The Frugal Architect's FinOps Journey: A Series of Cost-Saving Adventures - Part 4

 

Optimize

LAW VI  - Cost Optimization is Incremental

Dr. Werner’s Cloud FinOps Insights

The pursuit of cost efficiency is an ongoing journey. Even after deployment, we must revisit systems to incrementally improve optimization. The key is continually questioning and diving deeper. Programming languages provide profiling tools to analyze code performance, and while these require setup and expertise, they enable granular analyses that can lead to changes that shave milliseconds. What may seem like small optimizations accumulate into large savings at scale.

In operations, most time is spent running existing systems. There are opportunities to profile resource usage and identify waste reduction. At Amazon, we continuously monitor services in production to understand patterns and trim inefficiencies. Frugality takes persistence – by incrementally reducing latencies and infrastructure costs, we can optimize the cost to serve.

There is always room for improvement… if we keep looking. The savings we reap today fund innovation for tomorrow.

(excerpt from https://thefrugalarchitect.com/)

 

Let’s delve deeper

·      Cost efficiency is an ongoing process that requires continual improvement.

·      Revisiting systems post-deployment helps identify areas for optimization.

·      Programming languages offer tools for code analysis, aiding in pinpointing areas for improvement.

·      Small optimizations can lead to significant cost savings over time.

·      In operations, monitoring resource usage and patterns is crucial for waste reduction.

·      Continuous monitoring and optimization help in trimming inefficiencies.

·      Persistence in reducing latencies and infrastructure costs leads to optimized service costs.

·      Constant improvement ensures that today's savings can fuel tomorrow's innovation.

 

Apply FinOps principles and AWS Examples

Here's how you can apply FinOps Foundation principles with AWS examples:

1. Cost Efficiency through Continual Improvement:
• FinOps Principle: Regularly revisit systems to identify areas for optimization.
• AWS Example: Use AWS Cost Explorer to analyze spending patterns and identify opportunities for cost savings. Regularly review Reserved Instance usage to ensure cost-effectiveness.
2. Code Analysis for Optimization:
• FinOps Principle: Programming languages provide tools for code analysis to pinpoint areas for improvement.
• AWS Example: Use AWS CodeGuru to automatically review code and suggest optimizations, leading to more efficient use of resources and potential cost savings.
3. Monitoring for Waste Reduction:
• FinOps Principle: Monitoring resource usage and patterns is crucial for waste reduction.
• AWS Example: Use AWS CloudWatch to monitor resource utilization and set up alarms to alert you of any inefficiencies or potential waste.
4. Continuous Monitoring and Optimization:
• FinOps Principle: Continuous monitoring and optimization help in trimming inefficiencies.
• AWS Example: Use AWS Trusted Advisor to continuously monitor your AWS environment for cost optimization opportunities, such as underutilized resources or unoptimized configurations.
5. Persistence in Cost Reduction:
• FinOps Principle: Persistence in reducing latencies and infrastructure costs leads to optimized service costs.
• AWS Example: Use AWS Lambda for serverless computing, which can help reduce infrastructure costs by running code in response to events without provisioning or managing servers.
6. Constant Improvement for Future Innovation:
• FinOps Principle: Constant improvement ensures that today's savings can fuel tomorrow's innovation.
• AWS Example: Use AWS Cost Anomaly Detection to identify anomalous spending patterns and take corrective actions to optimize costs and free up resources for future innovation.

 

A FinOps Odyssey

 

LAW VII Unchallenged Success Leads to Assumptions.

Dr. Werner’s Cloud FinOps Insights

When software teams achieve significant success without facing major failures or roadblocks, complacency can set in. There is a dangerous tendency to become overconfident in the methods, tools, and practices that led to those wins.

Software teams often fall into the trap of assuming their current technologies, architectures, or languages will always be the best choice, simply because they have worked in the past. This can create a false sense of security that discourages questioning the status quo or exploring new options which could be more efficient, cost-effective, or scalable.

You see this frequently when it comes to programming languages. “We’re a Java shop” is a phrase I’ve heard too often – and it can stifle innovation. Unchallenged success breeds complacency through assumptions. We must always look for ways to question, optimize and improve.

As Grace Hopper famously stated, one of the most dangerous phrases in the English language is: “We’ve always done it this way.”

(excerpt from https://thefrugalarchitect.com/)

A FinOps Odyssey

Conclusion

In conclusion, "The FinOps Odyssey" series has shed light on the crucial role of FinOps principles in modern cloud architecture. From aligning costs with business models to optimizing resource usage and fostering a culture of continual improvement, each part of the series has highlighted key strategies, best practices and AWS services for achieving cost efficiency and operational excellence in the cloud. By applying the insights gained from this series, businesses can navigate the complexities of cloud cost management more effectively and drive greater value from their cloud investments.

