CloudThrottle utilizes a range of Patented and Patent pending Techniques utilized to automate budget management in the Cloud Budget Management. This setting it apart from competitors who rely on manual entry of monthly budgets or basic distribution methods that are time-consuming and prone to errors. These advanced techniques are designed to streamline and optimize budgeting activities, ensuring improved accuracy and enhanced efficiency. Here are some of the automation techniques employed by CloudThrottle for efficient budget management.
Topics
- Base Budget
- Budget Prorate
- Budget Rollover
- Budget Triggers and Thresholds
- Soft Caps and Hard Caps
- Budget Override Flag
- Budget Override Amount
- Additional funds
- Budget Modification
Base Budget: Refers to the initial or foundational financial plan or allocation amount for a specific project on a Cloud account. It serves as the starting point for budgeting and as a benchmark against any changes or modifications. The base budget sets the framework for financial planning and decision-making, providing a reference point for evaluating performance and determining the need for adjustments or additional funding.
Budget Prorate: CloudThrottle automatically prorates at the beginning of budget creation and during end of every month which allows for accurate tracking and reporting of budgetary performance
- Automated Budget Prorate: Budget proration involves proportionally allocating a budget based on a specific time period. It is used when a budget does not align precisely with a standard period, such as a fiscal year or calendar month. The total budget amount is divided or adjusted to match the duration of the given time period. Budget proration allows for accurate tracking and reporting of budgetary performance within specific timeframes.
- ~Example: If a budget is set for $120,000 for an 10-month period, the monthly budget proration would allocate $10,000 for each month.
- This concept allows for more accurate tracking and reporting of budgetary performance within specific timeframes, providing a clearer picture of expenditures and enabling better decision-making.
- Budget proration helps when there are changes or adjustments to the original budget during the course of a specific period. In such cases, the revised budget is prorated and allocated accordingly to reflect the updated financial plan.
- By utilizing the budget prorate concept, organizations can ensure that financial resources are allocated and managed appropriately, facilitating better control and visibility over their budgetary processes.
Budget Rollover: CloudThrottle automatically rollover any unused or unspent portion of a budget from one period to the next instead of resetting the budget to zero at the end of a specific time period, any remaining funds are carried forward and made available for use in subsequent periods. This ensures that the unutilized budget is not lost but can be allocated and utilized effectively.
Budget rollover provides several benefits to organizations, including:
- Continuity: Budget rollover allows for a seamless transition between budget periods, ensuring continuity in financial planning and resource allocation. It avoids disruptions caused by sudden budget resets and provides stability for ongoing projects and initiatives.
- Efficient Resource Utilization: Carrying forward unused funds enables organizations to maximize the utilization of available resources. It allows for better planning and allocation of funds, especially for long-term projects that require consistent funding across multiple periods.
- Improved Accuracy: Budget rollover enhances accuracy in financial forecasting and planning. By carrying forward the remaining budget, organizations can make more informed decisions based on actual spending patterns and adjust future budgets accordingly.
- Strategic Flexibility: Budget carryover provides flexibility in adjusting budgets to align with changing business needs or priorities. Organizations can allocate carried-over funds to new initiatives, address unforeseen expenses, or capitalize on emerging opportunities.
- Avoidance of "Use It or Lose It" Mentality: Budget rollover discourages a "use it or lose it" mentality, where departments or teams rush to spend their remaining budget at the end of a period to avoid losing funds. It promotes a more strategic and thoughtful approach to budget utilization throughout the year.
- ~Let's consider an example where your company has allocated an annual Cloud budget of $120,000 on a cloud account, equivalent to $10,000 per month. At the end of the first month, the actual cloud spending amounts to only $8,000, leaving $2,000 unused. In a budget rollover scenario, this remaining $2,000 would be carried forward to the next budget period. Consequently, instead of starting with a fresh budget of $110,000 ($120,000 - $10,000 = $110,000), the total budget would be adjusted to $112,000 ($110,000 + $2,000).
- ~Moving on to the second month, the actual spending amounts to $6,000, leaving a balance of $4,000. This remaining $4,000 will be carried forward to the subsequent budget period, which spans the remaining 10 months. Instead of starting with a fresh budget of $100,000 ($120,000 - ($10,000 + $10,000) = $100,000), the adjusted total budget will be $106,000 ($112,000 - $6,000).
- ~In this way, CloudThrottle budget rollover ensures that the unutilized funds from previous periods are carried forward, allowing for more efficient allocation of resources and flexibility in budget management.
Budget Triggers and Thresholds: An essential component of effective financial management strategies. They serve as tools to monitor, evaluate and control budgets within your organization.
