The 2024 AWS FinOps Guide for Growing Companies

Executive Summary

Cloud spending is growing faster than IT budgets. The average organization now spends over $1 million annually on cloud services, with 30-40% of that spending considered wasteful or inefficient. For growing companies on AWS, managing cloud costs isn't just a finance concern—it's a competitive advantage.

FinOps (Cloud Financial Operations) has emerged as the discipline that bridges the gap between engineering velocity and financial accountability. It's not about cutting costs at the expense of innovation; it's about making informed tradeoffs that maximize the business value of every dollar spent.

This guide provides a comprehensive framework for implementing FinOps practices in AWS environments. Whether you're a startup establishing your first cloud governance policies or an enterprise transforming existing processes, you'll find actionable strategies to improve visibility, optimize spending, and build a culture of cost accountability.

Key Findings

• Organizations that implement FinOps practices achieve 20-40% cost reduction in the first year
• 70% of cloud waste comes from just five categories: idle compute, oversized instances, orphaned storage, missing commitments, and inefficient architecture
• Companies with strong FinOps practices have 3x better cost predictability and faster budget approval cycles
• The most successful FinOps implementations focus on culture change as much as tooling

Who Should Read This Guide

• Engineering leaders establishing cloud governance
• Finance teams seeking to understand and control cloud spending
• Operations teams implementing optimization processes
• Executives evaluating FinOps investments

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Chapter 1: Understanding FinOps

What is FinOps?

FinOps is the practice of bringing financial accountability to the variable spending model of cloud. It combines systems, best practices, and culture to increase an organization's ability to understand cloud costs and make tradeoffs between speed, cost, and quality.

Unlike traditional IT budgeting, FinOps embraces the reality that:

• Cloud costs are variable and usage-based
• Engineers make spending decisions daily
• Optimization is continuous, not a one-time project
• Finance and engineering must collaborate

The FinOps Lifecycle

FinOps operates in three phases:

Inform: Create visibility into cloud spending

• Who is spending money?
• What are they spending it on?
• How does spending relate to business value?

Optimize: Identify and implement savings opportunities

• Right-size resources
• Purchase commitments
• Eliminate waste

Operate: Build sustainable practices

• Automate optimization
• Establish governance
• Drive cultural change

These phases are cyclical—optimization opportunities continuously emerge as cloud usage evolves.

Core Principles

The FinOps Foundation defines six core principles:

1. Teams need to collaborate: Finance, engineering, and business work together
2. Decisions are driven by the business value of cloud: Not just cost reduction
3. Everyone takes ownership: Accountability is distributed
4. FinOps reports should be accessible and timely: Data must be actionable
5. A centralized team drives FinOps: But doesn't own all decisions
6. Take advantage of the variable cost model: It's a feature, not a bug

The AWS FinOps Challenge

AWS presents unique FinOps challenges:

Pricing complexity: Over 200 services with different pricing models (on-demand, reserved, spot, savings plans)

Rapid service evolution: New features and pricing options released constantly

Multi-account complexity: Organizations often have dozens or hundreds of AWS accounts

Shared costs: Many costs don't map cleanly to individual teams or applications

Commitment decisions: Reserved Instances and Savings Plans require forecasting accuracy

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Chapter 2: Building Your FinOps Practice

Starting Your Journey

Every FinOps practice starts with visibility. You can't optimize what you can't see.

Step 1: Enable Cost Allocation

Configure AWS Cost and Usage Reports (CUR) with the following settings:

• Include resource IDs
• Enable hourly granularity
• Configure S3 bucket for Athena/QuickSight analysis

Step 2: Implement Tagging Strategy

Required tags for effective cost allocation:

Step 3: Establish Baseline Metrics

Before optimizing, establish your baseline:

• Total monthly spend
• Spend by service
• Spend by team/application
• Cost per unit (transaction, user, etc.)

