Finance and Technology Partnership - Cost Optimization Pillar

Finance and Technology Partnership

Establish a partnership between finance and technology: Technology teams innovate faster in the cloud due to shortened approval, procurement, and infrastructure deployment cycles. This can be an adjustment for finance organizations previously used to executing time-consuming and resource-intensive processes for procuring and deploying capital in data center and on-premises environments, and cost allocation only at project approval.

Establish a partnership between key finance and technology stakeholders to create a shared understanding of organizational goals and develop mechanisms to succeed financially in the variable spend model of cloud computing. Relevant teams within your organization must be involved in cost and usage discussions at all stages of your cloud journey, including:

  • Financial leads: CFOs, financial controllers, financial planners, business analysts, procurement, sourcing, and accounts payable must understand the cloud model of consumption, purchasing options, and the monthly invoicing process. Due to the fundamental differences between the cloud (such as the rate of change in usage, pay as you go pricing, tiered pricing, pricing models, and detailed billing and usage information) compared to on-premises operation, it is essential that the finance organization understands how cloud usage can impact business aspects including procurement processes, incentive tracking, cost allocation and financial statements.

  • Technology leads: Technology leads (including product and application owners) must be aware of the financial requirements (for example, budget constraints) as well as business requirements (for example, service level agreements). This allows the workload to be implemented to achieve the desired goals of the organization.

The partnership of finance and technology provides the following benefits:

  • Finance and technology teams have near real-time visibility into cost and usage.

  • Finance and technology teams establish a standard operating procedure to handle cloud spend variance.

  • Finance stakeholders act as strategic advisors with respect to how capital is used to purchase commitment discounts (for example, Reserved Instances or AWS Savings Plans), and how the cloud is used to grow the organization.

  • Existing accounts payable and procurement processes are used with the cloud.

  • Finance and technology teams collaborate on forecasting future AWS cost and usage to align/build organizational budgets.

  • Better cross-organizational communication through a shared language, and common understanding of financial concepts.

Additional stakeholders within your organization that should be involved in cost and usage discussions include:

  • Business unit owners: Business unit owners must understand the cloud business model so that they can provide direction to both the business units and the entire company. This cloud knowledge is critical when there is a need to forecast growth and workload usage, and when assessing longer-term purchasing options, such as Reserved Instances or Savings Plans.

  • Third parties: If your organization uses third parties (for example, consultants or tools), ensure that they are aligned to your financial goals and can demonstrate both alignment through their engagement models and a return on investment (ROI). Typically, third parties will contribute to reporting and analysis of any workloads that they manage, and they will provide cost analysis of any workloads that they design.