring that spending is optimized and that the organization stays on track to meet its objectives without excess expenditure.

Best Practices

Establish Clear Cost and Usage Goals

• Define specific cost objectives aligned with your business goals to guide your AWS usage.
• Set measurable targets that reflect your budgetary constraints and financial health.
• Regularly review and adjust these goals and targets based on evolving business priorities and financial data.
• Utilize AWS Cost Explorer and Budgets to track these goals and visualize progress towards meeting them.
• Communicate these goals across teams to ensure alignment and accountability.

Implement Regular Monitoring and Reporting

• Set up automated alerts and regular reporting mechanisms to track spending against the established goals.
• Use AWS CloudWatch and AWS Cost Management tools to create dashboards for real-time visibility into cost and usage metrics.
• Incorporate feedback loops to analyze discrepancies between expected and actual spending to refine your cost strategy continuously.
• Share reports with stakeholders regularly to promote transparency and encourage responsible usage.

Encourage Team Accountability and Ownership

• Assign budget owners for each team or project to foster a sense of responsibility for cost management.
• Incorporate cost performance into team objectives and reviews, thereby linking it to performance evaluations.
• Create a culture of cost awareness by training your teams on the financial impact of their decisions.
• Help teams understand how to optimize resources to align with target cost goals, encouraging innovation without overspending.

Questions to ask your team

• What specific cost and usage goals have you established for your workload?
• How often do you review and adjust your cost and usage targets?
• What mechanisms do you have in place to monitor adherence to these goals?
• How do you communicate cost optimization targets to relevant stakeholders?
• What tools or services do you use to track and report on cost and usage metrics?
• How do you ensure that innovation efforts align with established cost and usage goals?
• What checks and balances are in place to evaluate the impact of spending on business objectives?

Who should be doing this?

Cloud Financial Manager

• Establish cost and usage goals and targets for each workload.
• Monitor and analyze spending against established goals and targets.
• Work with stakeholders to ensure alignment with business objectives.
• Provide regular reports on cost management and optimization efforts.
• Facilitate discussions around cost implications of new projects and innovations.

DevOps Engineer

• Implement automation tools to track cost and usage metrics.
• Integrate cost management practices into the CI/CD pipeline.
• Ensure operational efficiency while adhering to cost targets during development.
• Collaborate with the Cloud Financial Manager to adjust workloads based on usage data.

Financial Analyst

• Analyze historical spending patterns to inform future cost targets.
• Assist in the creation of budgets aligned with cost goals.
• Provide insights and recommendations based on financial data to stakeholders.
• Collaborate with technical teams to understand cost drivers and opportunities for optimization.

Product Owner

• Define business objectives and align them with cost optimization goals.
• Ensure that new features and products are developed within budget constraints.
• Review progress towards established cost and usage targets during sprint planning and reviews.
• Facilitate communication between technical and financial teams.

What evidence shows this is happening in your organization?

• Cost Optimization Goals and Targets Template: A template for defining cost and usage goals and targets for your workloads. This document helps teams set clear expectations and measure outcomes effectively.
• Cost Governance Policy: A formal policy outlining the procedures and responsibilities for cost management. This document establishes guidelines for monitoring and controlling costs in alignment with organizational goals.
• Cost Usage Dashboards: Interactive dashboards that visualize cost and usage metrics. These dashboards provide real-time insights into spending trends and help teams track progress against set goals and targets.
• Cost Optimization Strategy Guide: A comprehensive guide that details strategies for optimizing costs while achieving business objectives. It includes best practices for setting measurable targets and monitoring performance.
• Checklists for Cost Management Practices: A checklist designed to assist teams in implementing effective cost management practices. It includes items to verify that goals and targets are being established and reviewed regularly.

Cloud Services

AWS

• AWS Budgets: AWS Budgets helps you set custom cost and usage budgets that alert you when you exceed your thresholds, allowing for better cost control.
• AWS Cost Explorer: AWS Cost Explorer allows you to visualize and analyze your costs and usage patterns, helping you to make informed budgeting decisions.
• AWS Cost and Usage Reports: This service provides detailed information about your AWS usage and costs, which can help you establish accurate goals and targets.

Azure

• Azure Cost Management + Billing: Azure Cost Management + Billing provides tools to monitor, allocate, and optimize your Azure spending, supporting the establishment of cost goals and targets.
• Azure Advisor: Azure Advisor provides personalized best practices recommendations to optimize your Azure resources, which can help in achieving cost targets.
• Azure Monitor: Azure Monitor tracks and analyzes your Azure service usage, providing insights to help you manage costs effectively.

Google Cloud Platform

• Google Cloud Billing: Google Cloud Billing provides tools for managing your costs, setting budgets, and tracking spending against targets.
• Google Cloud Cost Management: This suite includes tools like Cost Breakdown and BigQuery Billing Export to analyze and optimize your cloud spending.
• Google Cloud Monitoring: Google Cloud Monitoring allows you to track and visualize your resource usage, helping you achieve your cost management goals.

Question: How do you govern usage?
Pillar: Cost Optimization (Code: COST)