Creating a Culture of Cost Management in Your Organization

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Creating A Culture Of Cost Management In Your Organization Toban Zolman VP of Product Development Cloudability

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Transcript of Creating a Culture of Cost Management in Your Organization

Page 1: Creating a Culture of Cost Management in Your Organization

Creating A Culture Of Cost

Management In Your Organization

Toban Zolman

VP of Product Development

Cloudability

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Cloud Infrastructure Analytics

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Why should I care about Cost

Management?

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NEW WAY: Many little decisions every day by many different

people

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Why does it need to be cultural?

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The cloud is no longer one person’s

responsibility…

Engineers Finance Operations Capacity Execs

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How do you build the culture?

• Put data in the hands of the people

• Enact policies and evangelize best practices

• Incentivize good behavior

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What happens when it works?

• There are no surprises

• Everyone is on the same page

• Make budgeting easier

• Better decisions are made from engineer to CEO

• Save money

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A story of growth

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Visibility

Allocation Efficiency

Savings

Unit Cost

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Visibility

Allocation Efficiency

Savings

Unit Cost

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Visibility

Allocation Efficiency

Savings

Unit Cost

I. Cost visibility

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Two types of people

Incur costs Watch costs

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Two types of people

Incur costs Watch costs

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Two types of people

Incur costs Watch costs

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Two types of people

Incur costs Watch costs

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Two types of people

Manage costs Watch costs

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Tips for cost visibility

• Get each stakeholder the spending

fundamentals daily

• Let each team see other teams’ spending habits

• Create broadly available dashboards

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Visibility

Allocation Efficiency

Savings

Unit Cost

II. Allocation

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First, get everyone involved

๏ Multiple major business units

๏ Lots of products or cost centers

๏ Thousands of shared AWS

resources

๏ Distributed teams using AWS

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Tools for splitting up resources

• Tags are highly flexible, but 100% coverage is difficult due to compliance

• Linked accounts offer clean chargeback but limit reporting options

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Pro tips: Allocating Costs

• Get consensus on the taxonomy (but let Finance drive)

• Define 2-3 mandatory tags like “project” or “environment”

• Consider a “tag or terminate” rule to enforce compliance

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Visibility

Allocation Efficiency

Savings

Unit Cost

III. Efficiency

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168hours in a

week

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168hours in a

week

nights &

weekend

s

108

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Don’t run the cloud like a data center:

65% of the hours in a month are

nights and weekends

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Three easy wins for Amazon EC2 efficiency…

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Turn off underutilized instances

Low CPU, low bandwidth, low disk I/O, >1 day old | This example: Save $1,682 per week

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Schedule Dev/Test downtime

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Find legacy instances that could be upgraded

1. Newer instance families are faster/cheaper but have smaller SSDs

2. Look for instances that have attached Amazon Elastic Block Store

(EBS) and low ephemeral disk access

3. Move M1 to M3 to save $0.03-$0.10 per hour

Source: http://aws.amazon.com/ec2/pricing/

http://aws.amazon.com/ec2/pricing/
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Get alerts when thresholds are crossed

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Tips for encouraging efficient behavior

1. Automate weekly waste reporting for each team

2. Gamify cleanup by creating a visible leaderboard

1. Do a monthly, company-wide waste review

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Visibility

Allocation Efficiency

Savings

Unit Cost

IV. Savings

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Spot vs Reserved Instances?

Reservations require no engineering,

enabling finance to autonomously

reduce costs

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Buy Reserved Instances based on current hourly data

Don’t wait to buy reservations until you’ve completed the perfect analysis— you’ll waste

more money than you save

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Aligning RIs to infrastructure is more important

than ever because RIs are all sunk cost

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Tips for reservation efficiency

1. Appoint a person to own reservation purchases– often

a tech-minded finance person

2. Start with an immediate small and uncontroversial buy

1. Buy iteratively on a schedule that you hold sacred

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Visibility

Allocation Efficiency

Savings

Unit Cost

V. Unit Cost

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Why does unit cost matter?

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An increasing bill isn’t necessarily a bad

thing

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The bill still

goes up!

Sta

ge III

Efficiency

Sta

ge IV

RIs

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Unit cost is

cost per X

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cost per subscriber

cost per pageview

cost per customer

cost per API call

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Focus on reducing unit cost, even at total cost grows

0

30

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Unit cost Total cost

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Unit cost =

total cost / business metric

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$1000 / 1000 customers =

$1 unit cost

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Visibility

Allocation Efficiency

Savings

Unit Cost

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What does it look like in the real world?

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Case study: Enterprise with 100s of apps

• Split the detailed billing reports into 750 different views broken down by

BUs/applications/environments/etc.

• Daily spending updates

800 users get daily emails with just their spending

• Oversight for reporting and control

Execs/finance see the total spending in a simple weekly digest

"Our goal is to put control of AWS resources in each product team’s hands. We want

to get out of the way but at the same time we still need oversight to stop

overspending.”

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Case study: Scaled web business pushing unit cost

• Product owners track unit cost daily tying spending to revenue

• Operations examines infrastructure changes in terms of unit cost impact

• Finance reports monthly & quarterly on margin impacts based on unit cost

• VPs set goals on unit cost and worry less about setting arbitrary total cost

goals

Shortcut: Track your AWS bill as a percentage of revenue

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realestate.com.au: Increasing efficient use among

ops/engineers

• Lots of developers using dev/test

instances and forgetting to turn them

off

• Used Cloudability API data to

normalize dev/test environment

“health”

• Developed an algorithm to determine

health/sickness of any dev/test

environment

avg hourly node cost ($)

x

avg node uptime (%)

x

sq rt inverse of CPU util (%)

x

avg node running life (hrs)

x

avg daily unique nodes^1.3

Midge’s law

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Adobe: Optimizing thousands of reserved instances

• One team purchases Reserved

Instances across Adobe

• Established a consistent

monthly purchase to account

for change

25th of the month:

Central team drives decisions with

minimal input from teams

26th of the month:

Modifications made each month

ahead of purchase

28th of the month:

Purchase based on the current

month’s utilization data

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Getting started on your culture

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Things to do right after this Summit

I. Visibility: Set up a daily spending report for stakeholders

II. Allocation: Meet with your finance team to determine the taxonomy for tags & linked

accounts

III. Efficiency: Look for underutilized instances (low CPU+BW+disk) and M3 candidates

IV. Savings: Make an immediate small and uncontroversial Reserved Instance buy

V. Unit cost: Determine a top-line business metric, divide last months’ costs by it

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