COST02-BP02 Implement goals and targets - Cost Optimization Pillar

COST02-BP02 Implement goals and targets

This best practice was updated with new guidance on July 13th, 2023.

Implement both cost and usage goals and targets for your workload. Goals provide direction to your organization on expected outcomes, and targets provide specific measurable outcomes to be achieved for your workloads.

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

Implementation guidance

Develop cost and usage goals and targets for your organization. As a growing organization on AWS, it is important to set and track goals for cost optimization. These goals or key performance indicators (KPIs) can include things like percent of spend on-demand, or adoption of certain optimized services such as AWS Graviton instances or gp3 EBS volume types. Setting measurable and achievable goals can help you to continue to measure efficiency improvements which is important to ongoing business operations. Goals provide guidance and direction to your organization on expected outcomes. Targets provide specific measurable outcomes to be achieved. In short, a goal is the direction you want to go and target is how far in that direction and when that goal should be achieved (using guidance of specific, measurable, assignable, realistic, and timely, or SMART). An example of a goal is that platform usage should increase significantly, with only a minor (non-linear) increase in cost. An example target is a 20% increase in platform usage, with less than a five percent increase in costs. Another common goal is that workloads need to be more efficient every six months. The accompanying target would be that the cost per business metrics needs to decrease by five percent every six months.

A goal for cost optimization is to increase workload efficiency, which means decreasing the cost per business outcome of the workload over time. It is recommended to implement this goal for all workloads, and also set a target such as a five percent increase in efficiency every six months to a year. This can be achieved in the cloud through building capability in cost optimization, and releasing new services and features.

It's important to have near real-time visibility over your KPIs and related savings opportunities and track your progress over time. To get started with defining and tracking KPI goals, we recommend the KPI dashboard from the Cloud Intelligence Dashboards (CID) framework. Based on the data from AWS Cost and Usage Report, the KPI dashboard provides a series of recommended cost optimization KPIs with the ability to set custom goals and track progress over time.

If you have another solution that allows you to set and track KPI goals, make sure it's adopted by all cloud financial management stakeholders in your organization.

Implementation steps

  • Define expected usage levels: To begin, focus on usage levels. Engage with the application owners, marketing, and greater business teams to understand what the expected usage levels will be for the workload. How will customer demand change over time, and will there be any changes due to seasonal increases or marketing campaigns?

  • Define workload resourcing and costs: With usage levels defined, quantify the changes in workload resources required to meet these usage levels. You may need to increase the size or number of resources for a workload component, increase data transfer, or change workload components to a different service at a specific level. Specify what the costs will be at each of these major points, and what the changes in cost will be when there are changes in usage.

  • Define business goals: Taking the output from the expected changes in usage and cost, combine this with expected changes in technology, or any programs that you are running, and develop goals for the workload. Goals must address usage, cost and the relationship between the two. Goals must be simple, high level, and help people understand what the business expects in terms of outcomes (such as making sure unused resources are kept below certain cost level). You don't need to define goals for each unused resource type or define costs that cause losses for goals and targets. Verify that there are organizational programs (for example, capability building like training and education) if there are expected changes in cost without changes in usage.

  • Define targets: For each of the defined goals specify a measurable target. If the goal is to increase efficiency in the workload, the target will quantify the amount of improvement (typically in business outputs for each dollar spent) and when it will be delivered. For example, if you set a goal of minimizing waste due to over-provisioning, then your target can be waste due to compute over-provisioning in the first tier of production workloads should not exceed 10% of tier compute cost, and waste due to compute over-provisioning in the second tier of production workloads should not exceed 5% of tier compute cost.


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