Select your cookie preferences

We use essential cookies and similar tools that are necessary to provide our site and services. We use performance cookies to collect anonymous statistics, so we can understand how customers use our site and make improvements. Essential cookies cannot be deactivated, but you can choose “Customize” or “Decline” to decline performance cookies.

If you agree, AWS and approved third parties will also use cookies to provide useful site features, remember your preferences, and display relevant content, including relevant advertising. To accept or decline all non-essential cookies, choose “Accept” or “Decline.” To make more detailed choices, choose “Customize.”

COST01-BP01 Establish a cost optimization function - AWS Well-Architected Framework (2022-03-31)

COST01-BP01 Establish a cost optimization function

Create a team (Cloud Business Office or Cloud Center of Excellence) that is responsible for establishing and maintaining cost awareness across your organization. The team requires people from finance, technology, and business roles across the organization.

Level of risk exposed if this best practice is not established: High

Implementation guidance

Establish a Cloud Business Office (CBO) or Cloud Center of Excellence (CCOE) team that is responsible for establishing and maintaining a culture of cost awareness in cloud computing. It can be an existing individual, a team within your organization, or a new team of key finance, technology and organization stakeholders from across the organization.

The function (individual or team) prioritizes and spends the required percentage of their time on cost management and cost optimization activities. For a small organization, the function might spend a smaller percentage of time compared to a full-time function for a larger enterprise.

The function requires a multi-disciplined approach, with capabilities in project management, data science, financial analysis, and software or infrastructure development. The function can improve efficiencies of workloads by executing cost optimizations within three different ownerships:

  • Centralized: Through designated teams such as finance operations, cost optimization, CBO, or CCOE, customers can design and implement governance mechanisms and drive best practices company-wide.

  • Decentralized: Influencing technology teams to execute optimizations.

  • Hybrid: A combination of both centralized and decentralized teams can work together to execute cost optimizations.

The function may be measured against their ability to execute and deliver against cost optimization goals (for example, workload efficiency metrics).

You must secure executive sponsorship for this function to make changes, which is a key success factor. The sponsor is regarded as champion for cost efficient cloud consumption, and provides escalation support for the function to ensure that cost optimization activities are treated with the level of priority defined by the organization. Otherwise, guidance will be ignored and cost-saving opportunities will not be prioritized. Together, the sponsor and function ensure that your organization consumes the cloud efficiently and continues to deliver business value.

If you have a Business, Enterprise-On-Ramp, or Enterprise Support plan, and need help to build this team or function, reach out to Cloud Finance Management (CFM) experts through your Account team.

Implementation steps

  • Define key members: You need to ensure that all relevant parts of your organization contribute and have a stake in cost management. Common teams within organizations typically include: finance, application or product owners, management, and technical teams (DevOps). Some are engaged full time (finance, technical), others periodically as required. Individuals or teams performing CFM generally need the following set of skills:

    • Software development skills - in the case where scripts and automation are being built out.

    • Infrastructure engineering skills - to deploy scripts or automation, and understand how services or resources are provisioned.

    • Operations acumen - CFM is about operating on the cloud efficiently by measuring, monitoring, modifying, planning and scaling efficient use of the cloud.

  • Define goals and metrics: The function needs to deliver value to the organization in different ways. These goals are defined and continually evolve as the organization evolves. Common activities include: creating and executing education programs on cost optimization across the organization, developing organization-wide standards, such as monitoring and reporting for cost optimization, and setting workload goals on optimization. This function also needs to regularly report to the organization on the organization's cost optimization capability.

    You can define value-based key performance indicators (KPIs). KPIs can be cost-based or value-based. When you define the KPIs, you can calculate expected cost in terms of efficiency and expected business outcome. Value-based KPIs tie cost and usage metrics to business value drivers and help us rationalize changes in our AWS spend. The first step to deriving value-based KPIs is working together, cross-organizationally, to select and agree upon a standard set of KPIs.

  • Establish regular cadence: The group (finance, technology, and business teams) should come together regularly to review their goals and metrics. A typical cadence involves reviewing the state of the organization, reviewing any programs currently running, and reviewing overall financial and optimization metrics. Then key workloads are reported on in greater detail.

    During these regular meetings, you can review workload efficiency (cost) and business outcome. For example, a 20% cost increase for a workload may align with increased customer usage. In this case, this 20% cost increase can be interpreted as an investment. These regular cadence calls can help teams to identify value-based KPIs that provide meaning to the entire organization.

Resources

Related documents:

Related videos:

Related examples:

PrivacySite termsCookie preferences
© 2025, Amazon Web Services, Inc. or its affiliates. All rights reserved.