Koch Industries, Inc. (KII) is an American multinational corporation based in Wichita, Kansas. The firm employs 130,000 people in 60 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 Business Solutions (KBS) sits within Koch Industries and is the shared services for the entire enterprise. They manage security, governance and drive all major IT initiatives across the subsidiary companies.
Koch Business Solutions (KBS) 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 KBS. “So we asked, ‘How do we go out and make it happen, and how do we do it as efficiently as possible?”
When KBS 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, KBS knew it was time to find a more effective way to optimize processes and manage costs.
KBS 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. KBS’ 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 KBS 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 KBS 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, KBS 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.
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 KBS Cloud Optimization Engineer and a KBS Cloud latform Product Owner. Next, KBS’ Accounting team was included, and they continued progressing, with an accounting team member solely dedicated to cloud cost management.
This model of collaboration across teams and disciplines is now being called FinOps, and allows KBS 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 KBS’ 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, Mallory and Marty, have been extremely responsive,” said the Cloud Optimization Engineer at KBS. “They’ve been critical to our success.”
The KBS 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 KBS 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.
KBS 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 KBS’ infrastructure and running them with RIs is translating to large savings across the organization.
KBS now has over 230 Amazon Web Services (AWS) accounts and is currently about 25% of the way through its migration, so many more optimization opportunities lie ahead. KBS is also realizing significant reductions in manual processes, freeing employees’ time to tackle higher value initiatives.
The KBS Cloud Optimization Engineer’s time is now focused on training new teams across the company to utilize Apptio Cloudability. He now trains 10-20 employees at a time, and with each training there are more employees in the organization consciously saving money as part of their daily work.
Next, the team plans to focus on cleaning up Amazon Elastic Block Store (Amazon EBS) snapshots and they plan to partner with Apptio Cloudability to place the correct guardrails to help users safely take advantage of automation. Leveraging Apptio Cloudability’s automation capabilities will allow KBS to free up more time and resources to dedicate to other high value initiatives. In the future, they hope to focus more on Spot, Rightsizing and other aspects of RIs, including Amazon Relational Database Service (Amazon RDS), Amazon Redshift, and Amazon Simple Storage Service (S3).
Apptio Cloudability enabled the KBS 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.