FinOps has gained significant momentum in recent years as organizations seek to optimize their cloud spend. Central to the FinOps philosophy is the idea of Chargeback and Showback, which can also be referred to as “Cost Allocation” and “Cost Transparency.” While the concept is undoubtedly beneficial, it is not always easy to implement.
Chargeback and Showback require a thorough understanding of an organization’s cloud usage and cost structure, which can be challenging to gather and track accurately. From the days of 10 compound tags on AWS instances to the construct of Organizational Units within an account hierarchy, finding ways of classifying a resource into Bucket A versus Bucket B is a tale as old as time.
This blog covers how implementing IT Showback can benefit you and your organization, as well as explains how to get the most out of this. Read on to learn more!
Why IT Showback Is A Mandate For Your Business?
In a gist, IT Showback is your way to cloud cost allocation. But, businesses that are newer to the cloud (or in general) may not fully understand why cloud cost allocation matters. It’s simple: “You get the infrastructure that powers your business, and you pay the corresponding bill; what else is needed?” Not as simple as it seems!
Unless you know where exactly your money is going and WHY, cloud management is a Herculean feat!
By allocating cloud costs to specific teams and projects, organizations can better understand where their spend is going and make informed decisions about future investments. Cost transparency also encourages teams to take ownership of their cloud usage and identify areas where they can reduce unnecessary spending.
This article won’t delve into why Showback is important, as there’s already a blog post about the basics of IT Showback and its essence; you can explore them here: The Ultimate Guide To IT Showback!
Different Approaches To Categorizing Cloud Resources In Showback Reporting!
The focus here is to discuss the different approaches to categorizing your resources to get the most out of Showback.
- Key-Value Pairing: Tags–
Tags are the most recognized method of grouping assets for informed decisions. The Key-value pairing is often the only way to create Showback for older accounts that have mixed resources within them and are highly cluttered. Tags become even more critical when it comes to migration and taking advantage of the AWS Migration Acceleration Program (MAP).
Applying tags appropriately allows you to track your MAP progress and credit distribution efficiently. Without proper MAP tagging, you could be leaving huge sums behind. Common tags include Environment, Department/Team, Billing Code/Cost Center, and Application. Over the time, allocation strategies have evolved in the world of segmentation of data, but tags have been and tend to be a constant!
- Organizational Units (OUs)-
Organizational Units (OUs) provide a powerful means of establishing segregation at the account group level. A practical approach to implementing OUs is to create separate accounts for pre-production, production, quality assurance (QA), and disaster recovery purposes within an OU that is dedicated to a particular entity. This entity can be a department, a product, or a line of business.
- Product X consists of Product X – dev, Product X – prod, Product X – staging
- Product Y consists of Product Y – dev, Product Y – prod, Product Y – labs, Product Y – DR
- Product Z consists of Product Z – non-prod and Product Z – prod
Commonly, if companies are spending time building out a hierarchical OU structure, they want to see the costs associated in the same manner. With the Showbacks feature within nOps, this can be done with a few clicks.
Overall, OUs offer a flexible and scalable way to structure and manage your AWS accounts, enabling you to achieve greater visibility, control, and efficiency in your cloud environment.
- Account Name –
This goes hand in hand with an OU structure but doesn’t necessarily require creating OUs. More often than not, companies are leveraging AWS’s feature of a canonical account name as a standardized naming convention. Depending on the need, this can be enough information for generating accurate Showback reports.
Examples: Application X – dev, Shared Services, App Q – stg, Marketing
These accounts may not live within an OU structure, but their naming convention clearly identifies them. OU structure is usually one view, such as line of business or application. Account naming can allow for a different view, such as by environment or department.
These alternative views can also be created within the nOps platform to enhance the visibility of costs. You can even search account names for a common element to make grouping easier.
- Resource Name –
Naming conventions for resources can significantly benefit companies by enabling them to generate detailed Showback reports. We at nOps have seen companies implementing a multi-component naming convention which proved to be highly effective.
The convention consisted of three parts: the first 3 or 4 letters of the resource name denoted the application, the second part was a two-digit numeric code that identified whether it was a production, development, disaster recovery, or another type of resource, and the third part consisted of four alphanumerics that described the resource’s function (such as web server, backend database, or credentialing).
Looking at the example, we can see that the EC2 instance in question is used for credentialing within the development environment of Application X.
Although setting up this convention must have required significant effort, it provided a clear and concise way for any engineer to identify a resource’s purpose simply by looking at its name. Thus, naming conventions are a definite way of effective Showback reports; the only trick is the initial setup!
How Can nOps Business Contexts Help You With Effective Showback Reporting?
The above-mentioned Showback approaches can help you out to categorize direct resources; however, there still are some aggregate charges or non-resource specific charges such as tax, Cloudwatch, and business support to complete the picture of resource allocation.
And one of the most common approaches to these shared costs is proportionate distribution. However, this is not etched in stone, as there are times where you want to allocate expenses differently. This could involve having certain groups or lines of business take ownership of specific charges. Therefore, when you are evaluating cloud cost management tools, it’s essential to verify that they offer the flexibility to accommodate your unique needs and provide a comprehensive overview of your expenses.
That’s one specific reason why nOps is the perfect solution to your cloud cost allocation needs!
As shared costs need to be distributed across multiple teams and business units based on their nature, nOps Business Contexts allocates costs effectively by distributing them using fixed percentages or proportionate weightage that takes into account varying usage among teams or services.
Additionally, nOps Business Contexts simplifies AWS management by providing visual insights into cloud usage and cost accountability. To be precise, it helps you allocate every single dollar of AWS spend to maximize your potential.
And after you have a Showback created, it can be used in our new Cost Analysis feature for added granularity. You can see down to the specific resources which roll up into a Showback’s group charge.
Primarily, your team focuses on innovation, while nOps runs optimization on auto-pilot to help you track, analyze and optimize! Our customers can benefit in two key ways:
- First, pay less for what you use without the financial risk.
- Second, use less by automatically pausing idle resources.
Let us help you save! Sign up for nOps today.