Koch Industries, Inc. (KII) is an American multinational corporation based in Wichita, Kansas. The firm employs 130,000 people in 70 countries, with about half of its business in the United States. Koch Industries is one of the largest private companies in the U.S. with estimated annual revenue as high as $110 billion, according to Forbes.
Koch Global Services (Koch) sits within Koch Industries and is the shared services for the entire enterprise. They manage security, and governance and drive all major IT initiatives across the subsidiary companies.
Migrate to Accelerate, Then Stay Lean
Koch Global Services (Koch) is the IT global problem solver of business needs for Koch Industries. In 2017, a strategy was developed that focused on Koch migrating to the cloud. In the words of the team, there was a transformation imperative, and the opportunity to successfully transform would not be found in a data center. Koch needed to increase the pace of innovation.
“We knew there was opportunity out there to leverage technology,” said the Cloud Platform Leader at Koch. “So we asked, ‘How do we go out and make it happen, and how do we do it as efficiently as possible?”
When Koch started experimenting in the cloud, they had credits that allowed them to start creating cloud infrastructure instantly. But once the credits were gone, the team was responsible for the cost of the resources being consumed. Without a cloud cost management solution in place there is potential to over spend during the cloud migration. So they began managing costs by first applying them to the right companies and subsidiaries within Koch. Initially, this took the form of a massive spreadsheet that stakeholders often couldn’t make sense of, and often took around 40 hours each month to manage.
It was clear they were missing opportunities to save and scale effectively. With plans to grow KII’s cloud usage further, Koch knew it was time to find a more effective way to optimize processes and manage costs.
Koch needed an enterprise-level view of Koch’s cloud infrastructure to be able to capture savings faster. There were chargeback accuracy implications if cost allocations were done incorrectly. Koch’s role as the IT branch for all of the other businesses in KII meant this wasn’t just a question of internal chargeback to teams, but really providing visibility into how much each individual company was spending in cloud.
As the team got more comfortable with cost visibility, they realized more detailed data was required. With Koch’s complex, multi-cloud architecture, building a proprietary solution to deliver accurate billing information would have been very difficult.
Guided by KII’s Market-Based Management® philosophy, the Koch Cloud team turned to the market for a best-in-class solution to the issue. After assessing multiple tools, Apptio Cloudability was selected.
According to the Koch Cloud Platform leader, “Apptio Cloudability’s user experience and multi-cloud capabilities were differentiating factors that pushed it ahead of the other tools we evaluated. The implementation process was very smooth in terms of onboarding our customer’s environments.”
Using Apptio Cloudability’s Account Group Mappings and Views, Koch has been able to organize its spend by business and create global filters on its cloud data so each business only needs to view its spend and nothing else. This level of security and efficiency was critical to gaining the support of Koch’s subsidiary businesses and successfully roll out the platform. The value that the business gained from having access to their cost data drove the businesses to ask for more ways to see their resources. Additional views were created for the businesses to easily see their resources by key business lines and by product owners.
Rolling out the platform to every business also made it possible for the implementation teams to adopt best practices and integrate good cloud hygiene tasks, including turning off stale resources and improving tag coverage. Initially, the Cloud Optimization Team consisted of two dedicated full-time experts — a Koch Cloud Optimization Engineer and a Koch Cloud Platform Product Owner. Next, Koch’s Finance team was included, and they continued progressing, with a finance team member solely dedicated to cloud cost management.
This model of collaboration across teams and disciplines is now being called FinOps, and allows Koch to functionally act as a FinOps Business Center, organization-wide. Blending skill sets from accounting, technology, business and engineering disciplines is part of what makes Koch’s approach to cloud cost management so strong. FinOps is a combination of systems, best practices and culture that empowers multi-disciplinary, cross-functional teams to maintain financial accountability in the cloud.
“Our Apptio Cloudability account reps have been extremely responsive and collaborate with us to solve cost challenges as they arise,” said the Cloud Optimization Engineer at Koch “They’ve been critical to our success.”
The Koch optimization team’s approach to cost savings has produced positive results, so they’ve built a replicable method for training new users on Apptio Cloudability and rolling it out to new teams throughout the enterprise. This approach quickly spreads both the knowledge and the tools for savings and optimization to other parts of the organization.
Apptio Cloudability has been a vehicle for creating savings and efficiency and has facilitated collaboration within Koch around cloud costs.
Koch now has hundreds of users active in Apptio Cloudability managing their own slice of spend. Meanwhile, the core Cloud Optimization Team acts as advocates and educators providing a central resource for best practices.
Koch employees are utilizing valuable data from Apptio Cloudability to guide users on the ground, CTOs, CIOs, etc., giving them a clear line of sight to costs and usage so they can better plan for what’s next.
Further, the Cloud Optimization Team is taking advantage of trends across businesses to help everyone optimize. In December 2018, the Cloud Optimization Team undertook the massive project of purchasing Amazon EC2 Reserved Instances (RI) on behalf of all businesses within KII. They were able to get their Amazon EC2 RI coverage up from 25% to 87%, saving $5 million enterprise-wide. Amazon EC2 Windows instances are the core of Koch’s infrastructure and running them with RIs is translating to large savings across the organization.
In March 2020, the team purchased their first round of AWS Compute Savings plans to achieve 99% reserved coverage. The addition of the Compute Savings Plans provides the flexibility for our teams to rightsize their resources without the risk of losing reserved coverage and provides our teams the flexibility to expand to other AWS regions without the need to purchase RI’s first. The recommendations & insights from Cloudability are providing the Koch team the information they need to pursue RI purchases for other AWS services such as Redshift and RDS.
Koch now has over 550 Amazon Web Services (AWS) accounts and is pursuing opportunities to optimize workloads and reduce waste. By utilizing the Cloudability dashboards the Koch team has created a landing page for CIO’s to quickly understand their organization’s optimization opportunities and key cost drivers and drive action in their business. Across Koch, the businesses are using the information and insights in Cloudability to reduce weekend spend for development servers, delete aged snapshots, and rightsize EC2 servers and EBS volumes.
Next, the team plans to focus on partnering with Apptio Cloudability to place the correct guardrails to help users safely take advantage of automation to delete aged snapshots and gain higher adoption of EC2 Start Stop Schedules. Leveraging Apptio Cloudability’s automation capabilities will allow Koch to free up more time and resources to dedicate to other high value initiatives. In the future, they hope to focus more on Spot, Autoscaling, and managing overall storage costs.
Apptio Cloudability enabled the Koch team to maximize results from migration and get more from their cloud — increasing the speed of innovation and controlling cloud spending at the same time.