The Path to Value for a Cloud Cost Management in ServiceNow
Implementing Cloud Cost Management in ServiceNow provides organizations with a systematic method to monitor, manage, and optimise their cloud assets. To fully leverage your CCM implementation, itβs crucial to adopt a phased approach, generally categorized into Crawl, Walk, and Run stages. This step-by-step process enables organizations to enhance visibility, minimise risks, and boost operational efficiency progressively.
Mature your CCM program with predefined maturity items
The program maturity is categorized into Crawl, Walk, and Run stages to help you improve the value return of your CCM program, including processes, features, functionalities, and capabilities within your organization.
It is important to recognise that every organisation is unique. The recommendations provided below offer a suggested sequence of activities aimed at ensuring your CCM Implementation brings value as you expand it across your entire organisation. The activities listed for each phase are suggestions rather than strict guidelines, and we advise you to prioritise them based on your specific requirements.
Crawl Phase: Visibility Into Cloud Spend
Initiate your Cloud Cost Management journey by setting up a new Cloud Cost Management program. At this stage, you can establish a reliable Configuration Management Database (CMDB), determine ways to uncover cloud data, and define processes and roles. This phase also includes establishing ongoing cost governance by setting up clear accountability, refining tagging for accurate allocation, and creating dashboards for visibility into spending trends.
Perform a CMDB Health Check
A healthy Configuration Management Database (CMDB) is essential for the success of a CCM program. Since the CMDB holds all asset and configuration data, ensuring its health and integrity will prevent data issues and improve the effectiveness of asset tracking and lifecycle management.
Steps for a CMDB health check include:
- Validate current asset and configuration data: Ensure that the CMDB accurately reflects all current assets and their relationships to services, systems, and applications.
- Ensure the CMDB is well-structured: Organize the CMDB with well-defined asset classes, categories, and relationships to other IT services to avoid fragmentation.
- Resolve any data discrepancies: Identify and fix any inconsistencies or gaps in the CMDB before importing new asset data.
Establish CCM Processes
Click here to access the Cloud Cost Management Process Guide on Now Create, offering detailed instructions on how ServiceNow envisions the CCM process.
Identify Key Stakeholders for CCM Program
One of the areas to help with a successful CCM implementation and adoption throughout the organization is to identify key stakeholders. Stakeholders could be anyone affected by the CCM Program. Establishing clear communication and gathering input from these stakeholders could help in gaining support for the CCM program.
Steps to complete:
- Identify different areas that will be impacted by the CCM program
- Identify stakeholders who are invested and supportive to ensure a successful CCM program
- Document and setup clear communication plan with stakeholders
Assignment of responsibility to each role based on level of involvement in the CCM Program
Establish roles and responsibilities for those that need to carry out functions for the CCM program success. Identify the resources that need to be consulted on decisions or informed on outcomes.
Steps to complete:
- Documented roles and responsibility for the CCM Program
- Review RACI with Stakeholders
- Finalize and establish process to publish and maintain on a periodic basis
Define the Success Criteria of the CCM Program
Definition of the goals, objectives, metrics and overall success criteria of the CCM program is important to help identify measurable and achievable milestones and report on progress.
Steps to complete
- Document Success criteria
- Document the metrics and intended outcomes of a successful CCM program
- Communicate the overall success criteria with your stakeholders
CCM Training
Training, both internal to end users and external for CCM resources is essential to a successful CCM Program. Success programs have established standard training materials, short videos, and training classes for end users and CCM resources. CCM resources can receive training from external sources as well as certification training for specific vendors and technologies.
Steps to complete:
- Documented training material is available for End users and CCM resources
- Training on CCM best practices, certifications, and technologies are encouraged to help gain knowledge in the overall Cloud Cost Management methodologies
Install/Set-up Cloud Discovery
Install either Cloud Discovery or Service Graph Connector for providers to ensure that all features in Cloud Cost Management work efficiently.
Steps to complete:
- Amazon AWS Cloud Discovery
- Azure Cloud Discovery
- Google Cloud Platform Discovery
Relevant Demo and Tutorial Content:
- Click here to watch an Introduction to ServiceNow Cloud Discovery
- Click here to learn about using the Service Graph Connector for AWS to securely bring in Amazon Web Services (AWS) data into your ServiceNow instance
Integrations with Cloud Providers
In the Crawl phase we will focus on gaining visibility into cloud spend. The recommended sequence of activities is described below.
Important: Cloud Cost Management provides a guided setup to aid with these activities. See the example below for setting up AWS integration:
Steps to complete:
- Follow guided set-up for AWS integration
- Follow guided set-up for Microsoft Azure integration
- Follow guided set-up for Google Cloud integration
Relevant Demo and Tutorial Content:
- Click here to learn about configuring CCM for AWS
- Click here to learn about configuring CCM for Microsoft Azure
- Click here to learn about configuring CCM for Google Cloud
Use Tag Categories for Accurate Cost Reporting
To streamline cloud cost reporting and resource classification, normalize tags across your environment.
