Cloud FinOps. 2nd Edition

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• Preface
  • The World Turned Upside Down
  • Who Should Read This Book
  • About This Book
  • What You Need to Know Before Reading On
  • FinOps Is Evolving
  • Conventions Used in This Book
  • OReilly Online Learning
  • How to Contact Us
  • Acknowledgments
• I. Introducing FinOps
• 1. What Is FinOps?
  • Defining the Term FinOps
  • The FinOps Heros Journey
  • Where Did FinOps Come From?
  • Data-Driven Decision Making
  • Real-Time Feedback (aka the Prius Effect)
  • Core Principles of FinOps
  • When Should You Start FinOps?
  • Starting with the End in Mind: Data-Driven Decision Making
  • Conclusion
• 2. Why FinOps?
  • Use Cloud for the Right Reasons
  • Cloud Spend Keeps Accelerating
  • The Impact of Not Adopting FinOps
    • Informed Ignoring: Why Start Now?
  • Conclusion
• 3. Cultural Shift and the FinOps Team
  • Deming on Business Transformation
  • Who Does FinOps?
  • Why a Centralized Team?
  • The FinOps Team Doesnt Do FinOps
  • The Role of Each Team in FinOps
    • Executives and Leadership
    • Engineering and Developers
    • Finance
    • Procurement and Sourcing
    • Product or Business Teams
    • FinOps Practitioners
  • A New Way of Working Together
  • Where Does Your FinOps Team Report?
  • Understanding Motivations
    • Engineers
    • Finance People
    • Executives and Leadership
    • Procurement and Sourcing People
  • FinOps Throughout Your Organization
  • Hiring for FinOps
  • FinOps Culture in Action
    • Difficulty Motivating People Is Not New
    • Contributors to Action
    • Detractors from Action
    • Tipping the Scales in Your Favor
  • Conclusion
• 4. The Language of FinOps
  • Defining a Common Lexicon
  • Defining the Basic Terms
  • Defining Finance Terms for Cloud Professionals
  • Abstraction Assists Understanding
  • Cloud Language Versus Business Language
  • Creating a Universal Translator Between Your DevOps and Finance Teams
  • The Need to Educate All the Disciplines
  • Benchmarking and Gamification
  • Conclusion
• 5. Anatomy of the Cloud Bill
  • Types of Cloud Bill
  • Cloud Billing Complexity
  • Basic Format of Billing Data
  • Time, Why Do You Punish Me?
  • Sum of the Tiny Parts
  • A Brief History of Cloud Billing Data
  • The Importance of Hourly Data
  • A Month Is Not a Month
  • A Dollar Is Not a Dollar
  • Two Levers to Affect Your Bill
  • Who Should Avoid Costs and Who Should Reduce Rates?
  • Centralizing Rate Reduction
  • Why You Should Decentralize Usage Reduction
  • Conclusion
• 6. Adopting FinOps
  • A Confession
  • Different Executive Pitches for Different Levels
    • Starting Pitch
    • Advancing Pitch
    • Sample Headcount Plan for Advancing a FinOps Team
  • Pitching the Executive Sponsor
  • Playing to Your Audience
  • Key Personas That the Driver Must Influence
    • CEO Persona
    • CTO/CIO Persona
    • CFO Persona
    • Engineering Lead Persona
  • Roadmap for Getting Adoption of FinOps
    • Stage 1: Planning for FinOps in an Organization
      • Do your research
      • Create a plan
      • Gather support
      • Perform initial resourcing
    • Stage 2: Socializing FinOps for Adoption in an Organization
      • Communicate value
      • Gather team feedback
      • Define initial FinOps model
    • Stage 3: Preparing the Organization for FinOps
      • Assess FinOps readiness
      • Engage stakeholders
  • Type of Alignment to the Organization
  • Full Time, Part Time, Borrowed Time: A Note on Resources
  • A Complex System Designed from Scratch Never Works
  • Conclusion
• 7. The FinOps Foundation Framework
  • An Operating Model for Your Practice
  • The Framework Model
    • Principles
    • Personas
    • Maturity
    • Phases
