Cloud FinOps, 2nd Edition

Chapter 11. Allocation: No Dollar Left Behind

This chapter is about the strategic decisions that you need to make before allocating your spend. While cost allocation is about assigning cloud costs to the correct business units within an organization, there are also many benefits gained by reporting those allocations to the whole business.

Why Allocation Matters

The advantages of leaving no dollar unallocated, unassigned, or untagged are vast. First off, you can tell who is spending what. You remove typical cloud cost discussions that end abruptly with “That resource doesn’t belong to me.” But most valuable of all, you can begin to individually trend each team’s forecasted growth (versus the whole company’s spend) and set budgets for teams so they know how they are doing against their targets, which Chapter 13 covers in more detail.

Once you’ve established that, you’ll begin to know where anomalies are coming from, as well as which area of business and which workload drove them. Knowing what a resource is doing helps us begin to optimize intelligently by taking into account the characteristics of the environment and the scheduled plans of that team. Is it production or development? How much do you want to push the boundaries of their respective CPUs? And so on from there. Meanwhile, teams receive a realistic daily view of their spending that ties to what finance teams are going to want to charge back to them at the end of the month.

You should be heading toward unit economics ...