Budget triggers are predefined events or conditions that act as signals for initiating specific actions or interventions in the budgeting process. These triggers are typically tied to the percentage actual spent amount on the monthly allocated budget. When a budget trigger is activated based on the Threshold set, it prompts stakeholders to review the situation, assess the impact on the budget, and take appropriate actions to maintain financial stability and alignment with organizational objectives.
Soft Caps and Hard Caps: Soft caps and hard caps are concepts associated with budget thresholds, representing different levels of limits or boundaries within budget management:
- Soft Caps: A soft cap is a threshold that indicates a warning level or guideline within the budget. When the budget reaches or exceeds the soft cap, it signals that closer attention and monitoring are required. It prompts stakeholders to review spending patterns, reassess resource allocation, and take proactive measures to prevent further deviations or potential budget overruns. Soft caps provide flexibility for adjustments and proactive management.
- ~Soft Cap Example: Suppose a company establishes a Soft Cap of 65% for the monthly budget of an account to oversee and regulate cloud spending. When the monthly Cloud Spending approaches or exceeds this Soft Cap of 65%, it activates warning alerts to prompt scrutiny, evaluation, and alignment with the overall budget objectives.
- Hard Caps: On the other hand, a hard cap represents a strict limit or boundary that must not be exceeded under any circumstances. It is an absolute maximum or ceiling on an allocated monthly budget. When the budget reaches or exceeds the hard cap, it triggers immediate actions, such as restricting spinning more Cloud Resources, implementing cost-saving measures, seeking approval to Override preset percentage consumption on the monthly budget, or adding Additional funding. Hard caps are put in place to enforce strict budgetary controls and prevent excessive spending or financial risks.
- ~Hard Cap Example: In this scenario, the company sets a Hard Cap of 80% on the monthly budget for an account, which acts as the maximum limit for Cloud Spending. If the project expenses reach or exceed the 80%threshold, CloudThrottle restricts resource allocation. The project manager may need to halt non-essential activities, renegotiate contracts, or seek approval to Override the 80% cap and access the remaining budget or secure Additional funds if necessary.
Budget Override and Additional Funds: Budget Overrides and Additional Funds play pivotal roles in budget management, empowering organizations to adapt to flexibility, changing circumstances, address unexpected needs, and pursue strategic initiatives that surpass initial budget constraints. However, it is crucial to exercise proper justification and accountability when employing budget overrides and accessing additional funds. This preserves fiscal discipline, ensures efficient resource utilization, and mitigates the risk of cloud waste.
CloudThrottle offers two Budget Override settings to cater to different scenarios.
- Budget Override Flag: This setting enables the Override Flag to surpass a Cloud account's predefined Hard Caps or budgetary limits. By activating the budget "Override Flag," the project gains access to the total allocation of monthly funds, ensuring project continuity and fulfilling crucial operational requirements.
- ~Consider a scenario where a company establishes a Hard Cap of 80% on the monthly budget for a Cloud account. Unexpected costs arise, causing the Cloud Spending to exceed 90% of the allocated budget. In this case, a Budget Override is granted, activating the "Override Flag" in the CloudThrottle and allowing the project to utilize the remaining 20% of the budget to address the unforeseen costs.
- Budget Override Amount: Represents the additional funds granted to a project or cloud account for that month, exceeding the predefined budgetary limits or caps. Utilizing this CloudThrottle setting makes it possible to input an extra amount into the project for a specific month in addition to the monthly allocated budget.
- ~Example: A project has a monthly budget of $10,000, but unforeseen costs arise in a specific month. A Budget Override is approved, providing an additional $2,000 to address the unexpected expenses.
- Additional funds: Refer to extra financial resources obtained or allocated to augment the existing budget for a specific period. These funds provide the flexibility to address unforeseen costs, extend project scope, support testing, experiment with new methodologies, or capitalize on strategic opportunities that exceed the original budgetary limits.
- ~Example: A project with a $120,000 annual budget encounters an unexpected opportunity for a new proof of concept. To accommodate this activity, an additional $20,000 is allocated for a two-month period, without modifying the original budget. With these additional funds, the project can expand its scope and successfully carry out the new proof of concept.
Budget Modification: Modifying the budget involves adjusting the allocated amount or budget period for a specific cloud account. This adjustment can include increasing or decreasing the budgeted amount or changing the duration of the budget period. The purpose of modifying the budget is to accommodate changes in project requirements, unexpected circumstances, or shifts in organizational priorities. By making these adjustments, the budget remains aligned with the project's needs and enables effective financial management throughout its lifecycle.
- CloudThrottle provides the flexibility to modify the base budget. Throughout the budget's duration, CloudThrottle allows up to five modifications to adjust the budget amount or modify the budget period.
- ~Example: Imagine a project with an initial budget of$120,000. However, as the project advances, it becomes apparent that additional resources are necessary to fulfill the evolving requirements. To accommodate this, the project manager changes the budget to $160,000.