  • Domains and Capabilities
    • Structure of a Domain
    • Structure of Capabilities
      • Definition
      • Maturity assessment
      • Assessment lenses
      • Functional activities
      • Measures of success
      • Inputs
  • Adapting the Framework to Fit Your Needs
  • Connection to Other Frameworks/Models
  • Conclusion
• 8. The UI of FinOps
  • Build Versus Buy Versus Native
    • When to Use Native Tooling
    • When to Build
    • Why to Buy
  • Operationalized Reporting
    • Data Quality
    • Perfect Is the Enemy of Good
    • Report Tiering
    • Rolling Out Changes
    • The Universal Report
  • Accessibility
    • Color
    • Visual Hierarchy
    • Usability and Consistency
    • Language
    • Consistency of Color and Visual Representation
    • Recognition Versus Recall
  • Psychological Concepts
    • Anchoring Bias
    • Confirmation Bias
    • The Von Restorff Effect
    • Hicks Law
  • Perspectives on Reports
    • Personas
    • Maturity
    • Multicloud
  • Putting Data in the Path of Each Persona
    • Data in the Path of Finance
    • Data in the Path of Leadership
    • Data in the Path of Engineers
    • Connecting FinOps to the Rest of the Business
  • Seek First to Understand
  • Conclusion
• II. Inform Phase
• 9. The FinOps Lifecycle
  • The Six Principles of FinOps
    • #1: Teams Need to Collaborate
    • #2: Decisions Are Driven by the Business Value of Cloud
    • #3: Everyone Takes Ownership of Their Cloud Usage
    • #4: FinOps Reports Should Be Accessible and Timely
    • #5: A Centralized Team Drives FinOps
    • #6: Take Advantage of the Variable Cost Model of the Cloud
  • The FinOps Lifecycle
    • Inform
    • Optimize
    • Operate
  • Considerations
  • Where Do You Start?
  • You Dont Have to Find All the Answers
  • Conclusion
• 10. Inform Phase: Where Are You Right Now?
  • Data Is Meaningless Without Context
  • Seek First to Understand
  • Organizational Work During This Phase
  • Transparency and the Feedback Loop
  • Benchmarking Team Performance
  • What Great Looks Like
  • Conclusion
• 11. Allocation: No Dollar Left Behind
  • Why Allocation Matters
  • Amortization: Its Accrual World
  • Creating Goodwill and Auditability with Accounting
  • The Spend Panic Tipping Point
  • Spreading Out Shared Costs
  • Chargeback Versus Showback
  • A Combination of Models Fit for Purpose
  • Accounts, Tagging, Account Organization Hierarchies
  • The Showback Model in Action
  • Chargeback and Showback Considerations
  • Conclusion
• 12. Tags, Labels, and Accounts, Oh My!
  • Tag- and Hierarchy-Based Approaches
  • Getting Started with Your Strategy
    • Communicate Your Plan
    • Keep It Simple
    • Formulate Your Questions
  • Comparing the Allocation Options of the Big Three
  • Comparing Accounts and Folders Versus Tags and Labels
  • Organizing Accounts and Projects into Groups
  • Tags and Labels: The Most Flexible Allocation Option
    • Using Tags for Billing
    • Getting Started Early with Tagging
    • Deciding When to Set Your Tagging Standard
    • Picking the Right Number of Tags
    • Working Within Tag/Label Restrictions
    • Maintaining Tag Hygiene
    • Reporting on Tag Performance
    • Getting Teams to Implement Tags
  • Conclusion
• 13. Accurate Forecasting
  • The State of Cloud Forecasting
  • Forecasting Methodologies
  • Forecasting Models
  • Cloud Forecasting Challenges
    • Manual Versus Automated Forecasts
    • Inaccuracies
    • Granularity
    • Forecast Frequency
    • Communication
    • Future Projects
    • Cost Estimation
    • Impacts of Cost Optimization on Forecasts
  • Forecast and Budgeting
  • The Importance of Managing Teams to Budgets
  • Conclusion
• III. Optimize Phase
• 14. Optimize Phase: Adjusting to Hit Goals
  • Why Do You Set Goals?
