Unraveling Cloud Spending with FOCUS: Prices and Quantities Explained

Welcome to another deep dive in the Learning FOCUS blog series, where we explore the crux of financial management in the cloud. This week, we tackle a topic that, while seemingly straightforward, involves a significant amount of nuance: prices and quantities. With cloud costs sometimes feeling like navigating a labyrinth, understanding how prices and quantities interact in Microsoft’s FinOps Open Cost and Usage Specification (FOCUS) can illuminate your path. Let’s break down what these terms mean and how they influence your cloud expenditure management.

The Fundamentals: Prices, Quantities, and Their Interactions

In cloud management, understanding the cost implications of the resources you consume is crucial. FOCUS seeks to standardize how these costs are presented, allowing for a clearer evaluation of your cloud investments. A practical way to consider quantities is through an everyday analogy: purchasing notebooks. Whether you’re buying individually or in packs, the core remains the same — you end up with notebooks. However, each packaging option represents a different pricing model in the cloud, akin to the conventional PricingQuantity and ConsumedQuantity in FOCUS.

Distinguishing Quantities

Pricing Quantity vs. Consumed Quantity

The PricingQuantity refers to how providers bundle and charge for the services or products. For example, purchasing virtual machine (VM) hours can be likened to buying notebooks in bulk. Contrarily, ConsumedQuantity designates the real-world utilization of resources, unaffected by the provider’s bulk offers. Imagine utilizing just 24 VM hours when the provider bills in blocks of 100 hours; you’d calculate and understand usage distinctly through ConsumedQuantity.

Instance Size Flexibility (ISF)

Instance size flexibility introduces another layer through a normalization factor when commitment discounts apply. Here, the CommitmentDiscountQuantity attempts to map out purchase units after applying these factorized adjustments, offering more flexible cost planning without altering the resource itself.

Units of Measurement

In FOCUS, every quantity hinges on its corresponding unit, like hours, cores, or gigabytes. Depending on how you leverage these units, the outcome — your cost — might differ. The PricingUnit guides pricing specifics, while ConsumedUnit ties to what is physically used. For normalized considerations under ISF, a CommitmentDiscountUnit might apply, aligning prices to a more standardized consumption base.

Pricing Models: List, Contracted, Billed, and Effective Prices

Understanding cloud pricing requires navigating through multiple dimensions of pricing:

• ListUnitPrice: The undiscounted public retail rate.
• ContractedUnitPrice: Adjusted for negotiated discounts but not commitment discounts.
• x_BilledUnitPrice: What is invoiced reflects this, directly tracing to your billing invoice.
• x_EffectiveUnitPrice: Accounts for amortized commitment discount purchases, showing an adjusted logical price.

Each price tier in FOCUS can chart out your financial scenario differently, crucial for accurate budgetary planning.

Calculating the Cost

Ultimately, price times quantity equals your cloud cost. The mathematical underpinnings here remain simple but essential for budget validation. Ensure a meticulous selection of parameters; for instance, incorporating PricingQuantity ensures precise computing against BilledCost and EffectiveCost without encountering numerical errors often associated with floating-point calculations.

Future Directions with FOCUS

As FOCUS continues to evolve, understanding its roles and capabilities will facilitate a deeper integration of financial strategies within cloud environments. Upcoming releases promise enhancements such as CommitmentDiscountQuantity and further alignment of cost validation procedures. Staying informed on these developments paves the way for optimizing spend and potentially unveiling significant savings opportunities.

Each step of our journey through understanding prices and quantities with FOCUS moves us closer to mastering the art of financial prudence in cloud environments. As we await the next segment on calculating discounts and savings, revisit these themes for a robust grasp on past lessons, ensuring you’re ready to keep pace with this rapidly evolving field.

For those keen to refine their skills in using FOCUS data, I recommend dipping into the Power BI reports within the FinOps toolkit, or engaging with advanced FinOps hubs for scaled analytics. As FinOps continues to expand, mastering these foundational concepts will equip you for what’s next in the ever-expanding world of cloud financial management.

Stay tuned for more insights as we progress in our exploration of financial operations in the cloud world.