COST01-BP01: Establish ownership of cost optimization
Create a team (Cloud Business Office, Cloud Center of Excellence, or FinOps team) that is responsible for establishing and maintaining cost awareness across your organization. The owner of cost optimization can be an individual or a team that requires people from finance, technology, and business teams and understands the entire organization and cloud finance.
Implementation guidance
Establishing clear ownership of cost optimization is fundamental to successful cloud financial management. This involves creating a dedicated function or team that takes responsibility for driving cost awareness, implementing optimization strategies, and fostering a culture of cost consciousness across the organization.
Key steps for implementing this best practice:
- Define the cost optimization function:
- Determine whether to establish a new team or assign responsibilities to existing roles
- Consider organizational size and complexity when deciding on team structure
- Ensure the function has appropriate authority and resources to drive change
- Define clear roles and responsibilities for cost optimization activities
- Establish a FinOps team or Cloud Business Office (CBO):
- Include representatives from finance, technology, and business units
- Ensure team members have dedicated time for cost optimization activities
- Provide training on cloud economics and cost optimization best practices
- Establish regular meeting cadences and communication channels
- Define cost optimization responsibilities:
- Create accountability for cost optimization across different organizational levels
- Establish cost ownership at the workload, project, and business unit levels
- Define escalation paths for cost-related issues and decisions
- Implement cost allocation and chargeback mechanisms
- Secure executive sponsorship:
- Obtain leadership commitment and support for cost optimization initiatives
- Establish cost optimization as a key business priority
- Ensure adequate budget and resources for the cost optimization function
- Create executive-level reporting and accountability mechanisms
- Implement governance and processes:
- Establish cost optimization policies and procedures
- Create approval workflows for significant cost decisions
- Implement regular cost review and optimization cycles
- Define metrics and KPIs for measuring cost optimization success
- Enable cross-functional collaboration:
- Foster collaboration between finance, technology, and business teams
- Create shared understanding of cloud economics and cost drivers
- Establish communication channels and regular touchpoints
- Implement shared tools and dashboards for cost visibility
Organizational models for cost optimization
Centralized Model
A dedicated FinOps team or Cloud Business Office that:
- Provides centralized cost optimization expertise and guidance
- Manages cost optimization tools and processes
- Conducts organization-wide cost reviews and analysis
- Drives cost optimization initiatives across all business units
Benefits: Consistent approach, specialized expertise, economies of scale Challenges: May lack deep workload knowledge, potential bottleneck
Federated Model
Distributed cost optimization responsibilities with:
- Central FinOps team providing guidance and standards
- Cost champions embedded within business units and teams
- Shared responsibility for cost optimization activities
- Regular coordination and knowledge sharing
Benefits: Deep workload knowledge, faster implementation, shared ownership Challenges: Potential inconsistency, requires more coordination
Hybrid Model
Combination of centralized and federated approaches:
- Central team for strategy, standards, and complex optimizations
- Distributed champions for day-to-day cost awareness and simple optimizations
- Clear escalation paths and collaboration mechanisms
- Shared tools and processes across the organization
Benefits: Balances expertise with agility, scalable approach Challenges: Requires clear role definition and coordination
Team composition and roles
FinOps Team Core Roles
FinOps Lead/Manager:
- Overall responsibility for cost optimization strategy and execution
- Stakeholder management and executive reporting
- Team coordination and resource allocation
- Strategic planning and roadmap development
Financial Analyst:
- Cost analysis and reporting
- Budget management and forecasting
- ROI analysis and business case development
- Financial modeling and scenario planning
Cloud Engineer/Architect:
- Technical cost optimization implementation
- Architecture reviews and recommendations
- Tool configuration and automation
- Technical training and guidance
Business Analyst:
- Business requirements gathering and analysis
- Process improvement and optimization
- Stakeholder communication and training
- Change management and adoption
Extended Team Members
Cost Champions:
- Embedded within business units and development teams
- Day-to-day cost awareness and optimization
- Local expertise and advocacy
- Feedback and requirements gathering
Procurement/Vendor Management:
- Contract negotiation and management
- Vendor relationship management
- Purchasing strategy and optimization
- Compliance and governance
IT Operations:
- Infrastructure management and optimization
- Monitoring and alerting implementation
- Automation and tooling support
- Operational excellence practices
Implementation examples
Example 1: Small organization FinOps implementation
Example 2: Enterprise FinOps team structure
Example 3: Cost optimization charter template
AWS services to consider
Benefits of establishing cost optimization ownership
- Clear Accountability: Designated ownership ensures someone is responsible for cost optimization outcomes
- Specialized Expertise: Dedicated focus allows for development of deep cost optimization knowledge and skills
- Consistent Approach: Centralized ownership enables standardized processes and methodologies
- Cross-functional Collaboration: Brings together diverse perspectives from finance, technology, and business
- Continuous Improvement: Ongoing focus ensures cost optimization is treated as an ongoing process
- Cultural Change: Helps establish cost awareness as a core organizational value
- Measurable Results: Clear ownership enables better tracking and measurement of cost optimization success
Common challenges and solutions
Challenge: Lack of Executive Support
Solution: Develop business case showing potential savings, start with quick wins to demonstrate value, and provide regular executive reporting on cost optimization achievements.
Challenge: Resistance from Development Teams
Solution: Focus on enablement rather than enforcement, provide training and tools, involve teams in solution development, and recognize cost optimization achievements.
Challenge: Limited Resources
Solution: Start small with part-time roles, leverage existing team members, focus on high-impact activities, and gradually expand as value is demonstrated.
Challenge: Unclear Roles and Responsibilities
Solution: Create detailed role definitions, establish clear escalation paths, implement RACI matrices for key processes, and provide regular communication and training.
Challenge: Competing Priorities
Solution: Align cost optimization with business objectives, integrate into existing processes, demonstrate business value, and secure executive sponsorship.