  • The First Goal Is Good Cost Allocation
  • Is Savings the Goal?
  • The Iron Triangle: Good, Fast, Cheap
  • Hitting Goals with OKRs
    • OKR Focus Area #1: Credibility
    • OKR Focus Area #2: Maintainable
    • OKR Focus Area #3: Control
  • Goals as Target Lines
  • Budget Variances
  • Using Less Versus Paying Less
  • Conclusion
• 15. Using Less: Usage Optimization
  • The Cold Reality of Cloud Consumption
  • Where Does Waste Come From?
  • Usage Reduction by Removing/Moving
  • Usage Reduction by Resizing (Rightsizing)
  • Common Rightsizing Mistakes
    • Relying on Recommendations That Use Only Averages or Peaks
    • Failing to Rightsize Beyond Compute
    • Not Addressing Your Resource Shape
    • Not Simulating Performance Before Rightsizing
    • Hesitating Due to Reserved Instance Uncertainty
  • Going Beyond Compute: Tips to Control Cloud Costs
    • Block Storage
      • Get rid of orphaned volumes
      • Focus on zero throughput or zero IOPS
      • Make managing your block storage costs a priority
      • Reduce the number of higher IOPS volumes
      • Take advantage of elastic volumes
    • Object Storage
      • Implement data retention policies
      • Choose a storage tier/class that matches the data
    • Networking
      • Clean up unused IP addresses
      • Optimize network routes
  • Usage Reduction by Redesigning
    • Scaling
    • Scheduled Operations
  • Effects on Reserved Instances
  • Benefit Versus Effort
  • Serverless Computing
  • Not All Waste Is Waste
  • Maturing Usage Optimization
  • Advanced Workflow: Automated Opt-Out Rightsizing
  • Tracking Savings
  • Conclusion
• 16. Paying Less: Rate Optimization
  • Compute Pricing
    • On-Demand/Pay-As-You-Go
    • Spot Resource Usage
    • Commitment-Based Discounts
  • Storage Pricing
  • Volume/Tiered Discounts
    • Usage-Based
    • Time-Based
  • Negotiated Rates
    • Custom Pricing
    • Seller Private Offers
  • BYOL Considerations
  • Conclusion
• 17. Understanding Commitment-Based Discounts
  • Introduction to Commitment-Based Discounts
  • Commitment-Based Discount Basics
    • Compute Instance Size Flexibility
    • Conversions and Cancellations
  • Overview of Usage Commitments Offered by the Big Three
  • Amazon Web Services
    • What Does an RI Provide?
    • AWS Commitment Models
    • AWS Reserved Instance
    • Member Account Affinity
    • Standard Versus Convertible RIs
    • Instance Size Flexibility
    • AWS Savings Plans
    • Savings Bundles
  • Microsoft Azure
    • Azure Reservations
    • Instance Size Flexibility
    • Azure Savings Plans
  • Google Cloud
    • Google Committed Use Discounts
    • Paying for Cores, Not Hours, in Google
    • Google Billing and Sharing CUDs
    • Google Billing Account and Ownership
    • Applying Google CUDs in a Project
    • Google Flexible Committed Use Discounts
  • Conclusion
• 18. Building a Commitment-Based Discount Strategy
  • Common Mistakes
  • Steps to Building a Commitment-Based Discount Strategy
    • Step 1: Learn the Fundamentals of Each Program
      • Components of the commitment break-even point
      • The commitment waterline
    • Step 2: Understand Your Level of Commitment to Your Cloud Service Provider
    • Step 3: Build a Repeatable Commitment-Based Discount Process
    • Step 4: Purchase Regularly and Often
    • Step 5: Measure and Iterate
    • Step 6: Allocate Up-Front Commitment Costs Appropriately
  • How to Manage the Commitment Strategy
  • Purchasing Commitments Just-in-Time
  • When to Rightsize Versus Commit
    • The Zone Approach
    • Who Pays for Commitments?
