How Tech Mahindra Approaches Cost Optimization and Governance Using AWS Native Services

By Palanisaravanan S, AWS Delivery Head, Americas – Tech Mahindra
By Sathishkumar Jaganathan, Cloud Delivery Manager – Tech Mahindra
By Shonil Kulkarni, Manager, Partner Solutions Architect – AWS
By Sathish Arumugam, Partner Solutions Architect – AWS

Cloud cost governance is a set of processes and methodologies to ensure customers are availing all potential services, tools, and resources to continuously track, optimize, and control their overall cloud spend.

The success of the cloud transformation relies on reducing the cost spend, and efficient cost optimization is the key factor in measuring this success.

While cloud computing has streamlined application development, DevOps, and operational processes, cost control and responsibilities have been slowly moved out from the procurement and finance teams to the end state developers.

On Amazon Web Services (AWS), each type of resource has its unique pricing and usage models. Considering this, the process of measuring and optimizing cost and usage over a period of time is a critical part of cloud cost governance.

The decision, policies, and processes that emerge out of cost governance should involve discussions with business, IT, and the finance controllers who are responsible for managing and paying the monthly invoices.

In this post, we’ll share a customer story about how Tech Mahindra achieved the customer’s goal of cloud finance using cost management best practices along with AWS native tools and techniques.

Tech Mahindra is an AWS Advanced Consulting Partner with the AWS Migration Competency. Tech Mahindra is also a member of the AWS Managed Service Provider (MSP) and AWS Well-Architected Partner Programs.

Problem Statement

A US-based multinational company specialized in providing networking and cybersecurity solutions approached Tech Mahindra with the problem statement that their monthly cloud spend was both unsteady and more than budgeted.

The customer’s leadership had concluded the existing governance model wasn’t helping to achieve their business outcomes.

Tech Mahindra’s Infrastructure and Cloud Service team worked closely with the customer’s IT, engineering, and finance teams to understand their existing cloud governance model and issues. The following gaps were identified as an outcome of discovery exercise:

• Cost and usage unawareness – Lack of tools and measures, resources, and cloud finance knowledge to provide complete visibility to the business teams.
• Inappropriate cost governance strategy – While the customer had some bill reduction initiatives under way, they were more operational-oriented than strategic.
• No cost-effective resources – Lack of right services and type choices, sizing, and process to review the capacity usage to ensure developers are provisioning the right AWS instance types and using the right services.
• Needs chargeback mechanism – The mechanism to distribute the monthly spend among the customer’s internal organizations based on usage was unavailable.

Tech Mahindra created a cost governance model with committed savings for the customer on their existing AWS spend.

This model was put together using AWS Cost Management services such as AWS Cost Explorer, AWS Budgets, and AWS Trusted Advisor, and was combined with a due-diligence exercise jointly performed by Tech Mahindra subject matter experts and the customer.

Figure 1 – High-level architecture of the custom reporting solution.

Listed below are some key outcomes of the cost governance model that Tech Mahindra developed, covering end-to-end ownership of the customer’s AWS environment that is centrally managed and governed using AWS Organizations:

• Improved cost and usage awareness – Rationalized reports and dashboards for more customer experience and visibility into the cost and usage.
• Correct pricing model – Developed and institutionalized the Amazon EC2 Reserved Instance (RI) purchases, Savings Plans that provide a significant discount of up to 70 percent compared to On-Demand instance pricing. This includes determining the RI types and pricing options.
• Cloud financial management practice – Built the customer’s business unit-centric cost management strategies, analysis, and roadmap to establish a cost ownership culture at all levels of the organization, especially with end developers.
• Improved governance – Proactively monitor and generate alerts for cost usage, forecast for finance controllers/CFOs and technical teams for budgeting purpose.
• Automation and policy – Cost management policies focused on how to reduce the orphaned resources on an ongoing basis, AWS CloudFormation templates/custom scripts are used for automated account creation process.

