In the previous chapter, we discussed why cost allocation is essential for cloud financial management. Whether it’s done via tags, linked accounts, folders, or labels, cost allocation is essential for cloud financial management. Without a consistent allocation strategy, you have a big pool of costs with no way to split them up or to identify what costs belong to which team.
Although tags, labels, and accounts provide many benefits, one major advantage is that they add business dimensions and context into your billing data for cost allocation. Throughout this chapter, we’ll cover the two major methods of allocating costs: hierarchical account separation and tagging. We’ll cover how they each contribute to cost allocation, and we’ll describe some successful strategies we have seen.
Each cloud provider uses different terms for similar concepts; for simplicity’s sake, we’ll refer to hierarchy structures as “accounts” and key/value pairs as “tags” in this chapter. So when we say “tags,” we’re also referring to GCP “labels.” When we say “accounts,” we’re also referring to GCP “projects and folders” and Azure “subscriptions.”
Cost Allocation Using Tag- and Hierarchy-Based Approaches
As we discussed earlier, a cloud service provider will supply a detailed bill that breaks out spending in fine detail. Depending upon the size of an environment, this might run to millions or even billions of lines. For every resource you have consumed ...
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