Concepts

Amazon Web Services (AWS) Organizations offers a range of tools to manage and govern your environments across multiple AWS accounts. One of the powerful features of AWS Organizations is consolidated billing, which simplifies the billing process for organizations with multiple AWS accounts by enabling them to receive a single bill for all accounts within their organization.

Consolidated Billing in AWS Organizations

Consolidated billing is a feature that allows you to combine the usage from all accounts in your organization and to leverage volume pricing discounts. Each AWS account in an organization operates independently, but AWS consolidates their usage to make sure you can maximize your savings.

Benefits of Consolidated Billing Include:

  • Aggregated Volume Discounts: All accounts in an organization contribute to the total usage, potentially qualifying the organization for volume discount tiers on services such as Amazon S3 and EC2 instances.
  • Combined Free Tier Usage: Each AWS account receives the benefits of the AWS Free Tier. When accounts are part of an organization, their usage is combined, offering a higher limit compared to a single standalone account.
  • Simplified Payment Method: A single payment method is used for all the accounts in your organization which simplifies the management of your AWS accounts.
  • Detailed Cost Reports: Organizations can access detailed cost reports that make it easier to track how much each account spends.

How it Works:

When you enable consolidated billing, you designate one account within the organization to be the management account (formerly known as “master account”). The management account is responsible for paying all charges that are incurred by the member accounts. Member accounts are the other accounts in the organization that are linked to the management account.

Allocation of Costs

In an organization with multiple accounts, it’s crucial to understand not just the total cost, but also how those costs are distributed among the accounts. Properly allocating costs can help with budgeting, forecasting, and managing resources efficiently across the organization.

Methods of Cost Allocation Include:

  • Tags: You can tag resources with custom key-value pairs to categorize and track your AWS costs. By using cost allocation tags, you can break down your AWS bill according to the tags you’ve defined, such as project, environment, or department.
  • Cost Explorer: AWS Cost Explorer is a tool that allows you to visualize and manage your AWS costs and usage over time. It can provide insights into your spending patterns and help you to understand cost drivers and trends.
  • AWS Budgets: AWS Budgets allows you to set custom budgets that alert you when your costs or usage exceed (or are forecasted to exceed) your budgeted amount. Budgets can be created at the account level or for specific tags.

Example of Cost Allocation Using Tags:

Suppose you have an organization with multiple AWS accounts for various departments like R&D, Marketing, and HR. You’ve tagged all R&D-related resources with the key Department and value R&D. At the end of the month, you use the Cost Explorer to filter by the tag Department: R&D to see the total cost incurred by the R&D department.

Generating a Cost and Usage Report:

To gain detailed insights into the costs and usage of your AWS accounts, you can set up the AWS Cost and Usage Report (CUR). The report includes hourly and daily line items for each service used by an account and its associated tags, allowing for in-depth analysis of costs and usage.

Here’s a simplified example of what a section of the CUR might look like:

Account ID Service Usage Type Tag: Department Cost ($)
1234567890 Amazon EC2 US East (N.Virginia) R&D 1000
1234567890 Amazon S3 Requests-Tier1 Marketing 200
2345678901 Amazon EC2 EU (Frankfurt) HR 750
2345678901 Amazon RDS Multi-AZ-Instance R&D 500

In this table, the costs are broken down by an account, service, usage type, department, and the actual cost incurred.

Managing Costs Across Multiple Accounts

Cost management across multiple accounts within an organization hinges on effectively setting up and understanding consolidated billing, cost allocation techniques, and utilizing the tools AWS provides to analyze and report on cost data. The AWS Certified Cloud Practitioner exam will expect you to understand these concepts and how they can be leveraged to control and manage costs at the scale of an enterprise.

By mastering consolidated billing, cost allocation methods, and reporting tools, organizations can ensure they make informed decisions regarding their cloud expenditure, providing transparency and predictability of AWS costs.

Answer the Questions in Comment Section

True/False: AWS Organizations helps you centrally manage and govern your environment as you grow and scale your workloads on AWS.

  • a) True
  • b) False

Answer: a) True

Explanation: AWS Organizations enables you to set up a single payment method for all the AWS accounts in your organization through consolidated billing, which aids with cost management as you expand your AWS workloads.

True/False: In AWS Organizations, each linked account receives a separate bill based on its own usage.

