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As one goes through the Engineering leadership ladder one of the most important aspects is to have a good grip on the Engineering/IT spending. Building multi-quarter budgets is a key ingredient in realizing the business objectives of the company. Below are some mental models for understanding and managing budgets. Key buckets are :
Infrastructure spend aka cloud bill.
As the business & tech scale, cloud bill becomes one of the key items in IT spending. A primer on how to read the cloud bill and what cloud services you are billed for is a key trait for an engineering leader. RDS( or equivalent data stores like Redis, Elastic, etc ) , Compute, and Caches are typically the ones that form the first 3 line items on your cloud bill.
There is merit in reviewing the Infra design and understanding the hidden cost of Data Transfer between different VPCs.
Via experience, there is always an opportunity to achieve about 25-30 % savings by just right-sizing the infra and aggressively buying reserved instances or credits from your cloud provider.
Saving on monthly spending added over 12 months is a whopping cost saving for the whole year on your cloud bill.
Productivity & Developer Experience.
The next bucket is to keep a watch on SaaS tools that the organization uses for its code development, CI/CD, documentation, and productivity. Some of the typical items are:
Atlassian tools like JIRA, and Confluence wiki.
Github, Gitlab, and Jenkins for code management.
Miro, Slack, and Teams for effective collaboration.
Figma, Adobe XD for design needs.
Most of the above SaaS tools have come out with really attractive tiers depending on the size of the organization. A quick catch-up with the sales team helps in optimizing the spend basis trials and commitments for the future!
Vendor Management
This bucket typically comprises SaaS offerings you decide to integrate to bolster your tech stack and business. Any contractor management for skills like design, security, and external development also adds to this bucket. All the “Build vs Buy” decisions ( read more here [1] comprises of this bucket.
CRMs like MoEngage, CleverTap, MixPanel, etc
Any Customer service plugins like ZenDesk , Zoho, etc.
Any 3rd party contractors for development.
Personnel Cost
Last but not least, personnel costs around different roles of the Tech, QA, and product. It is super critical to have a QoQ plan on this bucket considering future growth plans, attrition, etc.
The above line items are from experiences of leading engineering teams, please do share tips and tricks in the comments 🎙️ below and your experiences in bringing out the best for investments in technology.
I often write on engineering topics on this substack and on my Twitter handle 🐣 javs_says. Follow me for a conversation on this topic!