Organizations need a strategy to analyze misalignment and overconsumption, reduce complexity, and define guidelines to use appropriate and efficient systems and implement a process wherever it is required. Creating and implementing these guidelines will help companies to develop a standard infrastructure and reduce duplicate projects and complexity.
To implement governance, you need to set up resource limits across the organization. Putting the service catalog in place with infrastructure as code helps to ensure that teams are not overprovisioned with resources beyond their allocated capacity. You should have a mechanism to understand and take action on business requirements quickly. Take both resource creation and decommission into account when applying resource limits and defining the process to change them.
Businesses operate multiple applications by various teams. Those teams can belong to different business units, within their revenue stream. The capability to determine resource costs to the application and business unit or team drives efficient usage behavior and helps reduce cost. You can define resource capacity based on cost attribution and the requirements of the group, organization unit, or department. To organize cost structure, you can use resource tagging along with account structuring.
As shown in the following screenshot, you can organize your accounts in different organization units (OUs), such as HR and Finance, and each department under the OU can have its own account. For example, here, HR has separate accounts for Payroll and Marketing, while Finance has separate accounts for Sales and Marketing:
In the preceding account structuring strategy, you can control costs at each business unit and department level. Adopting a charge-back mechanism for each department increases accountability for cost at a more granular level, which helps to optimize cost. Account structuring helps you to apply high security and compliance standards across the organization. As each account is linked to a parent account, you can get a great deal on the mass utilization of resources from vendors by consolidating expenditure across the organization.
As shown in the following screenshot, to get full cost visibility and consolidation across resources, you can tag each resource provisioned at the team level, which provides more granular control:
In the preceding diagram, you can see tagging strategy, which indicates that the given server is for application deployment and is utilized by the development team. This given server is owned by the marketing department of the finance business unit. In this way, the organization can get a granular level of cost expenditure visibility, and the team will be more frugal in their spending. However, you may want to adopt the show-back mechanism at the team level compared to the charge-back mechanism at the department and business unit level.
You can define your mechanism for tagging, where you can attach a name and value, such as resource name and owner name, to any resource. Almost every public cloud provider gives tagging capabilities out of the box. For on-premise, you can embed server metadata such as DNS name or hostname. Tagging not only helps you to organize costs but also to define a capacity limit, security, and compliance. It can be an excellent tool for inventory management and to keep an eye on the growing need for resources at every level of the organization.
Business leaders should evaluate the overall requirement to create efficient IT architectures. It requires collaboration to develop robust IT architecture and define governance across functional teams to set up accountability. Also, set up a standard to review the architecture, create the baseline for any new project initiative, and explain the process that will make sure that the system complies with the correct architecture and identify the route to improvement.
Engage all impacted stakeholders within your business in usage and cost discussions. CFO and application owners must understand resource consumption and purchasing options. Department owners must understand the overall business model and the monthly billing process. It will help to set up the direction for the business units and the whole company.
Make sure third-party vendors are aligned to your financial goals and can adjust their engagement models. Vendors should provide a cost analysis of any application they own and develop. Each team within the organization should be able to translate business, cost, or usage factors from the management into system adjustments, which help the application to implement and achieve the desired goals of the company.