  • a) True
  • b) False

Answer: b) False

Explanation: AWS Organizations uses consolidated billing. This means all accounts within the organization have their charges combined, and a single bill is issued to the master account for all accounts’ usage.

Multiple Select: Which of the following AWS services can be used in conjunction with AWS Organizations to help manage costs? (Select TWO)

  • a) AWS Budgets
  • b) Amazon EC2
  • c) AWS Cost Explorer
  • d) AWS Lambda
  • e) Amazon RDS

Answer: a) AWS Budgets, c) AWS Cost Explorer

Explanation: AWS Budgets and AWS Cost Explorer are tools that specifically help with managing and analyzing your costs in AWS. They can be used alongside AWS Organizations to better understand and optimize spending.

True/False: In AWS Organizations, it is possible to apply Service Control Policies (SCPs) to specific organizational units (OUs) to control costs.

  • a) True
  • b) False

Answer: a) True

Explanation: Service Control Policies (SCPs) can be applied to organizational units or even specific accounts within AWS Organizations to enforce permission boundaries and therefore contribute to cost control.

Single Select: What feature of AWS Organizations helps to simplify the billing process by enabling the setup of a centralized payment method?

  • a) Cost Allocation Tags
  • b) Detailed Billing Report
  • c) Consolidated Billing
  • d) AWS Cost and Usage Report

Answer: c) Consolidated Billing

Explanation: Consolidated Billing is a feature of AWS Organizations that simplifies the billing process by accumulating usage from all accounts in the organization and providing a single payment method.

True/False: Once your AWS accounts are part of an organization, the pricing benefits from aggregated usage, such as volume discounts, are applied automatically.

  • a) True
  • b) False

Answer: a) True

Explanation: When AWS accounts are part of an organization, they can take advantage of aggregated usage and receive volume discounts on services like Amazon S3 and EC

Single Select: What can be used to categorize and track your AWS costs and usage?

  • a) AWS Cost Explorer
  • b) Cost Allocation Tags
  • c) Service Control Policies (SCPs)
  • d) AWS Budgets

Answer: b) Cost Allocation Tags

Explanation: Cost Allocation Tags can be used to associate costs with specific projects or departments, which helps in tracking and categorizing AWS costs.

True/False: Enabling Amazon S3 bucket-level public access is a feature available within AWS Organizations.

  • a) True
  • b) False

Answer: b) False

Explanation: AWS Organizations does not have direct features to manage Amazon S3 bucket-level public access. This setting is managed within the Amazon S3 services, not AWS Organizations.

True/False: In AWS Organizations, Reserved Instances (RIs) discounts are not applied across the entire organization.

  • a) True
  • b) False

Answer: b) False

Explanation: Reserved Instances discounts can be shared across all accounts within an organization, optimizing the cost benefits across the organization.

Single Select: Which of the following is NOT an aspect of AWS Organizations’ consolidated billing?

  • a) Single bill for all AWS accounts
  • b) Automatic cost optimization
  • c) Volume discounts based on aggregated usage
  • d) Ability to track charges and allocate costs

Answer: b) Automatic cost optimization

Explanation: AWS Organizations’ consolidated billing provides a single bill for all accounts, volume discounts from aggregated usage, and the ability to allocate costs effectively but does not automatically optimize costs; this requires manual intervention or additional services/tools.

True/False: AWS Organizations only consolidates billing for accounts within the same region.

  • a) True
  • b) False

Answer: b) False

Explanation: AWS Organizations’ consolidated billing includes all accounts regardless of the region, as AWS accounts can span multiple regions.

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Afet Akman
6 months ago

Thanks for this informative post on AWS Organizations and consolidated billing. It really clarified my doubts.

Xisto Monteiro
8 months ago

Great explanation. But I was wondering, how does consolidated billing impact the cost allocation tags?

Emma Robin
6 months ago

Appreciate the detailed steps. This will help me prepare for the AWS Certified Cloud Practitioner exam.

Emilie Johnson
8 months ago

Excellent post, but how do credits and discounts apply across linked accounts in consolidated billing?

David Murphy
6 months ago

I noticed that the data from linked accounts is aggregated in the management account. Can you filter this data by account?

Jeanne Nicolas
8 months ago

This is really helpful. Thanks!

Alan Vargas
6 months ago

How often is the billing data updated in the management account when using consolidated billing?

Isabelle Kumar
8 months ago

Solid post. It helped me understand cross-account permissions better in the context of billing and cost management.

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