    • Strategy Tips
  • Conclusion
• 19. Sustainability: FinOps Partnering with GreenOps
  • What Are Cloud Carbon Emissions?
  • Scope 1, 2, and 3 Emissions
  • Are Cloud Providers Green?
    • Access
    • Completeness
    • Granularity
  • Partnering with Engineers on Sustainability
  • FinOps and GreenOps Better Together?
  • GreenOps Remediations
  • Avoid FinOps Working Against GreenOps
  • Conclusion
• IV. Operate Phase
• 20. Operate: Aligning Teams to Business Goals
  • Achieving Goals
  • Staffing and Augmenting Your FinOps Team
  • Processes
    • Onboarding
    • Responsibility
    • Visibility
    • Action
  • How Do Responsibilities Help Culture?
    • Carrot Versus Stick Approach
    • Handling Inaction
  • Putting Operate into Action
  • Conclusion
• 21. Automating Cost Management
  • What Is the Outcome You Want to Achieve?
  • Automated Versus Manual Tasks
  • Automation Tools
    • Costs
    • Other Considerations
    • Tooling Deployment Options
  • Automation Working Together
    • Integration
    • Automation Conflict
  • Safety and Security
  • How to Start
  • What to Automate
    • Tag Governance
    • Scheduled Resource Start/Stop
    • Usage Reduction
  • Conclusion
• 22. Metric-Driven Cost Optimization
  • Core Principles
    • Automated Measurement
    • Targets
    • Achievable Goals
      • Commitment coverage
      • Savings metrics that make sense for all
      • Combining metrics
    • Data Driven
  • Metric-Driven Versus Cadence-Driven Processes
  • Setting Targets
  • Taking Action
  • Bring It All Together
  • Conclusion
• 23. FinOps for the Container World
  • Containers 101
  • The Move to Container Orchestration
  • The Container FinOps Lifecycle
  • Container Inform Phase
    • Cost Allocation
    • Container Proportions
      • Custom container proportions
      • Container proportions in Google Cloud
    • Tags, Labels, and Namespaces
  • Container Optimize Phase
    • Cluster Placement
    • Container Usage Optimization
      • Centralize the rightsizing of clusters
      • Decentralize the rightsizing of containers/pods
    • Server Instance Rate Optimization
  • Container Operate Phase
  • Serverless Containers
  • Conclusion
• 24. Partnering with Engineers to Enable FinOps
  • Integrating Us with Them
  • Whats on the Mind of the Engineer?
  • Constraints and the Solving of Hard Problems
  • Principles for Enabling Cost-Efficient Engineering
    • #1: Maximize Value Rather Than Reduce Cost
    • #2: Remember That We Are on the Same Team
    • #3: Prioritize Improving Communication
    • #4: Introduce Financial Constraints Early in the Product Development
    • #5: Enablement, Not Control
    • #6: Leadership Support Isnt Helpful, It Is Essential
  • Data in the Path of the Engineer
  • Models for Partnering with Engineering Teams
    • Direct Contribution
    • Indirect Collaboration
    • Indirect Collaboration with Targeted Contribution
  • Conclusion
• 25. Connectivity to Other Frameworks
  • Total Cost of Ownership
  • Working with Other Methodologies and Frameworks
    • Find Out Whos Out There
    • Make Friends and Share Goals
    • Share Influence, Terminology, and Processes
    • Share Infrastructure
    • Share Knowledge
  • Conclusion
• 26. FinOps Nirvana: Data-Driven Decision Making
  • Unit Economics and Metrics
  • Unit Economics Dont Have to Be About Revenue
  • Calculating Unit Economic Metrics
  • Spending Is Fine, Wasting Is Not
  • Activity-Based Costing
  • Coming Back to the Iron Triangle
  • Whats Missing from the Equation?
  • When Have You Won at FinOps?
  • Conclusion
• 27. You Are the Secret Ingredient
  • Call to Action
• Afterword on What to Prioritize (from J.R.)
• Index

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