FOCUS can help Engineers take action

In my previous blog post, we explored how Reserved Instances or commitment-based discounts in general can undermine engineers’ accountability. Here is a quick summary on how that can happen:

• Reserved Instance normally can be classified as a “low hanging fruit”.
• Once harvested, organizations need to continue the FinOps journey.
• This journey is as successful as Engineering Teams take ownership of their cloud costs.
• Ownership is only possible with cost reports that is the reflection of their usage.
• Reserved instances impact price, outside Engineering line of action.
• The organization can´t afford leaving RI discounts over the table.

I proposed two solutions based on a stable price. In this follow-up post, I’ll introduce a third solution. FOCUS has introduced new columns that may address the issue of a stable price at its core.

About FOCUS

I’m proud to be one of the contributors to FOCUS first version. FOCUS is a cost and usage standard that aims to harmonize cloud billing data. This standardization will help FinOps practitioners more easily consolidate billing data from multiple cloud service providers. Learn more about FOCUS at https://focus.finops.org/

While this is the main benefit, it’s not the only advantage.

FOCUS price columns

An interesting aspect of FOCUS is that each line in the billing dataset includes several relevant columns. I’ll now quote the specification, providing the name and definition for each pricing column.

1. Contracted Unit Price The agreed-upon unit price for a single Pricing Unit of the associated SKU, inclusive of negotiated discounts, if present, while excluding negotiated commitment-based discounts or any other discounts.
2. List Unit Price The suggested provider-published unit price for a single Pricing Unit of the associated SKU, exclusive of any discounts.

With FOCUS, the price is associated directly with the billing record, shifting the responsibility of finding and matching the correct price to the cloud provider. Previously, and still for some cloud providers, pricing and usage data were in separate datasets, placing the burden of combining them on the customer.

Both prices are stable, but in my opinion, the Contracted Unit Price is more advantageous because it includes the organization’s negotiated discount. This simplifies potential conversations with Procurement, Finance, and other departments when pricing comes up, as the pricing amounts will align.

FOCUS Cost columns

If this wasn’t good enough, FOCUS also provides the cost already calculated based on consumption using the “Contracted Unit Price“, that is the same thing as what I call Full Price. Let’s quote FOCUS: “Contracted Cost represents the cost calculated by multiplying contracted unit price and the corresponding […] Quantity.”

The downside is that Contracted Cost is NOT the same as the cost that will appear on the Invoice. It requires communication about what this cost is trying to measure, as it will not match the numbers from Finance. On my previous blog post, I wend on more considerations about that.

In conclusion

Engineering accountability is key for a healthy cost environment. Once they take responsibility, they need timely, relevant, and accurate cost data. The cost provided must be a trustworthy representation of their application usage. This is a challenge for FinOps teams because stable prices are hard to obtain, especially in environments with Reserved Instances and Savings Plans.

With FOCUS, once the data flows in this format, costs based on stable prices like Contracted Cost are present by default, making consolidation much easier. Since Contracted Cost won’t match with Finance figures, which usually use Billing Cost, it’s important to ensure that Finance, Engineering and other stakeholders are aligned. This way, when costs are reported by Engineering and Finance, it’s clear to everyone that they are measuring different things.