Improved Cost and Usage Awareness

One of the key objectives of our engagement was to ensure the customer had complete transparency on their AWS spend. They had difficulty interpreting the detailed billings, reports, and analysis provided by AWS, so this was proving to be an obstacle to their overall cloud transformation success.

Tech Mahindra decided to extract the essence from the AWS cost and usage insights and provide the rationalized reporting with improved customer experience on reservations, forecast, and spend analysis. The reporting platform is authentication enabled to limit users to the associated customer’s business organization and permitted accounts.

Tech Mahindra developed the custom web-based cost and usage reports as the outcome of the joint exercise. The reports focus on finance, operations, and technical teams from the individual business unit.

Financial reports provide a consolidated view of the monthly spend on AWS, as well as forecast and savings achieved from Tech Mahindra’s cost governance services. Technical reports provide granular view of RI coverage, Amazon EC2 instance types, RI types per region, and monthly spend per account.

All of the stakeholders started using these custom reports to understand the overall cost impact on their monthly and quarterly spend.

Figure 2 – Custom-built dashboard and sample cost report.

Correct Pricing Model

During the due diligence exercise, Tech Mahindra discovered the customer had reservation coverage of approximately 26 percent of their EC2 instances under various types.

The reservations were done at the individual linked account level, but that didn’t help much. Tech Mahindra developed a centralized RI reservation strategy and AWS Organization control policies.

Objectives of the RI purchase strategy workshops were to understand:

• New and existing project requirements of the customer in Year 1, Year 2, and beyond.
• True needs of the EC2 instances family and type used for various requirements.
• Historical EC2 instance hourly usage for the specific account (over 30 and 60 days) to determine the purchase options.

Tech Mahindra developed the RI purchase plans using AWS Cost Explorer recommendations. Tech Mahindra also involved AWS’ cost optimization team, their RI analysis tools, and AWS Well-Architected Cost Optimization Labs to ensure the right RI instances were purchased. They made sure all RIs purchased are at the payer level for optimal usage.

Tech Mahindra has used the AWS Confidence Score mechanism, along with customer inputs, to purchase RIs monthly and quarterly. The objective was to ensure the RI strategy takes the customer’s business, application, and cost implications into consideration to minimize their risk exposure.

Figure 3 – Reserved Instance coverage report.

Tech Mahindra’s reservation strategy helped the customer achieve the following outcomes:

• Monthly spend reduced by 34 percent, and the overall reservation coverage raised from 25 percent to 85 percent, as shown in Figure 3.
• Consistency in the monthly cost helped the customer to do better financial planning.
• Eliminated underutilized or non-essential areas of spending.
• Accelerated savings realizations through automations, measures, and reporting.
• Established a mature cost governance model leveraging AWS cost management services and features, including the AWS Cost and Usage Report, Amazon CloudWatch, AWS Lambda, AWS Cost Allocation Tags, AWS Cost Explorer, AWS Cost Anomaly Detection, AWS Budgets, and Amazon QuickSight purchases across different regions and the Savings Plan options.

Continuous Cost and Usage Analysis

With its extensive experience managing and governing large and complex AWS environments for customers, Tech Mahindra has learned that creating a cost awareness culture is just as important as finding and using the right tools.

In line with this principle, Tech Mahindra worked with the customer’s business units to make sure decision makers and teams were aware of the overall cost impact related to the AWS services they are using. This approach has played a key role in implementing the proposed cost savings recommendations.

As the first step, Tech Mahindra came up with a cost optimization roadmap for each business group and published it. These time-bound roadmaps cover both short- and long-term goals that align with the customer’s cost savings goals.

Figure 4 – Cost optimization roadmap sample.

