Cloud FinOps: Collaborative, Real-Time Cloud Financial Management

Copyright
Table of Contents
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
Part I. Introducing FinOps
	Chapter 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
	Chapter 2. Why FinOps?
		Use Cloud for the Right Reasons
		The Problem
		The Impact of Not Adopting FinOps
		Conclusion
	Chapter 3. Cultural Shift and the FinOps Team
		Who Does FinOps?
			Why a Centralized Team?
			The Role of Each Team in FinOps
		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
	Chapter 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
	Chapter 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?
			Why You Should Decentralize Usage Reduction
		Conclusion
Part II. Inform Phase
	Chapter 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
	Chapter 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
	Chapter 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
	Chapter 9. Tags, Labels, and Accounts, Oh My!
		Cost Allocation Using Tag- and Hierarchy-Based Approaches
			Getting Started with Your Strategy
			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
Part III. Optimize Phase
	Chapter 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
	Chapter 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
			Going Beyond EC2: Tips to Control Block Storage Costs
		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
	Chapter 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
	Chapter 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
	Chapter 14. RI and CUD Strategies
		Common Mistakes
		Steps to Building an RI Strategy
			Learn the Fundamentals
			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
Part IV. Operate Phase
	Chapter 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
	Chapter 16. Metric-Driven Cost Optimization
		Core Principles
			Automated Measurement
			Targets
			Achievable Goals
			Data Driven
		Metric-Driven Versus Cadence-Driven Processes
		Setting Targets
		Taking Action
		Conclusion
	Chapter 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
	Chapter 18. FinOps for the Container World
		Containers 101
		The Move to Container Orchestration
		The Container FinOps Lifecycle
		Container Inform Phase
			Cost Allocation
			Container Proportions
			Tags, Labels, and Namespaces
		Container Optimize Phase
			Cluster Placement
			Container Usage Optimization
			Server Instance Rate Optimization
		Container Operate Phase
		Serverless Containers
		Conclusion
	Chapter 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
About the Authors
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