Cloud FinOps: Collaborative, Real-Time Cloud Financial Management
- Length: 250 pages
- Edition: 1
- Language: English
- Publisher: O'Reilly Media
- Publication Date: 2020-01-07
- ISBN-10: 1492054623
- ISBN-13: 9781492054627
- Sales Rank: #682169 (See Top 100 Books)
Despite many uncertainties in cloud computing, one truth is evident: costs will always tend to go up unless you’re actively engaged in the process. Whether you’re new to managing cloud spend or a seasoned pro, this book will clarify the often misunderstood workings of cloud billing fundamentals and provide expert strategies on creating a culture of cloud cost management in your organization.
Drawing on real-world examples of successes and failures of large-scale cloud spenders, this book outlines a road map for building a culture of FinOps in your organization. Beginning with the fundamental concepts required to understand cloud billing concepts, you’ll learn how to enable an efficient and effective FinOps machine.
- Learn how the cloud works when it comes to financial management
- Set up a FinOps team and build a framework for making spend efficiency a priority
- Examine the anatomy of a cloud bill and learn how to manage it
- Get operational recipes for maximizing cloud efficiency
- Understand how to motivate engineering teams to take cost-saving actions
- Explore the FinOps lifecycle: Inform, Optimize, and Operate
- Learn the DNA of a highly functional cloud FinOps culture
Preface Who Should Read This Book About This Book What You Need to Know Before Reading On FinOps Is Evolving Conventions Used in This Book O’Reilly Online Learning How to Contact Us Acknowledgments I. Introducing FinOps 1. What Is FinOps? The FinOps Hero’s Journey Where Did FinOps Come From? The Definition Real-Time Reporting (The “Prius Effect”) Core Principles of FinOps When Should You Start FinOps? Starting with the End in Mind: Unit Economics Conclusion 2. Why FinOps? Use Cloud for the Right Reasons The Problem The Impact of Not Adopting FinOps Conclusion 3. Cultural Shift and the FinOps Team Who Does FinOps? Why a Centralized Team? The Role of Each Team in FinOps Executives FinOps practitioners Engineering and operations Finance and procurement/sourcing A New Way of Working Together Where Does Your FinOps Team Sit? Understanding Motivations Engineers Finance People Executives Procurement and Sourcing People FinOps Throughout Your Organization Hiring for FinOps FinOps Culture in Action Conclusion 4. The Language of FinOps and Cloud Defining a Common Lexicon Defining the Basic Terms Defining Finance Terms for Cloud Professionals Abstraction Assists Understanding Cloud Language Versus Business Language Creating a Babel Fish Between Your DevOps and Finance Teams The Need to Educate Both Sides of the House Benchmarking and Gamification Conclusion 5. Anatomy of the Cloud Bill Cloud Billing Complexity The Basic Format of the Billing Data Time, Why Do You Punish Me? Sum of the Tiny Parts A Brief History of Cloud Billing Data The Importance of Hourly Data A Month Is Not a Month A Dollar Is Not a Dollar A Simple Formula for Spending Two Levers to Affect Your Bill Who Should Avoid Costs and Who Should Reduce Rates? Centralizing rate reduction Why You Should Decentralize Usage Reduction Conclusion II. Inform Phase 6. The FinOps Lifecycle The Six Principles of FinOps Teams Need to Collaborate Decisions Are Driven by the Business Value of Cloud Everyone Takes Ownership of Their Cloud Usage FinOps Reports Should Be Accessible and Timely A Centralized Team Drives FinOps Take Advantage of the Variable Cost Model of the Cloud The FinOps Lifecycle Inform Optimize Operate Considerations Where Do You Start? Why to Start at the Beginning Conclusion 7. Where Are You? Data Is Meaningless Without Context Seek First to Understand Organizational Work During This Phase Transparency and the Feedback Loop Benchmarking Team Performance Forecast and Budgeting The Importance of Managing Teams to Budgets What Great Looks Like: Crawl, Walk, Run Conclusion 8. Allocation: No Dollar Left Behind Why Allocation Matters Chargeback Versus Showback A Combination of Models Fit for Purpose The Showback Model in Action Chargeback and Showback Considerations Spreading Out Shared Costs Amortization: It’s Accrual World Creating Goodwill and Auditability with Accounting Going Beyond Cloud with the TBM Taxonomy The “Spend Panic” Tipping Point Conclusion 9. Tags, Labels, and Accounts, Oh My! Cost Allocation Using Tag- and Hierarchy-Based Approaches Getting Started with Your Strategy Communicate your plan Keep it simple Formulate your questions Comparing the Allocation Options of the Big Three Comparing Accounts and Folders Versus Tags and Labels Organizing Projects Using Folders in Google Cloud Platform Tags and Labels: The Most Flexible Allocation Option