The Frugal Architect's FinOps Journey: A Series of Cost-Saving Adventures - Part 3

Measure

LAW IV  - Unobserved Systems Lead to Unknown Costs

Dr. Werner’s Cloud FinOps Insights

Without careful observation and measurement, the true costs of operating a system remain invisible. Like a utility meter tucked away in a basement, lack of visibility enables wasteful habits. Making meters more visible can profoundly shift behaviors.

Though observation requires investment, not implementing adequate monitoring is shortsighted. The adage warns, “If you can’t measure it, you can’t manage it.” Tracking utilization, spending, errors, and more, is crucial for cost management.

When critical cost metrics are placed front-and-center before engineers and their business partners, more sustainable practices emerge organically. Ongoing inspection lets you spot excess spend and tune operations to trim expenses. The return on investment in observability typically far outweighs the expense.

Most importantly, keeping costs in the forefront encourages sustainable practices.

(excerpt from https://thefrugalarchitect.com/) 

Let’s delve deeper

• Lack of visibility into system costs can lead to wasteful habits and inefficiencies.
• Investing in monitoring tools is essential for effective cost management.
• Tracking metrics such as utilization, spending, and errors is crucial for controlling costs.
• Making cost metrics easily accessible to engineers and business partners promotes sustainable practices.
• Ongoing monitoring helps identify excess spending and allows for adjustments to reduce costs.
• The return on investment in visibility tools is significant, leading to more sustainable cost management practices.

 

Apply FinOps principles and AWS Examples

To apply FinOps Foundation principles and AWS services for cost optimization, consider the following:

1. Visibility into System Costs:
• FinOps Principle: Lack of visibility into system costs can lead to wasteful habits and inefficiencies.

·       AWS Example: 

• Use AWS Cost Explorer and AWS Budgets to gain insights into your AWS spending and identify areas for optimization. By understanding your costs, you can make informed decisions to reduce waste and improve efficiency. 
• Implement AWS Organizations and AWS Identity and Access Management (IAM) to manage and govern your AWS accounts effectively. This helps ensure that resources are used efficiently and securely.
1. Investing in Monitoring Tools:
• FinOps Principle: Investing in monitoring tools is essential for effective cost management.

·       AWS Example: 

• Use AWS CloudWatch to monitor your AWS resources and applications in real-time. By setting up alarms and monitoring metrics, you can quickly detect and respond to any cost anomalies or inefficiencies. 
• Utilize AWS Trusted Advisor and AWS Cost Anomaly Detection to identify cost-saving opportunities, such as rightsizing instances, using reserved instances, and leveraging spot instances.
2. Tracking Cost Metrics:
• FinOps Principle: Tracking metrics such as utilization, spending, and errors is crucial for controlling costs.
• AWS Example: Use AWS Cost Explorer to track your AWS spending over time and analyze usage patterns. By monitoring these metrics, you can identify areas where costs can be optimized and take action to reduce unnecessary spending.
3. Making Cost Metrics Accessible:
• FinOps Principle: Making cost metrics easily accessible to engineers and business partners promotes sustainable practices.
• AWS Example: Use AWS Budgets to set custom cost and usage budgets that are easily accessible to your team. By providing visibility into budgeted versus actual spending, you can ensure that everyone is aware of cost targets and can work towards them effectively.
4. Ongoing Monitoring for Cost Reduction:
• FinOps Principle: Ongoing monitoring helps identify excess spending and allows for adjustments to reduce costs.
• AWS Example: 
• Use AWS Cost Explorer to create custom cost reports and analyze spending trends. By regularly reviewing these reports, you can identify opportunities for cost reduction and make informed decisions to optimize your AWS costs.
• Continuously monitor and optimize your costs using AWS Cost Explorer, AWS Budgets, and AWS Cost Anomaly Detection. Regularly review your architecture and usage patterns to identify new optimization opportunities.
• Use AWS Lambda and AWS CloudFormation to automate cost management tasks, such as starting and stopping instances based on usage patterns, and provisioning resources using infrastructure as code.
5. Return on Investment in Visibility Tools:
• FinOps Principle: The return on investment in visibility tools is significant, leading to more sustainable cost management practices.
• AWS Example: 
• Implement AWS Cost Management tools like AWS Budgets, AWS Cost Explorer, and AWS Trusted Advisor to gain visibility into your costs and optimize them. By investing in these tools, you can effectively manage your costs and drive business growth.

 

 A FinOps Odyssey

 

LAW V Cost Aware Architectures Implement Cost Controls.

