COST03-01 Developing Cost Allocation Principles

High

Cost allocation enables enterprises to allocate costs to business teams, making costs of each business team clearly visible. This is also the basis of team responsibilities specified above. Based on clear costs, business departments can provide cost-effective solutions with properly priced products and a balance between costs, stability, and performance. Enterprise managers can make informed decisions on cloud expenditures of each business, ensuring that expenditures of core and strategic businesses are within the budget and no waste occurs.

Cost allocation follows the principles below to match business needs:

• Costs are allocated to specific users. They are allocated to the entity that actually incurred costs not to the one that purchased the services.
• Costs are allocated based on the actual consumption. For example, if you purchased a yearly subscription at USD 365 in January, the cost is allocated to January based on the expenditure. If you want to allocate the cost based on the consumption, the allocation is performed throughout the subscription period, with USD 1 recorded for each day within the year. This method of cost allocation better reflects cost accountability.
• Shared costs should also be allocated within organizations. Good examples of sources for shared costs include shared resources, platform services, support plans, and untagged resources. When shared costs are allocated, the increased visibility encourages the various business units to use shared resources more appropriately to reduce waste.

Huawei Cloud Cost Center supports allocation for costs of yearly/monthly resources and resource packages based on the actual users and consumption.