FSICOST02: Do you apply the Pareto-principle (80/20 rule) to manage, optimize, and plan your cloud usage and spend? - Financial Services Industry Lens
FSICOST02-BP01 Apply the Pareto-principle 80/20 rule for your CFM efforts

FSICOST02: Do you apply the Pareto-principle (80/20 rule) to manage, optimize, and plan your cloud usage and spend?

Investing the right amount of effort in a cost optimization strategy up front allows you to realize the economic benefits of the cloud more readily, by ensuring a consistent adherence to best practices and avoiding unnecessary over provisioning. CFM is paramount not only to effectively manage costs, but also to verify that investments are driving expected business outcomes.

FSICOST02-BP01 Apply the Pareto-principle 80/20 rule for your CFM efforts

No matter your organization size, pay specific attention to your capacity investment while developing CFM-related concepts. Here are some examples of CFM activities to apply the 80/20 rule to create an optimal input/output solution.

  • Cost allocation: Start with default allocation opportunities (per AWS account, AWS-generated createdBy tag), then follow up by tagging all AWS services that support tagging, check overall percentage of cost allocation. In case you reach 80% cost allocation, check if equal allocation of the unallocated 20% of costs is acceptable for your organization (for example, splitting AWS service cost equally between business units or teams). Before spending time and budget on a third-party solution (for example, telemetry) ensure that shared resources you aim to allocate are substantial (for example, over 20% of monthly bill).

  • Cost optimization: Incorporate implementation of low-hanging cost optimization recommendations (from Cost Explorer or AWS Trusted Advisor) into daily activities of your teams. Centralized teams evaluate and book SP and RI quarterly, decentralized teams perform instance rightsizing and modernization weekly. CFM practitioners report it is more efficient to spend 30 minutes per week rather than one day per month. While implementing cost optimization that require technical changes, pay attention to long term benefits – one-time adjustments provide reoccurring savings. Evaluate time and capacity invested into technical adjustments versus cost saving for at least the next 24 months. These types of calculations help prioritize activities with the highest impact.