5 Mastering Cost Allocation Techniques

 

This chapter covers

  • Understanding and implementing different cost allocation models, including direct, shared, and fixed allocation
  • Leveraging AWS Cost Explorer for cost analysis and allocation
  • Integrating cost data with asset inventory and tagging strategies
  • Setting up and utilizing AWS Cost and Usage Report (CUR) for advanced cost allocation
  • Building custom dashboards with Amazon QuickSight for visualizing cost allocation data
  • Understanding FOCUS and its importance in multi-cloud environments

In the context of FinOps, cost allocation is key for understanding, distributing, and managing cloud costs effectively. As organizations scale their cloud usage, it becomes increasingly important to assign cloud expenses to the correct teams, projects, or departments. This chapter will guide you through various cost allocation models, strategies, and techniques to help you gain full visibility into your cloud spending and build an effective financial management practice.

In the previous chapter, we established tagging as a foundational practice for effective cloud financial management. As it allows you to link resources to specific business units or projects. This chapter builds on that foundation by exploring how to use tagging to accurately allocate costs to the right teams, applications, or projects. We’ll also cover methods for distributing the costs of shared resources and creating FinOps reports that provide clear insights for your teams.

5.1 Exploring Cost Allocation Models

5.1.1 Direct Allocation

5.1.2 Shared Cost Allocation

5.1.3 Fixed Allocation

5.2 Leveraging AWS Cost Explorer for Cost Allocation

5.3 Advanced Cost Allocation with AWS Cost and Usage Report

5.3.1 Setting up AWS Cost and Usage Report

5.3.2 Understanding CUR Data Structure

5.3.3 Querying Cost and Usage Reports using Amazon Athena

5.3.4 Building FinOps Dashboards with AWS QuickSight

5.3.5 Exploring Cloud Intelligence Dashboards

5.4 FOCUS

5.5 Summary