Dr. Werner’s Cloud FinOps Insights
The essence of frugal architecture is robust monitoring combined with the ability to optimize costs. Well-designed systems allow you to take action on opportunities for improvement. For this to work, decompose applications into tunable building blocks.

A common approach is tiering components by criticality. Tier 1 components are essential; optimize regardless of cost. Tier 2 components are important but can be temporarily scaled down without major impact. Tier 3 components are “nice-to-have”; make them low-cost and easily controlled.

Defining tiers enables trade-offs between cost and other requirements. Granular control over components optimizes both cost and experience. Infrastructure, languages, databases should all be tunable. Architect and build systems with revenue and profit in mind. Cost optimization must be measurable and tied to business impact.

(excerpt from https://thefrugalarchitect.com/)

A FinOps Odyssey

 

Stay tuned for Part – 4 of The FinOps Odyssey 

 

The Frugal Architect's FinOps Journey: A Series of Cost-Saving Adventures - Part – 2

Continuing our journey through "The FinOps Odyssey" series, we delve deeper into the principles of the Frugal Architect. Building on the foundation laid in Part 1, which explored the fundamental aspects mandating cost as a non-functional requirement driving efficiency and optimization, Part 2 takes us further into the realm of frugality in architecture. In this instalment, we focus on two key laws of the Frugal Architect, exploring how these laws can help align cloud cost to the business model and how architecting decisions can influence cost, performance and much more. Let’s apply it in real-world scenarios to achieve greater cost efficiency and operational excellence in the cloud.

LAW II  - Systems that Last Align Cost to Business

Image generated with https://partyrock.aws/ for AWS Cloud Cost Optimization Theme

Dr. Werner’s Cloud FinOps Insights

 

The durability of a system depends on how well its costs are aligned to the business model. When designing and building systems, we must consider the revenue sources and profit levers. It’s important to find the dimension you’re going to make money over, then make sure the architecture follows the money.

For example, in e-commerce, that dimension might be the number of orders. When orders go up, infrastructure and operation costs rise. And that’s okay, because if your system is architected well, you can start to exploit economies of scale. What’s important is that infrastructure costs have a measurable impact on the business.

As builders, we need to think about revenue – and use that knowledge to inform our choices. Because growth at all costs leads to a trail of destruction.

(excerpt from https://thefrugalarchitect.com/)

Let’s delve deeper

·      A system's longevity relies on its cost alignment with the business model.

·      When designing systems, consider revenue sources and profit drivers. 

·      Identify the key metric for revenue generation and ensure the architecture supports it. 

·      For instance, in a software-as-a-service (SaaS) business, the key metric might be the number of active users. As the user base grows, infrastructure and support costs may increase. However, with a well-designed system, you can optimize resources and scale efficiently, leveraging economies of scale. The important factor is that infrastructure costs should align with the growth of the user base and directly contribute to the profitability of the business.

·      Builders should prioritize revenue considerations to make informed decisions, as unchecked growth can have negative consequences.

 

Apply FinOps principles and AWS services

·      Cost Alignment with Business Model: The FinOps principle of cost alignment emphasizes aligning costs with revenue and profit models. Attribute costs using your cost allocation process and tags. Tags provide showback to teams not directly responsible for costs, making them aware of their contribution. Perform chargeback to teams directly responsible for costs to recover expenses and raise awareness.
AWS Example:

·      Showback and chargeback mechanisms, implemented through tools like AWS Cost Explorer, Cost and Usage Reports, and AWS Budgets, can help demonstrate how costs are allocated across different business units or projects.

·      This transparency ensures that costs are aligned with revenue streams, promoting accountability and informed decision-making. 

·      By optimizing costs based on these insights, businesses can enhance the longevity and sustainability of their systems.

 

·      Consider Revenue Sources and Profit Drivers: By aligning the system architecture with the primary revenue-driving metric, organizations can ensure that their technology infrastructure is optimized to support revenue generation and overall business success
AWS Example:

For an e-commerce application hosted on AWS with revenue sources including product sales and advertising, and profit drivers such as customer retention and average order value, the following AWS services can be used:

·      Use Amazon RDS to manage your product database efficiently, ensuring high availability and scalability to handle peak loads during sales events. This can help in maintaining customer retention by providing a seamless shopping experience.

·      Utilize Amazon CloudFront to deliver product images, videos, and other static assets to users with low latency and high transfer speeds.

·      Implement Amazon SES for sending transactional and promotional emails to customers. Personalized emails based on customer behaviour can improve customer retention and increase average order value.

·      Use Amazon Redshift to analyse customer data and gain insights into customer behaviour. This can help in targeting customers with relevant products and offers, thereby increasing average order value.

