FinOps Handbook for Microsoft Azure

FinOps Handbook for Microsoft Azure

by Maulik Soni
Released May 2023
Publisher(s): Packt Publishing
ISBN: 9781801810166

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Book description

Drive financial visibility, set cost optimization goals, and reap savings for your organization with proven practices and invaluable insights

Purchase of the print or Kindle book includes a free PDF eBook

Key Features

  • Build a FinOps team and foster cross-organizational collaboration to optimize costs
  • Gain a deep insight into resource usage and rates to unlock the secrets of cost optimization
  • Apply your FinOps expertise to run a successful practice, reinvesting savings into new feature development

Book Description

To gain a competitive edge in today's unpredictable economic climate, you'll need to unravel the mystery of saving costs on Microsoft Azure Cloud. This book helps you do just that with proven strategies for building, running, and sustaining repeated cost optimization initiatives across your organization. You'll learn how to collaborate with finance, procurement, product, and engineering teams to optimize your cloud spend and achieve cost savings that can make a significant impact on your bottom line.

The book begins by showing you how to effectively monitor and manage your cloud usage, identify cost-saving opportunities, and implement changes that'll reduce your overall spend. Whether you're a small start-up or a large enterprise, this book will equip you with the knowledge and skills needed to achieve cost savings and maintain a lean cloud infrastructure. As you advance, you'll find out how to benchmark your current cloud spend and establish a budget for cloud usage. Throughout the chapters, you'll learn how to negotiate with your cloud provider to optimize your rate, allocate cost for the container, and gain a solid understanding of metric-driven cost optimization.

By the end of this FinOps book, you'll have become proficient in Azure Cloud financial management with the help of real-world examples, use cases, and scenarios.

What you will learn

  • Get the grip of all the activities of FinOps phases for Microsoft Azure
  • Understand architectural patterns for interruptible workload on Spot VMs
  • Optimize savings with Reservations, Savings Plans, Spot VMs
  • Analyze waste with customizable pre-built workbooks
  • Write an effective financial business case for savings
  • Apply your learning to three real-world case studies
  • Forecast cloud spend, set budgets, and track accurately

Who this book is for

This book is for cloud governance experts, finance managers, procurement specialists, product developers, and engineering teams looking to get clear and actionable guidance needed to implement all the phases of the FinOps life cycle in the Microsoft Azure context. This book is ideal for anyone with a basic understanding of financial terms, analytics tools, and the Azure cloud.

