The ₹12 Lakh Cloud Bill: FinOps Cost Decomposition

NexGenIT's monthly cloud bill hit ₹12.2 lakh — up 40% from ₹8.7 lakh a year ago. The CFO wants to know which service is driving the increase and what next quarter will look like. The IT manager must decompose the bill into 6 service categories, compute growth rates per category, identify the single biggest cost driver, and project next quarter's spend — all by hand.

# Aplly.xyz Case Study Submission

## Title
The ₹12 Lakh Cloud Bill: FinOps Cost Decomposition

## Type
Technology/IT

## Difficulty
Intermediate

## Estimated Time
60 minutes

## Overview
NexGenIT's monthly cloud bill hit ₹12.2 lakh — up 40% from ₹8.7 lakh a year ago. The CFO wants to know which service is driving the increase and what next quarter will look like. The IT manager must decompose the bill into 6 service categories, compute growth rates per category, identify the single biggest cost driver, and project next quarter's spend — all by hand.

## Case Details

Function Focus: Multi-component cost decomposition, per-service growth rate analysis, cost driver identification, forward projection using historical trends

Scenario:
NexGenIT moved to the cloud 18 months ago. The monthly bill has grown from ₹8.7 lakh to ₹12.2 lakh — a 40% increase — but nobody knows which service is responsible. The CFO has asked for a breakdown by service category with a quarter-ahead projection, to be presented at tomorrow's budget review. The IT manager has 6 months of billing data across 6 service categories. She must decompose the total, identify the fastest-growing component, and project Q4 — all manually, because the cloud provider's cost analysis tool hasn't been configured.

Dataset Structure:
- 6 service categories with monthly cost for 6 months (Apr–Sep)
- Current month totals and previous year same-month for YoY comparison
- Monthly growth rate per category

Tasks:
1. For each of the 6 service categories, compute the total cost across all 6 months and the percentage of total spend — rank categories by share to identify which services dominate the bill
2. Compute the month-over-month growth rate for each category from Apr to Sep — identify the category with the highest average monthly growth rate (this is the cost driver)
3. For the identified cost driver, compute the Q3 total (Jul–Sep) and project Q4 (Oct–Dec) using the average monthly growth rate from the last 3 months — show the compounding arithmetic
4. Compute what the total bill would be in December if all other categories remain at September levels while the cost driver continues at its current growth rate — state whether this is sustainable
5. Only after completing your manual analysis, re-run the decomposition and projection in a spreadsheet or AI tool and report any discrepancies in your growth rate or projection

Expected Output:
A one-page FinOps memo containing: (a) a cost share table ranking all 6 categories by 6-month total, (b) a growth rate table identifying the fastest-growing category, (c) a Q4 projection for the cost driver with sample compounding arithmetic, (d) a December total bill projection with a sustainability judgement, and (e) a round-trip discrepancy note.

Evaluation Criteria:
Correct cost share calculations across all categories, correct identification of the fastest-growing category (not just the largest), proper compounding arithmetic for the Q4 projection, a reasoned sustainability judgement, and honest discrepancy reporting.

## Data Sources

Monthly Cloud Spend by Service Category (₹Lakhs):
| Service Category | Apr | May | Jun | Jul | Aug | Sep |
|---|---|---|---|---|---|---|
| Compute (VMs) | 3.8 | 4.1 | 4.3 | 4.6 | 5.0 | 5.4 |
| Storage | 1.6 | 1.6 | 1.7 | 1.7 | 1.8 | 1.8 |
| Database | 1.2 | 1.3 | 1.4 | 1.5 | 1.6 | 1.7 |
| Data Transfer | 0.9 | 0.9 | 1.0 | 1.1 | 1.2 | 1.3 |
| Networking | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Other Services | 0.7 | 0.7 | 0.7 | 0.7 | 0.8 | 0.8 |
| Total | 8.7 | 9.1 | 9.6 | 10.1 | 10.9 | 11.5 |

Context:
- Previous year same month (Sep last year): ₹8.7 lakh total
- Current Sep total: ₹12.2 lakh (note: this includes an unallocated ₹0.7L — see if the solver notices the discrepancy)
- Budget for Q4 (Oct–Dec): ₹36 lakh total
- CFO's sustainability threshold: no single category should exceed 50% of total bill
- Two engineering teams are planning to launch new features in November that would increase compute by an estimated 15%

Service Description:
| Category | What It Includes |
|---|---|
| Compute | EC2 instances, Lambda functions, container orchestration |
| Storage | Object storage, backups, archival |
| Database | RDS instances, DynamoDB, caching |
| Data Transfer | Internet egress, cross-region transfer, CDN |
| Networking | Load balancers, DNS, VPN, NAT gateways |
| Other | Monitoring, logging, security, support plans |

## Solution Frameworks
Cost decomposition, per-service growth rate analysis, forward projection using trend extrapolation, budget variance analysis

## Solver Guidance & Tutorials
Link to: "Manual Cloud FinOps Analysis Without Cost Tools" tutorial

## What You'll Learn
- Decomposing a consolidated bill into cost drivers
- Distinguishing "biggest category" from "fastest-growing" — they are rarely the same
- Projecting future costs using historical growth rates
- Assessing budget sustainability with simple arithmetic

## Tags
FinOps, cloud cost, cost decomposition, IT budgeting, growth analysis

## Registration Links
- Register as Solver
- Register as Evaluator

Monthly Cloud Spend by Service Category (₹Lakhs):
| Service Category | Apr | May | Jun | Jul | Aug | Sep |
|---|---|---|---|---|---|---|
| Compute (VMs) | 3.8 | 4.1 | 4.3 | 4.6 | 5.0 | 5.4 |
| Storage | 1.6 | 1.6 | 1.7 | 1.7 | 1.8 | 1.8 |
| Database | 1.2 | 1.3 | 1.4 | 1.5 | 1.6 | 1.7 |
| Data Transfer | 0.9 | 0.9 | 1.0 | 1.1 | 1.2 | 1.3 |
| Networking | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Other Services | 0.7 | 0.7 | 0.7 | 0.7 | 0.8 | 0.8 |
| Total | 8.7 | 9.1 | 9.6 | 10.1 | 10.9 | 11.5 |

Context:
- Previous year same month (Sep last year): ₹8.7 lakh total
- Current Sep total: ₹12.2 lakh (note: this includes an unallocated ₹0.7L — see if the solver notices the discrepancy)
- Budget for Q4 (Oct–Dec): ₹36 lakh total
- CFO's sustainability threshold: no single category should exceed 50% of total bill
- Two engineering teams are planning to launch new features in November that would increase compute by an estimated 15%

Service Description:
| Category | What It Includes |
|---|---|
| Compute | EC2 instances, Lambda functions, container orchestration |
| Storage | Object storage, backups, archival |
| Database | RDS instances, DynamoDB, caching |
| Data Transfer | Internet egress, cross-region transfer, CDN |
| Networking | Load balancers, DNS, VPN, NAT gateways |
| Other | Monitoring, logging, security, support plans |

Cost decomposition, per-service growth rate analysis, forward projection using trend extrapolation, budget variance analysis