Eric Lam’s Post

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Head of Cloud FinOps, Offering Leader at Google

Shared services cost allocation is one of the top challenges that many Cloud FinOps teams face today. Excited to share our latest perspectives and approach to solving this key challenge. Big thanks to Kundan Sarkar Srinivas Cheemalapati, MBA Alberto Páez for leading this effort and Bruce Warner Pathik Sharma for contributing their expertise to this important piece of work to drive Cloud #FinOps adoption. Daniel Pettibone Brad Little #cloudfinancialmanagement FinOps Foundation #cloudfinops #sharedservices #costallocation #digitaltransformation #googlecloud

Shared services had been and is always a challenge since traditional IT service management days. FinOps changed the perspective by way of bringing accountability to teams in Real time (hourly in some cases where the cloud spend runs in million of dollars/month). All the personas are tightly integrated with transparency never like before so the agree to agree is higher than agree to disagree when it comes to chargeback with access to data at granular levels. With the variable spend nature of cloud and the CSPs constantly improvising the billing structure, it is easy for the enterprise orgs to get lost at the wink of an eye.

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"Shared service costs are those that cannot be attributed specifically to a desired measurement group..." I understand why we allocate from an accounting perspective. From a FinOps perspective, this puzzles me greatly. it's counter to reality. For example, I can't remove a gateway load balancer if one AMI is retired. Is it better to recommend that shared costs are reported and managed at the collective level at which they occur? Ex: if a value stream shares a shared service, the value stream handles the cost. "Teams! Our gateway costs are out of control! We an approach to lower them." My suggestion implies higher groups injecting work into the backlogs of lower groups (e.g., value stream to teams). Many frameworks allow for this via a retrospective at a collective level. I've taken a business class or two, so I expect that finance folks may not like this post. Accounting heresy? Maybe. This engineer bows humbly before you, hat in hand, asking that you momentarily place conventions on the shelf and consider if allocations conflict with an outcome based culture.

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Benjamin Hall

Solution Architect | Cloud | FinOps Lead

1y

One thing I didn't see covered is how to be pro-active with costs rather than reactive with labels once you are there. What I find commonly with clients who were early adopters of cloud is they utilise outdated 'resource hierarchy' models which may see resources 'shared' as their are multiple workloads in the one project/folder (in using GCP terminology). This may not be as relevant with GCP due to their age/and resource hierarchy originally. But it's common. An example could be, the Folder is LOB1, but the Project is DEV. As such, shared costs exist as different workloads may all utilise X service. Whereas better practice now structures these workloads very differently with the granularity of a workload and env per project, within a LOB folder. Limiting actual physical shared cost of resources. So to be pro-active is to review your resource hierarchy first, determine if it's suitable moving forward. The second is labels to provide the visibility. As some costs are physical actual usage, others are logical i.e. all those costs relate to X LOB. As such, you can limit the physical actual shared costs by reviewing hierarchies prior as your organisation may have changed. But good to see this represented by a CSP!

I thought biggest problem is geting engineers to act ..

Sherri Wooldridge

Principal Consultant, Cloud Economics at Rise and Shift (still a FinOps Evangelista!)

1y

Eric - This is everything I've wanted to communicate in my realm of FInOps. Thank you for the well-written piece. As a reminder to all... this is a continuous journey.

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Riya S.

Cloud Engineer at Google || 2x Google Cloud Certified Professional Cloud Architect || FinOps Certified Practitioner

1y

This is truly a significant piece of knowledge. Great work team!

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Dr. Richard Ramyar

Director + CTO | Google Cloud Consulting | #DisabilityAmbassador #Strategy #Digital #CyberSec #GCP #AIML #GenAI #CloudArch #PhD #LLB #Regs #FinEcon | #VisitingScholarHonorary @LIBF | @DoctorsWithME Professional Assoc

1y

Many thanks Eric - great to see Dr. Magesh Kasthuri, this will also interest you

Sai Prakash DilipKumar, Shubham Jaiswal, Lucky samadhiya and Ankit Kumar

Madhu Kumar

Founder & CEO at Amadis Technologies

1y
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