Organizational Structure

Successful FinOps requires clear roles and responsibilities:

FinOps Team (central)

• Maintains tools and dashboards
• Provides optimization recommendations
• Tracks organization-wide metrics
• Educates teams on best practices

Engineering Teams (distributed)

• Own their cloud costs
• Implement optimization recommendations
• Make architectural decisions considering cost
• Tag resources appropriately

Finance (partner)

• Sets budgets and targets
• Provides financial analysis
• Forecasts cloud spending
• Manages commitment purchases

Maturity Model

FinOps maturity progresses through stages:

Crawl

• Basic visibility established
• Manual optimization
• Reactive cost management
• Limited accountability

Walk

• Automated reporting
• Systematic optimization reviews
• Teams aware of costs
• Some automation

Run

• Real-time visibility
• Automated optimization
• Cost considered in all decisions
• Continuous improvement culture

Most organizations should aim for "Walk" within 6 months and "Run" within 18 months.

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Chapter 3: AWS Cost Optimization Strategies

The Optimization Framework

We recommend prioritizing optimization by impact and effort:

Quick Wins (High impact, low effort)

• Terminate idle resources
• Delete orphaned storage
• Right-size obvious outliers
• Enable intelligent tiering

Core Optimization (High impact, moderate effort)

• Systematic right-sizing
• Reserved Instance/Savings Plan strategy
• Architecture improvements
• Automated scheduling

Advanced Optimization (Moderate impact, higher effort)

• Spot instance adoption
• Container optimization
• Serverless migration
• Multi-region optimization

Compute Optimization

Compute (EC2, containers, Lambda) typically represents 40-60% of AWS spend.

Right-Sizing Strategy

1. Collect utilization data (minimum 2 weeks, ideally 4)
2. Install CloudWatch Agent for memory metrics
3. Analyze peak utilization, not average
4. Recommend conservative downsizing (one size at a time)
5. Validate in non-production first

Instance Family Selection

Graviton Consideration: ARM-based Graviton instances offer up to 40% better price/performance for compatible workloads.

Commitment Strategy

Recommended approach: Cover 60-70% of baseline with Savings Plans, 10-20% with Reserved Instances for specific needs, remainder on-demand.

Database Optimization

Database services often have the highest per-resource costs.

RDS Optimization

• Right-size based on actual query performance, not just CPU/memory
• Use read replicas for reporting queries
• Consider Aurora Serverless for variable workloads
• Review Multi-AZ necessity for non-production

Storage Optimization

• Convert from io1/io2 to gp3 where possible
• Right-size provisioned IOPS
• Delete old snapshots

Caching Strategy

• Implement ElastiCache for hot data
• Reduce database load and instance requirements

Storage Optimization

S3 Strategy

• Enable S3 Intelligent-Tiering for variable access patterns
• Implement lifecycle policies for aging data
• Delete incomplete multipart uploads
• Use S3 Inventory for large bucket analysis

EBS Optimization

• Audit and delete orphaned volumes
• Convert io1 to gp3 where appropriate
• Right-size volumes based on actual usage
• Enable EBS snapshot lifecycle management

Network Optimization

Data transfer can be a hidden cost driver.

Cost Reduction Strategies

• Use VPC Endpoints to eliminate NAT Gateway costs
• Optimize CloudFront cache hit ratio
• Use AWS PrivateLink for cross-VPC communication
• Compress data before transfer

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Chapter 4: Tools and Automation

AWS Native Tools

AWS Cost Explorer

• Free basic cost visualization
• Rightsizing recommendations
• Savings Plans recommendations
• 14-month historical data

AWS Budgets

• Alert on cost thresholds
• Action triggers (e.g., stop resources)
• Forecasted vs. actual tracking

AWS Compute Optimizer

• ML-based rightsizing recommendations
• EC2, EBS, Lambda analysis
• Free tier available

AWS Trusted Advisor

• Cost optimization checks
• Business/Enterprise support required for full access

