The ABCs of Cloud Governance: Budget Enforcement

Last updated on February 6th, 2023 at 1:49pm

We built Kion around three key pillars of cloud governance: automation and orchestration, including account management; financial management, including budget enforcement; and continuous compliance using automation. In a previous post, I talked about the requirements of a robust account management solution.

In this post, I’ll share some thoughts on what makes for good budget enforcement in the cloud and the benefits you should see as a result.

Budgets should cascade from the top

Budgeting works the same way in just about every business on earth. There’s a big pot of money entrusted to the senior leaders within the organization and that money gets transferred down throughout the organization in a hierarchical fashion. It makes sense to set your cloud budget in the same way.

Money has different flavors

For most organizations, not all money is treated the same way. In the government, there is the concept of different funding sources or ‘colors’ of money. In commercial organizations, budget sources differ between externally funded contractual engagements and internal or overhead activities. To further complicate things, each of these different sources of funding typically have different periods of time when they can be spent. Governance requires that the correct projects be funded by the correct sources to ensure proper accounting. At scale, this process must be automated so that people in the accounting or finance department don’t have to spend a week every month reconciling cloud service provider bills.

Budget alerts are only part of the solution

Being notified when cloud spending is approaching a threshold has its uses: it allows for a quick pulse check and evaluation of the current spend plan. However, there are many instances when an alert is simply not enough. What happens when the person receiving the alert is out of the office and cannot act?

When a spend limit is imminent, you need the ability to limit or pause spending without any additional intervention. In certain cases, like sandbox or ‘play’ environments, you may want to terminate spend to prevent further accrual. Budget enforcement actions go a step further than alert functionality.

Alert fatigue is a real phenomenon, and it can be tempting to begin to ignore or defer actions on alerts. In cases where automatic intervention is needed, enforcement actions are the answer.

Budget transparency helps create responsible use

The cloud has flipped the traditional IT spending processes on its head. Long gone are the days when the senior managers within an organization make the decisions on how money should be spent. In the cloud, every engineer makes decisions which cause the organization to accrue costs.

Cost visibility is the bare minimum needed to ensure your entire organization has adequate insight for budgeting, forecasting, cost control, and reporting. Cloud governance solutions should deliver near real-time visibility into service-level and resource-level charges and a view of planned vs spent. But robust governance solutions go a step further to make budget information visible to all cloud users and encourage responsible use. Budget transparency takes the guesswork and mystery out of operating in the cloud, making it more likely that users will approach spend in an informed manner.

During Kion demos, the number one concern and the topic that draws most interest is budget. Fear of cost overruns keeps organizations from fully committing to the cloud in many cases. Alerting alone won’t allay this fear; you must have the ability to automatically intervene to be able to sleep at night.

If you’d like to see how Kion can help you enforce budgets in the cloud, reach out to our team.

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