Table of contents

  1. FinOps Handbook for Microsoft Azure
  2. Contributors
  3. About the author
  4. About the reviewers
  5. Preface
    1. Who this book is for
    2. What this book covers
    3. To get the most out of this book
    4. Download the color images
    5. Conventions used
    6. Get in touch
    7. Share Your Thoughts
    8. Download a free PDF copy of this book
  6. Part 1: Inform
  7. Chapter 1: Bringing Visibility and Allocating Cost
    1. Technical requirements
    2. Tools used in this book for implementing FinOps for Microsoft Azure
      1. Azure CLI
      2. Power BI Desktop
      3. Azure Cost Management + Billing
      4. Azure Advisor
      5. Azure Monitor
      6. Azure Pricing Calculator
    3. What is the Microsoft Azure Well-Architected Framework?
    4. Creating a baseline using the WAF Cost Optimization assessment
    5. Cost allocation from an accounting point of view
      1. What is ABC allocation?
    6. Cost allocation in Azure for FinOps
      1. Cost allocation using the account, management group, and subscriptions hierarchy
      2. Cost allocation using resources tags
    7. Exploring cost analysis in the Azure portal
      1. Identifying the offer type for your subscription(s)
      2. Accumulated and forecasted cost
      3. Cost grouped by service
      4. Cost grouped by management group
      5. Cost grouped by tag
      6. Creating, saving, and sharing custom cost analysis views
    8. Summary
  8. Chapter 2: Benchmarking Current Spend and Establishing Budgets
    1. Technical requirements
    2. The on-demand and elastic nature of Azure
    3. Developing KPIs for consistent reporting
      1. Strategic and operational KPIs
      2. Leading and lagging KPIs
      3. Why do you need KPIs?
      4. Defining, measuring, and reporting KPIs
    4. Benchmarking between teams
    5. Creating and managing budgets in Azure cost analysis
      1. Production marketing website budget
      2. Marketing development budget
      3. Marketing production budget
      4. Overall Marketing department budget
      5. Tracking the budget spend
    6. Creating and managing alerts in Azure cost analysis
      1. Budget alerts
      2. Spending anomaly alerts
    7. Summary
  9. Chapter 3: Forecasting the Future Spend
    1. Technical requirements
    2. Introduction to forecasting
    3. Getting your Azure usage data
    4. Setting up the Cost Management connector for Power BI
    5. Forecasting based on manual estimates
    6. Forecasting based on past usage
    7. Advanced forecasting by application
      1. Identifying usage charges by application
    8. Fully loaded costs in forecasting
    9. Summary
  10. Chapter 4: Case Study – Beginning the Azure FinOps Journey
    1. Case study – Peopledrift Healthcare
      1. Challenges
      2. Objectives
      3. Solution
      4. Benefits
    2. Summary
  11. Part 2: Optimize
  12. Chapter 5: Hitting the Goals for Usage Optimization
    1. Technical requirements
    2. The project management triangle method for goal setting
    3. Setting OKRs or KPIs
      1. OKR examples
      2. KPI – tagging by business unit
      3. KPI – cost avoidance for unattached disks by business unit
      4. KPI – Azure Hybrid Benefit utilization by business unit
      5. KPI – storage accounts with hot, cool, and archive tiers
    4. Understanding Azure Advisor recommendations for usage optimization
      1. Accessing Azure Advisor using the portal
      2. Accessing Azure Advisor using the CLI
    5. Top 10 usage optimization targets using custom Azure workbooks
      1. Target 1 – 98% of all your resources must be tagged
      2. Target 2 – right-sizing underutilized virtual machines
      3. Target 3 – enabling Azure Hybrid Benefit for Windows and Linux VMs
      4. Target 4 – right-sizing underutilized SQL databases
      5. Target 5 – enabling Azure Hybrid Benefit for SQL databases, managed instances, and SQL VMs
      6. Target 6 – upgrading storage accounts to General-purpose v2
      7. Target 7 – deleting unattached discs
      8. Target 8 – deleting unattached public IPs
      9. Target 9 – Azure App Service – using the v3 plan with reservations and autoscaling
      10. Target 10 – Azure Kubernetes Service – using the cluster autoscaler, Spot VMs, and start/stop features in AKS
    6. Trade-offs of cost versus security, performance, and reliability
      1. Cost versus security
      2. Cost versus performance
      3. Cost versus reliability
    7. Summary
  13. Chapter 6: Rate Optimization with Discounts and Reservations
    1. Technical requirements
    2. Commitment-based discounts in Azure
      1. The Microsoft Enterprise Agreement
      2. The Microsoft Azure Consumption Commitment (MACC)
    3. Identifying reservation opportunities for your workload
    4. Using the Azure Cost Management (ACM) Power BI app
      1. Scenario 1 – you are purchasing VM reservations for the first time
      2. Scenario 2 – you have existing reservations but want to purchase a new one for another Region and VM SKU
    5. Understanding Azure Advisor recommendations for reservations
    6. Reservation purchase and cadence
      1. Purchase cadence
    7. Reservation details, renewal, savings, and chargeback report
      1. Reservation details
      2. Auto-renewal
      3. Reservation savings and chargeback report
    8. Reservation exchange and cancellation
      1. Exchange reservations
      2. Cancel (return) a reservation
    9. Summary
  14. Chapter 7: Leveraging Optimization Strategies
    1. Technical requirements
    2. Introducing Azure Spot market
      1. Estimating Spot VM discounts
      2. Spot VM and VM Scale Sets
    3. Spot VM caveats
      1. Eviction type and policy
      2. Limitations
    4. Pricing history and eviction rate details
    5. Architecting the workload to handle eviction
    6. Spot Priority Mix
    7. Discounting strategies with savings plans
      1. Savings plan versus reserved instances
      2. Purchasing a savings plan
    8. Writing a business case for cost optimization
      1. Business case: Orion business analytics platform cost optimization
    9. Summary
  15. Chapter 8: Case Study - Realize Savings and Apply Optimizations
    1. Case study – Peopledrift Inc., a healthcare company
      1. Challenges
      2. The solution
      3. Benefits
    2. Summary
  16. Part 3: Operate
  17. Chapter 9: Building a FinOps Culture
    1. Technical requirements
    2. Establishing a CoE for cloud cost management
    3. Motivating engineering teams to take action
      1. Incentivizing the team
      2. Penalizing the team
    4. Automated tag inheritance, governance, and compliance
    5. Automated VM shutdown and startup
    6. Automated budget actions
    7. Third-party FinOps tools
      1. Apptio Cloudability
      2. CloudHealth by VMware
      3. Cast.ai
    8. Summary
  18. Chapter 10: Allocating Costs for Containers
    1. Technical requirements
    2. FinOps challenges for containerized workloads
    3. ACI cost allocation
    4. Introducing Kubecost
    5. AKS cost allocation
    6. Showback and chargeback shared AKS clusters
    7. Cost optimization recommendations for AKS clusters
      1. Manage underutilized nodes
      2. Resizing local disks
      3. Reserved instances
      4. Right-sizing your container requests
      5. Remedying abandoned workloads
      6. Right-size persistent volumes
    8. Summary
  19. Chapter 11: Metric-Driven Cost Optimization
    1. Technical requirements
    2. Core principles of MDCO
    3. MDCO and reservation reporting using Power BI
    4. Setting thresholds for purchasing reservations
    5. Automated reservation purchases based on MDCO triggers
    6. Summary
  20. Chapter 12: Developing Metrics for Unit Economics
    1. Technical requirements
    2. What is cloud unit economics?
      1. Benefits of cloud unit economics
    3. Indirect versus direct cost metrics
    4. Tracking costs back to business benefits
    5. Developing metrics for unit economics
      1. Cost per patient encounter
      2. Revenue per patient encounter
      3. Gross margin per patient encounter
      4. Cost per claim
      5. Revenue per claim
    6. Activity-based cost model
    7. Summary
  21. Chapter 13: Case Study – Implementing Metric-Driven Cost Optimization and Unit Economics
    1. Case study – Peopledrift Inc., a healthcare company
      1. Challenges
      2. Objectives
      3. Solution
      4. Benefits
    2. Summary
  22. Index
    1. Why subscribe?
  23. Other Books You May Enjoy
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    2. Share Your Thoughts
    3. Download a free PDF copy of this book

Product information

  • Title: FinOps Handbook for Microsoft Azure
  • Author(s): Maulik Soni
  • Release date: May 2023
  • Publisher(s): Packt Publishing
  • ISBN: 9781801810166