Within the cloud provider portal, you set cost tags to link resource usage to specific business units, such as "Application," "Test," or "QA" for cost centers. However, resource requesters may create inconsistent tags, like "App," "AppService," or "appl," when they intend to refer to "Application."
Tag categories allow multiple tag names to be grouped under one entity, ensuring consistent cost assignment. For instance, by setting "Application" as a tag category, any resource tagged as "App," "AppService," or "appl" will be classified under "Application," providing precise cost reporting.
Cost categories are automatically updated each time billing data is downloaded. However, if recent changes to tag categories (like adding new tags) are not reflected in your reports, you can manually apply the updates by navigating to Cloud Cost Management Workspace > Operations > Cost usage tags > Tag categories > Reapply tag categories without re-running the Billing Download job.
Default tag categories
- Application feature
- Application owner
- Application team
- *AI Service
- Business application
- Business service
- Business unit
- Cost center
- Department
- Division
- Environment
- Kubernetes cluster name
* This tag category is available with the Cloud Cost Management version 8.0.0 or later.
Steps to complete:
- Review the default tag categories above and here.
- To create and update a tag category, navigate to Cloud Cost Management Workspace > Operations > Cost usage tags > Tag categories.
- On the Tag Categories list, select New. On the form, fill in the required fields.
Relevant Demo and Tutorial Content:
- Click here to learn more about tags and tag categories.
Walk Phase: Cost Savings & Avoidance
In the Walk phase of your Cloud Costs Management program, the focus shifts toward actively optimizing cloud costs. This phase involves introducing rightsizing initiatives to adjust resources to better align with actual usage, establishing policies for unused or underutilized resources, setting up Business hour policies and applying automation to scale resources efficiently. Additionally, significant savings can be achieved by leveraging reservation plans, which provide discounted rates in exchange for committing to long-term resource usage. By prioritizing optimization, the Walk phase builds on foundational cost management practices, allowing organizations to manage cloud expenses proactively and achieve a more streamlined and cost-effective cloud environment.
Optimize Usage: Rightsizing
When moving workloads to the cloud, you might initially allocate resources based on your requirements for on-premises physical machines. This can often lead to overestimations of the necessary space in a cloud environment on virtual machines. ServiceNow aids in automating workflows to collect runtime data, analyze usage patterns, and recommend adjustments for right-sizing resources. This includes automatically generating change requests for approval by resource owners and offering detailed status reports and intuitive insights on the areas where right-sizing efforts may be lagging.
Moreover, rightsizing extends to cloud storage and database assets too, enhancing visibility and cost efficiency.
How Rightsizing works:
Steps to complete:
- Configure Rightsizing operations
- Schedule resources to be rightsized
- Move a resource to a different Rightsizing job (optional)
- Exclude a resource from Rightsizing analysis (optional)
- View or edit scheduled and completed Rightsizing jobs
Relevant Demo and Tutorial Content:
- Click here to learn about resizing resources with Rightsizing
Optimize Usage: Unused resources
Discover and identify machines that are rarely used or completely unused. CCM can reduce cost by identifying the unused resources and scheduling jobs to power-off or terminate the unused resources. Configure Unused resources processes and specify the potential savings that trigger notifications.
Cloud Cost Management uses an optimized process for each provider.
How the Unused resources feature works:
Steps to complete:
- Configure Unused resources
- Schedule unused resources to be powered off or terminated
- Move a resource to a different Unused resources job (optional)
- Exclude a resource from Unused resources analysis (optional)
- View or edit scheduled and completed Unused resources jobs
Relevant Demo and Tutorial Content:
- Click here to learn about managing unused resources
Optimize Usage: Business hours
Deactivate resources when not in use by pinpointing cloud resources that aren't needed outside of normal working hours and scheduling them to turn off and on automatically.
If a department operates for only 12 hours each day, it is unnecessary to provide cloud resources for the remaining 12 hours. You can lower on-demand costs by avoiding the operation of certain cloud resources around the clock. Cloud Cost Management enables you to set policies specifying when resources should be deactivated (e.g., after midnight in certain regions), estimate potential savings, and send a change request to the resource owner for approval. Upon approval, the resources will be automatically turned off and on at designated times, eliminating the need for impractical manual intervention.
How the Business hours feature works:
Each successful execution of a Billing Download job triggers the Budget Forecast, Business Hours, Reservation Plans, Rightsizing, and Unused resources jobs to analyze the spend and usage data and to update the actionable recommendations in the reports. Business Hours jobs follow this process.
Steps to complete:
- Configure Business hours operations
- Create Business hours schedule
- Define a Business hours policy
Relevant Demo and Tutorial Content:
- Click here to learn about improving resource usage with Business hours
Optimize Price: Reservation or Saving plans
Decrease costs by the conversion of on-demand payment plans to reservation plans for your cloud resources.
The Reservation or Saving plans feature recommends resources that could decrease costs by the conversion of on-demand payment plans to reservation plans. These plans are also called committed-use discounts, committed-use savings plans, or reserved instance plans.
