Netflix spends roughly $9.6 million per month on AWS. Cloud computing as a whole is a major factor in business today, allowing for infinitely more possibilities to expand.
So why does your AWS bill have a nasty habit of jumping around and pulling the rug out from under your feet?
Think of it this way; AWS is akin to your household utilities. The more you use, the more you pay in theory. However, your bill doesn’t care if you took a bath or left a tap running by accident for 24 hours - you’ll have to pay for everything you’re provided with, whether you use it or not.
If you want to stop this and start getting your AWS bill under control, then you need to learn about FinOps. Luckily, that’s exactly what we’re going to cover today.
In this post you’ll learn:
- How AWS bills get out of control
- What is FinOps?
- How FinOps prepares you for your AWS bill
- How to kickstart FinOps without the huge cost
Let’s get started.
How AWS bills get out of control
Even for those who know what they’re doing, AWS can hit you with horrible surprise bills.
For example, take this episode of AWS Morning Brief. In it, AWS expert Corey Quinn talks about a friend of his whose AWS bill wound up being 9000% higher than the previous month despite him doing nothing wrong with his setup.
Now expand the problem by a thousandfold, add in your entire company of employees, and the vastly increased resources you require from the cloud. You’re fighting a horrible billing system while also having to deal with the regular problems of limited inter-team communication and expertise.
The thing is, even when everything is running correctly, your team won’t necessarily be able to do anything about a high bill (or know that it’s higher than it needs to be). It’s not just that your engineering team doesn’t realize how much your AWS spend is or that finance will pay the bills without questioning them.
The real issue is that your teams can’t solve those problems even if they wanted to.
AWS doesn’t come with a dashboard that says “you’re spending $X this month” for your whole company, so generally nobody but finance (the people receiving the bill) will be able to know how much your usage is costing. Engineers can’t look up a single view showing their expenses even if they tried.
Remember, cloud computing billing (and especially AWS billing) is a nightmare of Lovecraftian proportions.
Conversely, your finance team won’t have any idea whether you need all of the cloud computing servers, storage and managed services you’re paying for, so they will just have to rubber-stamp the bill even if it seems high to them. They don’t have a leg to stand on when it comes to challenging the bill, and nobody wants to be the accountant who challenges a founder on why they’re spending what they are.
You can’t run a company with this disconnect and expect to have no issues or overspending on AWS.
So, what’s the solution?
What is FinOps?
FinOps is the shortened term for “Cloud Financial Operations”, and is your one-way ticket to understanding why your cloud computing bill is as big as it is, and how much you should be spending.
FinOps is more of a company culture with a few dedicated specialists that keep things running than a specific team that you hire or exercise you perform. The ultimate goal is to make sure that your engineering team (and thus your cloud spend) is financially accountable for their decisions, and to make it clear when you need to expand your spending to get the most out of the cloud.
FinOps is based on a few easy-to-grasp principles, all of which need to be applied in order to run an effective FinOps operation:
- Easy collaboration
- Active ownership
- Centralization powered team
- Reliable reporting
- Business-driven decisions
- Getting bang for your buck
As you may have heard, communication is king. There is almost no problem that can’t be solved by communicating or collaborating more freely, and FinOps takes full advantage of that power. By getting finance to collaborate more with engineering you can shift their perspectives to make cost an important factor in the decision to expand cloud services.
Collaboration will also breed improvement naturally. The more your teams talk to each other, the more they will identify problems and continuously improve their practices by overcoming them.
In the same way, your teams will become conscious of how they are affecting your final bill, letting them take accountability for their own decisions. When your team knows how their actions affect the company as a whole, more thought will go into them before a choice is made.
Having a centralized, dedicated FinOps team lets them focus on unifying and investigating your bill without spending more finance or engineering resources that could be better spent on other tasks.
Reports allow your team to know what they’re doing and whether it’s the right thing to do. Taking steps to make your reports fast and reliable means that you have a much shorter turnaround for action to be taken and improvements to be made.
That’s not even mentioning how quick, accurate reports let your teams know exactly when they should be raising or lowering your cloud spend.
General accountability, better reporting, and a centralized FinOps team also mean that your teams can make business-driven decisions. This is a massive benefit of having a defined FinOps approach, as it means that any and all decisions (at least, those related to your cloud computing spend) can be fully justified and have been thought through before they’re made.
In other words, you and your CEO won’t be blindsided by the shockwave of a poorly thought-out cloud expansion.
Finally, your FinOps operatives will be able to judge what the ideal spending level for you would be based on your needs. With input from engineering and finance alike on your company’s requirements and budget, they can help you to get the most bang for your buck when it comes to the cloud.
Now that we’ve laid out the principles that FinOps is built on, let’s dive into the phases to carry out a FinOps operation. Namely these are:
It’s worth noting that this is a cycle; as soon as you’re done with the Operate phase, you shift right back to Inform and repeat the whole thing.