Automation Opportunities

Instance Scheduler Automatically stop non-production instances outside business hours:

• Potential savings: 65% on dev/test compute
• Implementation: AWS Instance Scheduler or custom Lambda

Auto Scaling Optimization

• Right-size Auto Scaling groups
• Implement predictive scaling
• Use target tracking policies

Cleanup Automation

• Delete orphaned EBS volumes after X days
• Release unattached Elastic IPs
• Terminate instances tagged for expiration

Third-Party Platforms

For comprehensive FinOps, consider platforms that provide:

• Multi-cloud support
• Enhanced recommendations
• Anomaly detection
• Automated implementation
• Team accountability features

Platforms like CloudBolt (included with Sentasity Managed Billing) provide enterprise capabilities without enterprise complexity.

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Chapter 5: Organizational Transformation

Building Cost-Aware Culture

Technology and tools are only part of the solution. Sustainable FinOps requires cultural change.

Key Cultural Shifts

Communication Strategies

For Engineering Teams

• Frame optimization as engineering excellence, not constraint
• Celebrate wins publicly
• Make costs visible in existing dashboards
• Include cost metrics in code reviews

For Finance

• Translate cloud costs into business terms
• Provide forecasting accuracy metrics
• Show ROI of optimization investments
• Connect costs to business outcomes

For Executives

• Report unit economics, not just totals
• Show trends, not just snapshots
• Highlight business value delivered
• Quantify optimization opportunity

Governance Framework

Budget Allocation

• Allocate budgets to teams, not projects
• Include buffer for growth and experimentation
• Review quarterly based on business priorities

Policy Enforcement

• Required tags on all resources
• Approval workflows for large resources
• Automated enforcement where possible
• Exception process for valid cases

Review Cadence

• Weekly: Anomaly review (automated alerts)
• Monthly: Team cost reviews
• Quarterly: Strategy and commitment reviews
• Annually: Architecture and policy review

Success Metrics

Track these metrics to measure FinOps success:

Efficiency Metrics

• Cost per unit (transaction, user, request)
• Waste percentage (idle + orphaned resources)
• Commitment coverage and utilization

Organizational Metrics

• Tagging compliance rate
• Time to implement recommendations
• Budget variance (actual vs. forecast)

Business Metrics

• Cloud cost as percentage of revenue
• Engineering time spent on optimization
• Customer acquisition cost including infrastructure

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Conclusion and Next Steps

Summary

Implementing FinOps is a journey, not a destination. The most successful organizations:

1. Start with visibility: You can't optimize what you can't see
2. Build incrementally: Crawl, walk, then run
3. Focus on culture: Tools alone don't change behavior
4. Automate continuously: Manual processes don't scale
5. Measure outcomes: Track metrics that matter to the business

Your 90-Day Action Plan

Days 1-30: Foundation

• Enable Cost and Usage Reports
• Implement tagging strategy
• Establish baseline metrics
• Identify top 10 waste sources

Days 31-60: Quick Wins

• Implement Instance Scheduler for non-production
• Delete orphaned resources
• Right-size obvious outliers
• Begin commitment analysis

Days 61-90: Scale

• Roll out team dashboards
• Implement systematic right-sizing
• Purchase initial commitments
• Establish review cadence

Getting Help

FinOps is easier with the right support. Sentasity provides:

• Free waste scanner: Identify immediate optimization opportunities
• Managed Billing: Ongoing optimization with Tier 1 support
• CloudBolt access: Enterprise FinOps platform included
• Monthly contracts: Try risk-free with no long-term commitment

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About Sentasity

Sentasity helps growing companies optimize their AWS costs through managed billing, free FinOps tools, and Tier 1 support. Our waste scanner with 34 detection policies identifies savings opportunities automatically, while our transparent monthly contracts mean you can try us risk-free.

Start your free scan to see your optimization opportunities.

Learn about Managed Billing for ongoing FinOps support.

Contact us to discuss your specific needs.