Today, everyone is getting into the FinOps game in the glorious world of Big Data. After all, to compete with your peers and stand out from the crowd, you need to push the envelope. To do so takes more than just a solid data analytics strategy. You also need full control over your entire organization's IT stack―including infrastructure.
As cloud utilization increases, customers constantly demand support to monitor and optimize their cloud expenditures. Even cloud service providers themselves offer customer support tools.
This article delves deeper into the tools and methods that Amazon Web Services (AWS), one of the main hyperscalers with a significant portion of the cloud market, provides its customers. So, let's get started!
AWS FinOps: An Overview
AWS (Amazon Web Services) is a cloud computing platform that provides various services, including computing, storage, networking, analytics, machine learning, security, and more. FinOps (Financial Operations) is a term that describes the practices and processes used to optimize the cost and financial performance of an organization's use of cloud computing services, such as those provided by AWS.
FinOps involves:
- Identifying opportunities to reduce the costs of cloud services.
- Optimize those services' use to ensure that they are being used efficiently and effectively.
- Continuously monitor and analyze the organization's cloud spending to identify areas for improvement.
In the context of AWS, FinOps practitioners use various tools and techniques to optimize the cost and financial performance of the organization's use of AWS services, including cost analysis, capacity planning, and resource optimization.
Key Challenges in FinOps Ecosystem
Adopting FinOps is a long-term journey and requires a different mindset from traditional IT organizations. Many challenges need to be addressed for the successful implementation of FinOps.
Resource Tagging
Resource tagging is one of the key challenges identified in the FinOps ecosystem. The challenge arises because of the need for more standardization in tagging and billing processes. This makes it difficult for service providers to accurately forecast their costs and revenues.
Accurate Forecasting
The financial services industry is used to dealing with large amounts of data and making important decisions based on that information. However, the volume of data in FinOps is much larger than any other industry has ever dealt with, making it more challenging to make accurate forecasts.
Full Allocation of Cost
In finance operations, many different costs are associated with processing transactions, such as wire fees and foreign exchange rates. These costs vary widely depending on the transaction type and can be difficult to predict accurately. This means that it's difficult for companies to identify all their costs when planning budgets and forecasting expenses.
Looking Beyond IaaS
Many companies have invested heavily in cloud-based infrastructure to reduce capital expenditures (CAPEX) by leveraging the economies of scale offered by these services. However, there are still many challenges related to managing this infrastructure effectively, especially when it comes to monitoring performance and ensuring security across multiple environments.
AWS Services to Control and Optimize Cost
Cost control is challenging for any business, but it's crucial for organizations that use the cloud. Cost management requires specific skills, experience, and tools that help you track and manage your spending.
AWS has several cost-control features built in. The following resources can help manage your costs:
- Budgeting and forecasting - Use AWS Budgets to track actual spending against your budget and forecast future expenses. These metrics can help plan for future needs or adjust budgets based on actual spending patterns.
- Convergence and integration between tools and processes - Converge on a single platform where all budgets, forecasts, capacity planning data, etc., are stored in one place for further analysis. This will allow users from different departments to work together more efficiently across teams by sharing data in real time rather than emailing spreadsheets back and forth.
- Robust integration with cost analytics modules - Financial information systems (FIS) are used by most enterprises today to manage their accounting records. These systems require robust integration with other applications.
5 Steps to Reduce Costs & Enhance AWS Operations
Whether a startup or a large enterprise, you want to maximize the return on your IT investments. But doing so can be complex with the ever-evolving cloud computing landscape.
Here are five steps to reduce costs and enhance AWS operations:
Perform a Licensing Assessment
The first step is understanding what software you need and how much it costs. The second step is ensuring that all software is properly licensed in AWS. When it comes to licensing, it's always best to know the rules before you break them.
Build a Business Case
Building a business case around your cloud migration strategy from an operational and financial perspective is essential. This includes calculating the cost savings and determining how much time will be saved by using AWS services rather than building your infrastructure.
Identify Initial Workloads
Once you know what software needs to run in AWS, it's time to identify which applications should be migrated based on their usage patterns and importance to your organization's day-to-day operations.
Develop an Implementation Roadmap
Once you have identified your initial workload, it's time to develop an implementation roadmap that maps out how long it will take and how much it will cost to migrate each application into AWS. You need this information to create a business case for moving the application into AWS and ensure you only spend the necessary on migration costs or delays.
Innovate and modernize
After you have identified all the possible applications that could be migrated into AWS, evaluate each one to see if there are any opportunities for innovation or modernization within them. This might include replacing outdated technology with newer versions or adding new functionality such as artificial intelligence (AI) or machine learning (ML).
AWS Use Cases For Cost Management
There are several use cases for cost management in Amazon Web Services (AWS). Here are a few examples:
- Optimizing Resource Utilization: By identifying and addressing underutilized resources, you can reduce your AWS costs by only paying for what you use.
- Right-Sizing Resources: By ensuring that your resources are appropriately sized for your workload, you can avoid overpaying for underutilized resources or experiencing performance issues due to inadequate resources.
- Using Cost-Effective Resources: AWS offers a range of resource types and pricing options, such as On-Demand, Spot, and Reserved Instances. You can save on your AWS costs by choosing the most cost-effective options for your workload.
- Automating Cost Optimization: AWS provides tools and services, such as AWS Cost Explorer and AWS Budgets, that allow you to automate cost optimization efforts and track your spending.
- Managing Data Transfer Costs: Data transfer costs can be a significant portion of your AWS bill, especially if you have a large volume of data transferred in or out of your resources. You can reduce your data transfer costs by optimizing data transfer patterns and using tools like Amazon CloudFront and AWS Direct Connect.
- Monitoring and Analyzing Costs: By regularly monitoring and analyzing your AWS costs, you can identify opportunities for cost optimization and take action to reduce your spending.
Final Words
AWS is a treasure trove of tools, services, and platforms available to enterprise IT professionals. While most of us will only use some tools in our arsenal, FinOps teams are in the perfect position to take advantage of the AWS cloud. With a little extra effort, FinOps teams can provide their business with better and more efficient service while cutting costs, maximizing return on investment (ROI), and taking complete control of IT resources.