Starting us off, we have the Inform phase.
Here you need to gather as much information as you can and give your team all of the knowledge they need to make informed decisions and optimize your operations. This is generally achieved through a combination of benchmarking your cloud usage, budgeting for your spending, forecasting your future requirements, and so on.
You should also look into the cloud solutions on offer, along with their pricing, any potential discounts, and so on. After all, cloud computing is a field that is forever changing, and the best offer of today may not remain so for long.
Next comes the Optimize phase.
This stage is all about (surprise surprise) optimizing your cloud footprint. As such, this will largely involve your engineering team rightsizing to make the most of your resources and making sure that nothing is being wasted. While this happens, your FinOps team can be working with your cloud provider (or another which has a better deal) to figure out a potential discount your team can have depending on your commitment.
Finally, there’s the Operate phase.
Here’s where your company looks internally to relate your metrics (spending, cloud capacity/usage, etc) to your business objectives. You need to look into whether your metrics are measuring up to your objectives and, as a result, whether you need to change what you’re doing. Whether that means increasing your cloud spend, further optimizing your usage or any number of other outcomes, this is where you make those decisions.
How FinOps prepares you for your AWS bill
So, you know what FinOps is and how it works. Great!
But how exactly does that relate to your AWS bill?
As mentioned earlier in this post, it’s easy for your AWS bill to get out of control. The issue is that your engineering team has no idea how much their decisions are costing, and no realistic way to check. Similarly, finance has no method to see if what you’re spending is necessary or even useful.
It would be bad enough if your teams didn’t know enough about the situation (cost/usefulness) to question it. However, the real issue is that your teams couldn’t solve the problem alone even if they tried to.
Finance doesn’t have the technical know-how to challenge your bill, and engineering physically can’t check what they’re spending through their AWS interfaces without digging deep into the company’s account and region structure.
This is where FinOps comes in.
FinOps combines the resources of finance and engineering in a dedicated team to give your cloud solutions the attention they deserve without taking resources from your existing teams.
With your FinOps specialists and culture, engineering will know exactly how their decisions are affecting your bottom line. Better still, they’ll have the context of whether an increased spend would be worth it to hit your current targets. Meanwhile, finance will know exactly what your spending is going on, will see a much slower rate of spend increase, and may even initially see a reduction in how much AWS is costing.
However, you need to remember that FinOps isn’t designed to reduce your AWS spend.
The ultimate goal is to make sure that you’re spending exactly what you need to in order to get the most out of cloud computing to help operate and grow your company. At first, this may mean spending less due to not needing as much as you’re currently committed to or by optimizing your usage, but this is a side effect, not the point of the operation.
Yet, despite having many benefits, FinOps as a practice and team has one major downside; the commitment.
The cost in money and time of setting up a dedicated FinOps team and restructuring your company culture to be compatible with it cannot be underestimated. You’re having to hire for a role you’ve never worked with before, figure out how they will interact with your existing teams, adapt the very core of how your company interacts with itself and operates, and much more.
It’s a bumpy ride and takes a lot to make it work.
But what if you could get started on that journey to optimizing your cloud usage and bill without having to make that massive commitment?
Well, lucky for you, there’s Aimably.
How to kickstart FinOps without the huge cost
Aimably is the perfect solution to starting your journey towards FinOps excellence without having to overhaul your entire organization or hire dedicated employees.
Instead of all of that headache and risk, Aimably lets your teams know everything they need to know about your AWS spend, helps you curb any surprise bills and overspending, and so much more.
With Aimably Pulse, regular emails or Slack posts inform your team of what exactly is being spent on cloud computing, letting your team know exactly how much their actions are costing. Nobody even has a chance to lose track of your spend, because you all receive regular reminders.
Immediate, customizable warnings with Aimably Warn let you know when your bill is increasing a significant amount, letting you take immediate action before it becomes a real issue. Now finance won’t be hit with a surprise bill to approve, and any significant (unexpected) change in your spend will be accounted for as soon as it starts to happen, rather than at the end of what will be a very expensive month.
Aimably Insight will let your team gain the insights needed to make the decisions that matter. From comprehensive daily usage tracking to researching the origin of any cost spikes and identifying areas that can be improved, Insight puts all of this knowledge in one place to let your team easily stay on top of the situation.
Finally, Aimably Reduce puts in the leg work to look for areas where you can reduce your AWS spend without taking a performance hit.
To sum up, with the Aimably suite you can start to reap the major benefits of having an in-house FinOps team without having to actually hire one. Engineering will have the financial context of your cloud computing, finance will know that what’s being spent is necessary and so can just be approved without issue, and you can justify everything to your CEO with the utmost confidence.
What are you waiting for? Sign up for Aimably today!