Chargeback for accountability
In FinOps in steady state, charge or showback plays a critical role.
Cloud service providers produce a consolidated account-level consumption and billing reports for all the resources used. Businesses must analyze these reports for consumption and budget variance to “chargeback” or bill to the respective departments or services. Business accounts must put in place a chargeback model to assess the alignment and agreement among key stakeholders such as Line of Business, Finance, other functional units, and cloud service providers (CSPs). This will require looking at the account, tagging strategy, and alignment of application data (for instance, the App ID) to the different budget groups while developing the migration plans. It’s a key step to defining an equitable chargeback model.
Depending on cost optimization objectives, define optimal account structures to establish the right level of hierarchical account order and logical account groupings. Start tagging the resources at the earliest and maintain the consistency of tagging strategy. In specific scenarios such as data transfer costs, CSPs’ support fees, or other costs that are shared by all users, it is very difficult to identify and allocate the costs back to individual teams, projects, or initiatives. In the discovery and assessment phase, analyze the current chargeback model and define the cloud cost and usage reports that can help generate the cost and usage information at the desired level of granularity. This will help in internal alignment on how to allocate the shared cost.
So how can businesses get started on a chargeback model? First, build a dedicated team to develop the chargeback model. Then, to ensure a smooth chargeback process, work closely with the Finance department, get their buy-in to implement chargeback, and gain strong support from the senior management.