How the Reservation/Saving plans feature works
- Each time that billing and usage data are updated, the system collects the list of resources that the provider recommends would cost less under reservation plans over the planned lifetime.
- The Reservation or Saving plans feature sorts the resources by estimated savings and displays the list on the Reservation/Saving plans page. You can navigate to Cloud Cost Management Workspace > Operations > Recommendations > Reservation/Saving plans to view the list.
- The Reserved Instances page has three tabs such as New, Accepted, and Declined. You can use the tabs to sort the recommendations into categories for action. If you change your mind, you can move a resource from any tab to any other tab.
Steps to complete:
- Configure Reservation/Saving plans operations
Relevant Demo and Tutorial Content:
- Click here to learn about Reducing resource cost with Reservation Plans
Run Phase: Operational Efficiency
In the Run phase, organizations focus on implementing advanced financial controls and integrations to drive sustained cloud cost efficiency. During this phase, cloud budgets are established to set spending limits, enabling proactive alerts and corrective actions if budgets approach their thresholds. Integrating "Bring Your Own License" (BYOL) options becomes a priority, allowing companies to leverage existing software licenses within the cloud environment, thereby reducing software licensing costs. This phase also introduces change management integration, linking cloud resources and budget impacts to the organization's change control process to ensure that modifications in the cloud environment are aligned with cost objectives. By combining these practices, the Run phase establishes a mature cost governance framework, making cloud spending predictable and aligned with broader business goals.
Budgets
Many organizations operate in the cloud without structured budgets, or if they have budgets, they may lack flexibility. Typically, budgets are set up to trigger alerts when spending hits a certain threshold. But what happens if you exceed your annual budget by August, leaving you with several months of unplanned expenses? This often forces reactive budget cuts in other areas. Automated workflows offer a proactive solution, allowing for more detailed, long-term budgeting. By using these tools, you can monitor usage trends, accurately forecast spending, and stay on track throughout the year. You can also set and track budgets by cloud providerβsuch as AWS and Azureβensuring clear oversight and prioritization for each provider.
Use the Budget view in the Cloud Cost Management Workspace to define and monitor custom budget plans that keep your cloud spending in check.
To manage your cloud spend, you can define and monitor custom budget plans. The system compares the plans with billing data to calculate and report on how well budgets are being met. Understanding budget compliance by groups and service accounts can significantly improve oversight and reduce cloud spend.
How budget analysis works:
Each successful Billing download triggers a budget refresh automatically. Budget refresh is also triggered manually when a new Budget policy is created.
Budget Forecast jobs using the cost forecast data from the providers and follow this process:
- Apply each budget plan to billing data
- Update all Budget Forecast reports.
- Repeat the process whenever billing data is updated or a user requests budget reanalysis.
Steps to complete:
- Create a budget policy to specify a budgeted amount, cost type, reset period, and other aspects of the budget.
- Specify who can view budget data and who is notified of variances from the budgeted amount.
Relevant Demo and Tutorial Content:
- Click here to learn about managing cloud budgets.
Cloud Cost Simulator / BYOL
Note. Cloud Cost Simulator is available to SAM Enterprise customers.
Leverage the license and cloud cost simulator to build a business case for moving specific resources to the cloud, and understand the costs associated of running those resources on various cloud providers.
The Cloud simulator dashboard provides recommendations to move resources to the cloud based on the following criteria:
- Software
- Cluster
- Hardware EOL
- Software EOL
- Low utilization
- Show all matched VMs
Example use cases: End of life for software: On some virtual machines, you may have software that is nearing the end of its life cycle. Calculate the cost of migrating these virtual machines to the cloud, taking into account all of the benefits. E.g.: Microsoft Azure offers free extended security updates for certain Microsoft products that have reached the end of their life cycle.β
Based on the criteria or recommendation, the Software Asset Management application automatically selects the virtual machines that match your criteria. Once all the on-premises virtual machine have been identified, the Software Asset Management application matches those virtual machines with virtual machines on the cloud: AWS, Azure or Google Cloud.
The most optimal matching of resources is conducted, and the total cost involved is given to you. Cost for the various cloud providers: AWS and Azure is provided along with/without the cost of Bring Your Own License (BYOL). Once the decision is made to move to a particular cloud provider, a change request can be created to move forward with the implementation.
Steps to complete:
- Create a budget policy to specify a budgeted amount, cost type, reset period, and other aspects of the budget.
- Specify who can view budget data and who is notified of variances from the budgeted amount.
Relevant Demo and Tutorial Content:
- Click here to learn about managing cloud budgets.
Wrap-up
Implementing a CCM program in ServiceNow is a structured journey that enhances Cloud Cost visibility, minimizes risks, and boosts operational efficiency. By adopting the Crawl, Walk, Run approach, organizations can progressively improve their CCM maturity.
By following these phases, organizations can ensure a robust and efficient CCM program that delivers significant value.
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