Using Tags for Billing Getting Started Early with Tagging Deciding When to Set Your Tagging Standard Picking the Right Number of Tags Working Within Tag/Label Restrictions Maintaining Tag Hygiene Reporting on Tag Performance Getting Teams to Implement Tags Conclusion III. Optimize Phase 10. Adjusting to Hit Goals Why Do You Set Goals? The First Goal Is Good Cost Allocation Is Savings the Goal? The Iron Triangle: Good, Fast, Cheap Hitting Goals with OKRs OKR Focus Area #1: Credibility OKR Focus Area #2: Sustainability OKR Focus Area #3: Control Goals as Target Lines Detecting Anomalies Reducing Spend to Meet Forecast Using Less Versus Paying Less Conclusion 11. Using Less: Usage Optimization The Cold Reality of Cloud Consumption Where Does Waste Come From? Usage Reduction by Removing/Moving Usage Reduction by Resizing (Rightsizing) Common Rightsizing Mistakes Relying on recommendations that don’t account for spikes in utilization Failing to rightsize beyond compute Not addressing your resource “shape” Not simulating performance before rightsizing Hesitating due to reserved instance uncertainty Going Beyond EC2: Tips to Control Block Storage Costs Get rid of orphaned volumes Focus on zero throughput or zero IOPS Make managing your block storage costs a priority Reduce the number of higher IOPS volumes Take advantage of elastic volumes Usage Reduction by Redesigning Scaling Scheduled Operations Effects on Reserved Instances Benefit Versus Effort Serverless Computing Not All Waste Is Waste Crawl, Walk, Run Advanced Workflow: Automated Opt-Out Rightsizing Tracking Savings Conclusion 12. Paying Less: Rate Optimization Compute Pricing On-Demand Spot/Preemptible/Low-Priority Resource Usage Reservations Storage Pricing Volume Discounts Usage-Based Time-Based Negotiated Rates Custom Pricing Agreements Seller Private Offers BYOL Considerations Conclusion 13. Paying Less with Reserved Instances and Committed Use Discounts Introduction to Reservations Reserved/Committed Usage Instance Size Flexibility Conversions and Cancellations Overview of Usage Commitments Offered by the Big Three Amazon Web Services What Does a Reserved Instance Provide? Parameters of an AWS Reserved Instance Linked Account Affinity Standard Versus Convertible Reserved Instances Instance Size Flexibility Savings Plans Google Cloud Platform Not Paying for VM Instance Hours Billing and Sharing CUDs Relationships Between Organizations and Billing Accounts Applying CUDs Within a Project Microsoft Azure Instance Size Flexibility Conclusion 14. RI and CUD Strategies Common Mistakes Steps to Building an RI Strategy Learn the Fundamentals Components of the RI break-even point The RI waterline Build a Repeatable RI Process Purchase Regularly and Often Measure and Iterate Allocate RI Costs Appropriately The Centralized Reservation Model Timing Your Reservations When to Rightsize Versus Reserve Building Your Strategy Level of Commitment to Your Cloud The Cost of Capital The Red Zone/Green Zone Approach Purchase Approvals Who Pays for Reservations? Strategy Tips Conclusion IV. Operate Phase 15. Aligning Teams to Business Goals Achieving Goals Processes Onboarding Responsibility Visibility Action How Do Responsibilities Help Culture? Carrot Versus Stick Approach Working with Bad Citizens Putting Operate into Action Conclusion 16. Metric-Driven Cost Optimization Core Principles Automated Measurement Targets Achievable Goals Reserved coverage Savings metrics that make sense for all Combining metrics Data Driven Metric-Driven Versus Cadence-Driven Processes Setting Targets Taking Action Conclusion 17. Automating Cost Management What’s the Goal of Automation? What Is the Outcome You Want to Achieve? Automated Versus Manual Tasks Automation Tools Costs Other Considerations Tooling Deployment Options Automation Working Together Integration Automation Conflict Safety and Security How to Start What to Automate Tag Governance Scheduled Resource Start/Stop Usage Reduction Conclusion 18. FinOps for the Container World Containers 101 The Move to Container Orchestration The Container FinOps Lifecycle Container Inform Phase Cost Allocation Container Proportions Custom container proportions Container proportions in GCP Tags, Labels, and Namespaces Container Optimize Phase Cluster Placement Container Usage Optimization Idle resources for containers Rightsizing clusters and containers Container classes within Kubernetes Server Instance Rate Optimization Container Operate Phase Serverless Containers Conclusion 19. Managing to Unit Economics: FinOps Nirvana Metrics as the Foundation of Unit Economics Coming Back to the Iron Triangle Activity-Based Costing What’s Missing from the Equation? Conclusion What’s Next? Afterword on What to Prioritize (from J.R.) Index
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