Tech Mahindra has used the following cost management tools and AWS services to gather inputs and generate custom reports for the customer:

• AWS Cost Explorer shows patterns in AWS spending over time, projects future costs, identifies areas that need a further inquiry, observes RI utilization and coverage, and receives RI recommendations.
• AWS Trusted Advisor provides the potential areas for optimization.
• AWS Budgets creates custom alerts when cost or usage exceed (or are forecasted to exceed) a budgeted amount.
• Amazon CloudWatch collects and tracks metrics, monitors log files, sets alarms, and automatically reacts to changes in AWS resources.
• AWS CloudTrail can log, continuously monitor, and retain account activity related to actions across AWS infrastructure at low cost.
• Amazon S3 Analytics automates analysis and visualization of S3 storage patterns to help you decide when to shift data to a different storage class.
• AWS Cost and Usage Report provides the cumulative raw data dump in granular level. The data helped to build the historical trend analysis and the predictive analysis for the customer’s business units.

Tech Mahindra identified three factors for a successful implementation of cost optimization recommendations:

• Business impact opportunities vs. no business impact opportunities.
• Process with guidelines.
• Execution timelines.

Figure 5 – Cost optimization approach.

Improved Governance

Tech Mahindra created a common governance structure (as shown in Figure 6) across all stakeholders, including executives, infrastructure and operational leaders, engineering leads, and finance and procurement teams, to collaborate and have transparency across individual cost goals and status.

All business units have been tasked with a common end objective of efficient AWS cost management.

Figure 6 – Tech Mahindra cost governance model.

Bi-weekly and monthly cost governance meetings are scheduled with key stakeholders to walk through the cost and usage trends, anomalies, and identify optimization potentials.

Tech Mahindra developed reports that help run the cost governance meetings effectively:

• Proactively monitors and generates alerts for the cost usage, including daily and weekly emails on the usage using Amazon QuickSight.
• Forecasts cloud spend for budgeting and cost control using AWS Cost Explorer.
• Provides weekly, monthly, and quarterly reports focused on cloud cost management using QuickSight.

Automation and Policy

Automation and policy creation are key levers of a successful cost governance model to standardize the processes across the customer’s organization.

The table below details how Tech Mahindra created AMI retention policies for different environments and a sample policy for the customer’s critical environment.

The next table describes different automations that were implemented to build a standard cost governance model across the organization.

Self-Service Account Creation Process

The customer had a dedicated enterprise-wide training organization to take care of their training needs, including new product launches. The training organization had continuous requirements for creating the AWS accounts and was done manually.

Tech Mahindra built a self-service model and automated the AWS account creation process with minimum manual interventions using AWS Service Catalog. This provisions requested parameters through AWS Lambda API to build the job. Lambda then triggers the API call to AWS CloudFormation to build a new AWS account in the AWS Organization.

Figure 7 – AWS account creation process.

Now, this solution has reduced the turnaround time drastically and improved tracking per the program governance. Customer training organization users are creating the AWS accounts quickly with this new automation process. The process automation helped them to align with their training roadmap.

Customer Benefits

• Complete visibility: 100 percent spend visibility across the each business unit and service.
• Savings: Greater than 30 percent cost savings through Tech Mahindra’s pricing model RI purchases and from implementing recommended cost optimization opportunities.
• Cost governance structure: Monthly and bi-weekly calls with business unit owners to make sure they understand how money is being spent.
• Process improvement: Helped the customer standardize the process around AMI retention and account creation.
• Automation: Automated Lambda scripts and QuickSight report emails to the customer group.

Summary

We hope this post has provided you helpful information on how Tech Mahindra implemented a sustainable finance management approach using AWS native services and cost management best practices for the customer.

Business success is often measured by the success of monetization. Tech Mahindra’s cloud cost governance model emphasizes bringing all stakeholders together to improve cloud governance in large global organizations.

Tech Mahindra has effectively managed to build continuous cost and usage analytics using AWS native services such as Amazon QuickSight and AWS Billing and Cost Management Tools.
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Tech Mahindra – AWS Partner Spotlight

Tech Mahindra is an AWS Advanced Consulting Partner and a specialist in digital transformation, consulting, and business re-engineering solutions.

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