What is a Cloud? 

Defining Cloud Computing

SP 800-145  Cloud computing is a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources that can be rapidly provisioned and released with minimal management effort or service provider interaction.

This cloud model is composed of five essential characteristics, three service models, and four deployment models.

NIST – SP-800-145

https://csrc.nist.gov/publications/detail/sp/800-145/final

Cloud computing is the on-demand delivery of compute resources, database storage, applications, and other IT resources through a cloud services platform via the internet with pay as- you-go pricing   

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• Cloud Computing is on demand delivery…..
• Cloud Computing and Virtualization are complementary and not the same.
• In Cloud Computing your pay for resources used.

NIST Five Essential Cloud Characteristics

• On Demand Self Service
• Broad Network Access
• Resource Pooling
• Rapid Elasticity
• Measured Service

Some effects of moving from on premises to Cloud Computing:

• Localization of cost: From central management to a developer’s hands.
• Material spend: No possibility to predict the exact cost of the infrastructure.
• Variable price: Spend what you use.

What is Cloud Spend?  The estimated monthly dollar amount spend on a company's cloud infrastructure. Public cloud providers bill based on usage and meter costs depending on how much usage is measured, like an electricity bill.

• There are three Cloud Service Models – IaaS, PaaS, SaaS
• There are four Cloud Deployment Models – Private, Public, Hybrid and Community

Which of the following NIST Five Essential Cloud Characteristics would be used for enabling the sharing of resources between cloud tenants? (Select One)

• On Demand Self Service
• Broad Network Access
• Resource Pooling
• Rapid Elasticity
• Measured Service

FinOps Fundamentals

What is FinOps?  

• The practice of brining financial accountability to the variable spend model of cloud, enabling teams to make business trade-offs between spend, cost and quality.

                                    FinOps Foundation

• FinOps is a collaborative effort between Finance and Operations where cloud spending is moderated and optimized.
• A culture to adopt

What is FinOps about?

• An efficient approach for teams to manage their cloud costs.
• Ownership driven and supported by a central group
• Work towards financial and operational control.

History of FinOPs

• Started in 2012 mainly as Cloud Cost Optimization
• FinOps is a result of cloud computing procurement being centralized.
• Business Units would have made these decisions but now finance professionals make them in larger organizations.
• Corporate Cloud Governance

Six Principles of FinOps

1.Collaboration

2.Business Value

3.Ownership

4.Timely Reports

5.Centralized Team

6.Variable Cost Model

What is the FinOps Lifecyle?

• Inform
• Optimize
• Operate

Example Test Tips

• Chargeback is a common method for organizations to mitigate overspending.
• Chargeback provides visibility and accountability for resource spending
• Accounting Model
• Tagging implementation

Example Practice Question

Which of following answers would be true around Devops and Cloud resources? (Select Three)

• DevOps consumes resources faster and unpredictably
• Cost is not always a concern with DevOps engineers. Cost vs Performance
• User deploy Hard Coded Resources (IaC)
• Traditional FinOps works all the time.
• DevOps should not be involved with FinOps

The FinOps team should be responsible for:

• Defining enterprise cloud usage strategy
• Defining and adjusting enterprise cloud budgets
• Setting up the cloud usage practices and guidelines
• Reviewing the data and determining corrective actions as needed

FinOps Team structure should be considered for the enterprise

• Stakeholders
• Centralization
• Meet Business Goals
• Roles and Responsibility

Establishing a team by identifying specific members from:

• Cloud Center of Excellence (CCoE)
• Sponsor(s)
• Engineering
• Finance
• Application Owners
• DevOps
• And more business units as needed

• FinOps Team should be under the CFO/COO in most enterprises.
• Should be aligned with engineering/development
• Should be collaborative with Finance and Engineering to meet business goals.

• Establishing a FinOps Team. Possible members should be.
• CTO
• CIO
• CFO
• Directors of Engineering /Ops/Dev
• Financial Controllers
• Engineering Managers
• Project Managers
• Enterprise Architects
• Cloud Engineer/Architects

• Roles are Personas
• Everyone who is part of a FinOps organization should have primary goals
• FinOps Practitioner - Primary Goal is to drive best practices into the organization through education, standardization, and cheerleading

FinOps Practitioner

• Objectives –Drive Change
• Frustrations – Lack of Buy in
• Key Metrics - Forecasts
• FinOps Benefits –Aligns accountability to users.

Test Tips 

• Each role in a FinOps based organization should be specified.
• Part of the FinOps team
• Roles = Personas
• FinOps Practitioner - Drive best practices into the organization through education, standardization, and cheerleading
• Encourage teams to act by using chargeback/show back for cloud resources.

Example Practice Question

Changes needs to occur to an organization for FinOps to become successful. Which of the following would NOT be a change needed? (Select One)

• Obtain Executive Buy In
• Obtaining Funding to establish a FinOps practice.
• Assigning Responsible Members to drive adoption.
• Assign a Project Management Team to handle the FinOps transition.

• FinOps Domains represents a sphere of activity or knowledge.
• Each FinOps Domain consists of FinOps Capabilities.
• Capabilities are “Functional Activities” to meet the demands of a FinOps practice/domain.

FinOps Foundation Domains  https://www.finops.org/img//resources/FinOps%20Poster_011021.pdf

FinOps Capabilities

• Cost Allocation (Metadata & Hierarchy)
• Data Analysis and Showback
• Managing Shared Cost
• Data Ingestion & Normalization
• Managing Anomalies
• Forecasting
• Measuring Unit Costs

• FinOps Domains represents a specific sphere of activity or knowledge.
• Each FinOps Domain consists of FinOps Capabilities and Capabilities can overlap between Domains.
• Forecasting for example can be accomplished under both the
• Understanding Cloud Usage and Cost & Performance Tracking & Benchmarking Domains

• Teams need to collaborate.
• Decisions are driven by the business value of cloud.
• Everyone takes ownership of their cloud usage.
• FinOps reports should be accessible and timely.
• A centralized team drives FinOps.
• Take advantage of the variable cost model of the cloud.