·      Use Amazon Redshift to analyse customer data and gain insights into customer behaviour. This can help in targeting customers with relevant products and offers, thereby increasing average order value.

·      Scale your application servers based on traffic demands using Amazon EC2. This ensures that your application remains responsive during peak traffic periods, leading to improved customer retention and increased sales.

·      Use AWS Lambda for serverless computing to run code in response to events, such as processing orders or updating customer profiles. This can help in automating tasks and improving operational efficiency, contributing to increased profitability.

·      Identify Key Revenue Metric:

·      Identify the primary metric that drives revenue and ensure the system architecture supports it.

AWS Example: For an e-commerce site, the key revenue metric might be the number of transactions processed. AWS provides services like Amazon RDS for database management and Amazon EC2 for scalable computing, which can support the processing of a high volume of transactions.

·      Prioritize Revenue Considerations:

·      Builders should prioritize revenue considerations to make informed decisions.

AWS Example: AWS offers services like AWS Lambda for serverless computing, which can help reduce operational costs and improve efficiency. By prioritizing revenue considerations, developers can choose cost-effective AWS services that align with their revenue goals, ensuring sustainable growth and profitability.

 

A FinOps Odyssey

 

LAW III  - Architecting is a Series of Trade-offs

Dr. Werner’s Cloud FinOps Insights

In architecture, every decision comes with a trade-off. Cost, resilience, and performance are non-functional requirements that are often at tension with each other.

As the saying goes, “Everything fails, all the time.” Being able to defend against failure means investing in resilience, but performance may pay the price.

It’s crucial to find the right balance between your technical and business needs – to find the sweet spot that aligns with your risk tolerance and budget. Remember, frugality is about maximizing value, not just minimizing spend. And to do that, you need to determine what you’re willing to pay for.

(excerpt from https://thefrugalarchitect.com/)

Let’s delve deeper

• Architecture decisions involve trade-offs between cost, resilience, and performance.
• Resilience requires investment but may impact performance.
• Balancing technical and business needs is essential for cost-effectiveness.
• Frugality is about maximizing value, not just minimizing spend.

Apply FinOps principles and AWS services

Applying the FinOps Foundation principles to architecture decisions involves a careful balancing act between cost, resilience, and performance. 
AWS provides a range of services that can help achieve this balance:

1. Cost-Effective Architecture:

FinOps Principles:

Implement cost allocation tags as per the FinOps Framework to categorize and track costs based on business attributes, helping align technical decisions with business priorities.

AWS Example:

• AWS Cost Explorer and AWS Budgets help monitor and optimize costs by providing insights into usage patterns and cost trends.
• AWS Trusted Advisor offers recommendations for cost optimization based on best practices and AWS architecture.
1. Resilient Architecture:

FinOps Principles:

Use the FinOps Framework's resilience principles to design architectures that are resilient to failure, ensuring high availability and fault tolerance.

            AWS Example:

• AWS Auto Scaling automatically adjusts the number of instances in a scalable manner to maintain performance and optimize costs.
• AWS Elastic Load Balancing distributes incoming traffic across multiple targets to ensure high availability and fault tolerance.
2. Performance Optimization:

FinOps Principles:
Apply the performance optimization guidelines from the FinOps Framework to ensure that your systems are optimized for performance without compromising cost-effectiveness.

AWS Example:

·      AWS Lambda enables serverless computing, allowing you to run code in response to events without provisioning or managing servers. This can lead to cost savings and improved performance.

• Amazon CloudFront delivers content with low latency and high transfer speeds by caching content at edge locations close to end-users.
3. Balancing Technical and Business Needs:

FinOps Principles:

Utilize the FinOps Framework's principles for balancing technical and business needs to make informed decisions that align with both technical requirements and business priorities.

AWS Example:

• AWS Cost Allocation Tags allow you to categorize and track costs based on business attributes, helping you align technical decisions with business priorities.
• AWS Organizations provides policy-based management for multiple AWS accounts, allowing you to allocate resources based on organizational requirements.
4. Maximizing Value:

FinOps Principles:

Follow the FinOps Framework's guidelines for maximizing value to ensure that your cloud resources are providing the maximum value to your organization at the lowest cost.

AWS Example:

• AWS offers a wide range of services, such as AWS Lambda, Amazon S3, and Amazon DynamoDB, that are designed to provide high value at a low cost.
• AWS Cost Anomaly Detection uses machine learning to identify unexpected changes in your AWS cost and usage patterns, helping you optimize spending and maximize value.

By leveraging these AWS services and principles, organizations can design architectures that are cost-effective, resilient, and optimized for performance, while maximizing overall value.

 

A FinOps Odyssey

Stay tuned for Part – 3 of The FinOps Odyssey series