How To Achieve Accurate Financial Forecasting In The Cloud
Accurate financial forecasting in the cloud can be the difference between success and failure but is often reliant on other areas of your cloud management also being accurate. Find out how CloudHealth can help ensure top-to-bottom accuracy throughout your cloud operations to facilitate better-informed decision making.
Financial forecasting in the cloud is complex. There are many different types of forecasting requests—often requiring different data sets to resolve—and it is not always possible to rely on historical data in order to accurately calculate budgets or capacity requirements. When future revenue and expenditure trends are based on faulty data, the consequences can be very damaging to a business.
Conversely, an accurate and reliable financial forecast can guide policy and operating decisions to create a defined business path and accelerate growth. When forecasts and actual revenues and expenditures are closely matched, it builds confidence and trust between businesses and stakeholders—making it far easier to raise capital for future growth when required.
Accurate financial forecasting in the cloud can be the difference between success and failure but is often reliant on other areas of your cloud management also being accurate.
The cornerstones to accurate financial forecasting in the cloud
The cornerstones to accurate financial forecasting in the cloud are precise cost allocation and robust budget management. Precise cost allocation relies on the correct use of tags and labels to ensure resources are allocated to their appropriate cost unit. It is important businesses implement and enforce a global tagging policy to prevent data being faulty when used for forecasting.
Robust budget management is important for all manner of reasons; but—in the context of financial forecasting in the cloud—if cost controls are not in place, and expenditure is allowed to spiral out of control, it undermines financial forecasts and damages the confidence and trust between businesses and stakeholders—ultimately making it more difficult to raise capital when required.
How CloudHealth can resolve cost allocation and budget management issues
The CloudHealth cloud management platform is most commonly utilized to optimize cloud costs, enhance resource performance, and identify gaps in security. Once costs are optimized, performance enhanced, and security issues resolved, the status quo is maintained using policy-driven automation. However, CloudHealth can also resolve cost allocation and budget management issues.
With regard to cost allocation, system administrators create “tag checking policies” to ensure Tags and Labels are being used in compliance with the global tagging policy. In the event of CloudHealth identifying an untagged resource, a misspelled Tag, or a non-conforming value, the platform can take a number of actions depending on how the policy has been configured. For example:
- If a resource is lacking a Tag or Label, the platform can stop the resource and alert its owner via an email notification.
- If a resource key is misspelled “environment”, the platform can run a function to change the spelling to “environment”.
- If a resource is tagged “env:prod”, and the global tagging policy is not to use abbreviations, the Tag can be amended to “environment:production”.
Similarly, budget owners can create policies that alert them when the month-to-date cloud spend is on track to exceed the monthly budget or when costs increase unexpectedly over a specific time period for a department, team, or service. Cost trend policies are an ideal way to alert budget owners to budget management issues before it is too late for them to be reversed. For example:
- If storage costs for a department, team, or service increase by more than 10% in a day, alert the budget owner by email.
- If projected month-to-date cloud spend is greater than 100% of the monthly budget, alert the budget owner by email.
- Notify the budget owner when the monthly spend-to-date reaches 85% of the allocated budget.
Accurate financial forecasting in the cloud is straightforward
Once the cornerstones of accurate financial forecasting in the cloud are in place, the CloudHealth platform provides customized reports with which businesses can identify historic trends in resource utilization. These reports not only provide accurate data about current consumption that can be used for optimization purposes but are a solid basis for accurate resource forecasts for the future.
The benefit of using CloudHealth´s customizable reports for accurate financial planning in the cloud is that they let you create unique business groups that reflect different sets of analysis, management and evaluation criteria. This means that different types of complex forecasting requests can be resolved without the need to access different data sets—everything is produced from the same data repository.
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