Teams need to collaborate.

• Collaboration and Communication
• Define Governance and Control
• Increase Cost Efficiency and Performance

FinOps Reports Should Be Accessible and Timely

• Real Time Decisions
• Alerts and Monitoring
• Cost Avoidance
• True Costs Focus on Clean Decisions.
• FinOps decisions are based on fully loaded and properly allocated costs

Example Test Tips

• Decisions are made with data
• Ownership of cloud costs should go to the edge
• FinOps decisions are based on fully loaded and properly allocated costs

Example Practice Question

Which of the following would be the main goals for the Inform Phase? (Select One)

•  
• Allocate, benchmark, and forecast cloud service needs.
• Compare the needs of the company with discounts for time and reserved usage in order to get the better rates.
• Continuously evaluate the performance of cloud services against business objectives for speed, quality and cost.

• The FinOps lifecycle follows the three phases of the Crawl, Walk, Run
• Inform
• Optimize
• Operate

Inform Phase where the FinOps team creates visibility into rates, usage, and cloud spend across the organization

Optimize Phase is where we look for ways to improve rates and usage to reduce cost. This is where we build business cases for right-sizing, cloud parking, auto scaling, and re-architecting workloads

Operate Phase, we act and make decisions. This is where we execute on the business cases we built and go after the opportunities we found.

• Inform
• Understand your organizations resource consumption thru context, data, budgets and Forecasting.
• Optimize
• Setting your goals and targets by determining you cloud costs thru strategy, tracking, cost breakdown and cost growth boundary.
• Operate
• Aligning organization teams to business goals thru drive and action. Focus is on getting results for the organization.

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Example Test Tips

• Onboarding should be clearly defined in the Operate Phase
• Processes should be documented
• Automation should be planned and implemented for processes
• New or Existing Cloud Applications/Services

Which of the following are primary goals? (Select Three)

• Visibility
• Authorization
• Benchmarking
• Performance
• Forecasting

Cloud economics is the study of cloud computing’s costs and benefits and the economic principles that underpin them. As a discipline, it explores key questions for businesses:

• What is the return on investment (ROI) of migrating to the cloud or switching current cloud providers?
• And what is the total cost of ownership (TCO) of a cloud solution versus a traditional on-premises solution? 

There are four pricing models for Amazon EC2 instances:

• On-Demand Instances – Provides for instant use with no commitment
• Reserved Instances – Provides for cost savings with commitment
• Spot Instances – Available AWS capacity at a significant discount for short term
• Dedicated Hosts – Use for license bound/compliance applications

• Cloud Billing is complex and can vary widely between providers.
• Cloud Billing is the process of generating bills from the resource usage data which is done via predefined billing policies.
• Providers use what is effectively a SKU for each service. For example, every Vm instance template and individual region/zone you may deploy in have its own billing characteristics.
• AWS has over 200 Individual SKUS
• It is very important to choose the right billing model (Reserved, Spot, Savings)

• A central team is better equipped to manage RI and CUD commitments due to their ability to look across the entire cloud estate and the complexity of managing a large portfolio of commitments.
• Rightsizing VMS and scale down the number of resources during off peak consumption.
• It’s a best practice to terminate resources that are not being used.
• A FinOps professional needs to be able to view and understand raw data

Benchmarking is an important aspect in FinOps. For a practitioner to be successful we must be able to compare performance.

• A thorough understanding of an organization’s purpose and guidelines is needed.
• The ability to identify precisely dimensions, elements and processes that need benchmarking. 
• Elements – Trend and Variance Analysis

Example Test Tips

• What is the Cloud Spend Formula? Spend = Usage x Rate
• Paying less for what you use is called rate reduction
• A FinOps professional needs to be able to view and understand raw data

Cost Management in AWS

• Benchmarking teams to compare improvement is very important.

• Right Sizing is critical for Cost Optimization/Cloud Spend Management
• Budgets can be setup to help avoid cost overruns.
• 20,000 can be setup per account
• 2 Free Budgets, Others are at a cost

Example Practice Question

Which of the following are the best ways we can manage our billing and determine cost issues? (Select Two)

• Trusted Advisor C.O checks
• Cost Explorer
• Systems Manager
• Contact Support

Which of the following two statements are true about Budgets in AWS? (Select Two)

• Budgets are included with Enterprise and Business support plans
• You receive 2 Free budgets and if you use more than two you will be charged per budget.
• Up to 20,000 can be set up in AWS Budgets
• Budgets can provide insight into past spending habits.

Which of the following statements are correct about charges incurred in AWS? (Select Three)

• There no charges for data transfer inbound (into AWS)
• Data transfer outbound is not charged (out of AWS)
• Storage is paid on a per GB basis
• Compute is paid by the minute or hour
• Support is charged by number of support calls

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Which of the following would NOT be considered a characteristic of cloud computing? (Select One)

• On Demand Self Service
• Broad Network Access
• Resource Pooling
• Rapid Elasticity
• Simple Integration
• Measured Service

Which of the following service models provides software to users? (Select One)

• IaaS
  PaaS
  SaaS
  DaaS

Which of the following answers would be correct around Cloud Computing and how resources are consumed? (Select Two)

• Cloud computing introduces new ways to consume and pay for IT services
• The shift from CAPEX to OPEX financing and cash flow models using cloud
• The shift from OPEX to CAPEX financing and cash flow models using cloud
• Cloud computing introduces new culture and new cash flow methods