Andrew Midgley - March 01, 2018

How Accurate Cloud Financial Reporting Is Crucial To Success

Why Is Accurate Cloud Financial Reporting So Challenging?

Because cloud is complicated. Due to the combined factors of the dynamic nature of cloud, the granular way it’s billed, inconsistencies in how cloud vendors represent separate products, large singular upfront payments and different ways of representing special pricing rules mean that it’s very easy to make mistakes or to misrepresent your cloud costs internally. To give a sense of the big data nature of the problem consider this: for a customer who spends approximately $100k a month in AWS this will generate about 4 million line items of billing data, each line containing more than 100 unique pieces of information. Every cloud customer is different, so you’ll need to be thoughtful about how you take into account your specific conditions to deliver fair and accurate cloud financial reporting.

Why Accuracy Matters

Quite simply you could be incorrectly charging back your business groups (each potentially having their own profit and loss ledger), projects or teams for their contribution to your overall cloud footprint. This could lead to individual groups appearing better or worse than they are in reality – perhaps even affecting whether an initiative is profitable or not – all of which has massive impacts on the overall operational and financial readiness of your organization. If cloud is a strategic part of your business operations and you haven’t given your cloud financial reporting the attention it needs any potential skewing of financial information could have significant business fallouts. At the very least, having meaningful and accurate representations of this detail will enable you to focus your optimization efforts in a way likely to deliver success. Cloudability provides you with a unique toolset to help master accurate cloud financial reporting. Let’s look at some examples.

Clean, Flexible and Fresh Cost Data

We’ve built our True Cost™ platform around the fact that cloud vendors will deliver highly detailed billing data numerous times a day. The net result for our customers is high fidelity and fresh cost data that is available for any ad hoc reporting. We’ve put a strong focus on normalizing this data and providing it in a set of dimensions that will allow you to describe your cost data in an exact manner and with maximum flexibility. A good example of this is our dimension Service Name, which allows us to describe discrete logical services derived from cloud vendors cost data that isn’t otherwise available.

As we can see above, logical services such as EBS and EMR are easily identified separately from general EC2 spend. By categorizing as such we are also abstracting away complications that can happen as cloud vendor products may change name. Finally, having the data normalized like this allows for very flexible reporting and empowers very precise drilldowns. These are both key to delivering accurate cloud financial reporting. Similarly Lease Type (Reserved, Spot, On Demand) is an attribute Cloudability resolves for every single resource hour you pay for. You can apply this dimension in any report you create across all AWS services at one time or drilled down into a particular service.

Representing Your Pricing Rules and Agreements

A significant aspect for your financial reporting could be factoring in a custom pricing agreement with your cloud vendor or internal pricing rules that need to be applied. We’ve built our platform to be extremely flexible in accepting your rules and applying them in real time when fresh billing data arrives. This means you don’t need to wait for any end of month processing or special credits to arrive to build an accurate picture. Our solution is unique in that we represent your rules with a special dimension and metrics that can be used together in absolutely any report, regardless of how granular you need to go.

Above you can see a simple report with sample data that makes use of the Cost Adjustment Description dimension and the Cost Adjustment and Cost (Adjusted) metrics. These together provide a very powerful mechanism to interrogate whether any pricing rule(s) have been applied correctly and you can use the relevant metric to provide accurate cost data to your teams.

Factoring into your Optimization Decisions

If your arrangements impact the pricing of On Demand or Reserved Instance hours of any cloud service then that will impact your decision making and potential outcomes of purchasing RIs or doing rightsizing. The best example of this is in purchasing RIs, as if these arrangements are relevant your break-even point can be affected and you could end up unwittingly purchasing unprofitable RIs. But be not afraid! Cloudability not only reflects your pricing rules within report analytics – we also do so within optimization tooling such as our RI Planner. If you visit the Cloudability RI Planner, all recommendations will display rates and saving opportunities that exactly match your arrangements.

Take the Next Step

Learn more about the possibilities you can unlock with accurate cloud financial reporting (and the support of precision tools like our RI planner) and see how customers like Atlassian have saved thousands with Cloudability. Ready to start or continue your own process of optimization? Start a free trial to see your accurate cloud financial and usage data in Cloudability and learn the True Cost™ of your cloud.

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