What this book covers

Chapter 1, Bringing Visibility and Allocating Cost, discusses the challenges faced by FinOps teams in establishing successful FinOps practices and provides solutions to overcome them. It also highlights Microsoft’s Cost Management + Billing tool to gain visibility of the existing IT environment and current cloud cost. The chapter also covers the topics of cost allocation using accounts, management groups, subscriptions, and tags, and explores cost analysis in the Azure portal for FinOps.

Chapter 2, Benchmarking Current Spend and Establishing Budget, provides an overview of benchmarking cloud spend and developing KPIs for consistent reporting to improve performance. It covers topics such as Azure’s on-demand and elastic nature, creating budgets, and configuring anomaly alerts in the Azure Cost Analysis tool.

Chapter 3, Forecasting the Future Spend, explains the importance of financial forecasting for FinOps teams and provides insights into various ways to obtain past and current usage and charges for cloud services in Azure. It highlights the significance of tagging resources and covers topics such as setting up cost management connectors in Power BI, forecasting based on manual estimates and past usage, advanced forecasting by application, and fully loaded cost forecasting.

Chapter 4, Case Study – Beginning the Azure FinOps Journey, is a case study of Peopledrift Healthcare’s journey to implement FinOps practice and achieve its objectives. The company faced challenges in estimating current and future spending and accurately forecasting spend. By implementing FinOps, they were able to overcome these challenges and improve their financial management gradually.

Chapter 5, Hitting the Goals for Usage Optimization, focuses on the Usage Optimization aspect of the FinOps Optimize phase, which targets cost avoidance and right-sizing. Cost avoidance can be achieved by deleting unneeded resources, while right-sizing involves selecting the right service SKUs for optimal workload performance. The chapter covers the Project Management Triangle Method for goal setting, as well as setting objectives and key results (OKRs) and KPIs. The top 10 usage optimization targets are discussed, along with trade-offs between cost, security, performance, and reliability.

Chapter 6, Rate Optimization with Discounts and Reservations, discusses rate optimization in FinOps, which involves getting better enterprise discounts and purchasing reservations to save costs. The chapter explains enterprise agreements, Azure Advisor recommendations, identifying opportunities for reservations, and monitoring reservation utilization. It also covers reservation purchase and cadence, details, renewal, savings, and chargeback reports, as well as reservation exchange and cancellation.

Chapter 7, Leveraging Optimization Strategies, discusses the importance of utilizing various optimization strategies in a holistic manner, including removing waste, right-sizing, purchasing reservations, savings plans, and highly discounted spot VMs. The focus is on highly discounted spot VMs. Additionally, the chapter discusses the Spot Priority Mix and Savings Plans, which provide a consistent compute capacity with additional spot VMs and are an alternative to reservations, respectively.

Chapter 8, Case Study – Realize Savings and Apply Optimizations, showcases how Peopledrift Inc. adopted the Microsoft Azure cloud and migrated their workload from on-premises to the cloud. After consistently high usage, the FinOps team started looking for ways to save money through rate and usage optimization. The case study discusses the KPIs designed to measure progress, the execution of the usage and rate optimization programs, and the consideration of Azure Savings Plans.

Chapter 9, Building a FinOps Culture, provides an overview of building a culture of FinOps through collaboration across business boundaries. Management buy-in is essential to establish a Center of Excellence (CoE) for cloud cost management, which is responsible for bringing stakeholders together and preparing a business plan that articulates savings opportunities.

Chapter 10, Allocating Cost for Containers, focuses on allocating cost for container workloads, specifically in Azure Kubernetes Services (AKS) clusters. The challenges of allocating costs in microservices and shared AKS clusters are discussed. The open source tool Kubecost is explored as an industry standard for cost allocation and visibility. The chapter also covers showback and chargeback mechanisms using Kubecost and provides cost optimization recommendations for AKS clusters.

Chapter 11, Metric-Driven Cost Optimization, introduces a cost management strategy for cloud computing environments, which involves using data and analytics to continuously monitor, measure, and optimize cloud costs. The chapter covers the core principles of Metric-Driven Cost Optimization (MDCO), reservation reporting using Power BI, setting thresholds for purchasing reservations, and automated reservation purchases based on MDCO triggers.

Chapter 12, Developing Metrics for Unit Economics, discusses the concept of unit economics in cloud FinOps and its importance in analyzing the costs and revenue associated with delivering a single unit or product within a business. It explains how FinOps teams can use this analysis to make informed decisions about pricing, cost optimization, and resource allocation. The chapter also covers tracking costs back to business benefits, developing metrics for unit economics, and implementing an activity-based cost model.

Chapter 13, Case Study – Implementing Metric-Driven Cost Optimizations and Unit Economics, focuses on implementing MDCO and unit economics for container allocation in the AKS platform. The team utilized a data-driven decision-making process to optimize cloud usage and purchase reservations. They also calculated IT costs per unit of service to understand the profitability of the DeliverNow platform. The case study provides insights into cost allocation for containers and shared services, metrics for reservation purchases, and unit metrics for calculating the per-unit cost and profitability of the business.