COST07-BP03 Select third-party agreements with cost-efficient terms
Cost efficient agreements and terms ensure the cost of these services scales with the benefits they provide. Select agreements and pricing that scale when they provide additional benefits to your organization.
Level of risk exposed if this best practice is not established: Medium
Implementation guidance
When you utilize third-party solutions or services in the cloud, it is important that the pricing structures are aligned to Cost Optimization outcomes. Pricing should scale with the outcomes and value it provides. An example of this is software that takes a percentage of savings it provides, the more you save (outcome) the more it charges. Agreements that scale with your bill are typically not aligned to Cost Optimization, unless they provide outcomes for every part of your specific bill. For example, a solution that provides recommendations for Amazon Elastic Compute Cloud(Amazon EC2) and charges a percentage of your entire bill will increase if you use other services for which it provides no benefit. Another example is a managed service that is charged at a percentage of the cost of resources that are managed. A larger instance size may not necessarily require more management effort, but will be charged more. Ensure that these service pricing arrangements include a cost optimization program or features in their service to drive efficiency.
Implementation steps
-
Analyze third-party agreements and terms: Review the pricing in third party agreements. Perform modeling for different levels of your usage, and factor in new costs such as new service usage, or increases in current services due to workload growth. Decide if the additional costs provide the required benefits to your business.
Resources
Related documents:
Related videos:
