Budget management helps you create spending plans, set alert thresholds, and track your budget progress in real time. When actual or predicted spending exceeds a threshold, the system automatically sends an alert notification to help you keep your spending under control.
What is budget management
Budget management is a cost optimization tool from Alibaba Cloud. It helps you efficiently monitor cloud spending and avoid unexpected costs by setting budgets for organizations, departments, projects, or specific Alibaba Cloud services.
You can track your actual spending against your budget plan. After you set a budget amount and alert rules, the system automatically sends alert notifications through email or internal messages when a threshold is triggered. This helps you stay informed about your budget status at all times.
You can also use estimate-to-actual analysis to examine trends in predicted versus actual spending. This lets you make dynamic adjustments.
Budget management supports the following two budget types:
Cost budget: This budget type primarily tracks costs generated by resources. You can set yearly, quarterly, or monthly amount-based budgets and corresponding alert thresholds by dimensions such as account and product. When the actual or predicted spending reaches an alert threshold, an alert notification is sent.
Usage and coverage budget: This budget type primarily monitors the usage and coverage of savings plans, reserved instances, and Storage Capacity Units. You can set yearly, quarterly, or monthly usage and coverage budgets and alert thresholds by dimensions such as account, region, and instance. When the usage or coverage rate reaches an alert threshold, an alert notification is sent.
When an alert threshold is triggered, the system sends a notification but does not restrict actual resource usage. You can then take action as needed.
Create a budget
If you are using budget management for the first time, you must enable it. Log on to the Expenses and Costs console. In the navigation pane on the left, find Budget Management, and click Enable for Free. After you enable the feature, you must wait 24 hours. You can use the feature only after spending data is generated for your account.
To create a budget, select a budget type, set a budget name, select a budget scope, set a budget period, configure threshold rules and alerts, and then save the budget.
Create a cost budget
Log on to the Expenses and Costs console. On the Budget Management page, click Create Budget.
Select a budget type: On the Create Budget page, select Cost budget and click Next.
Set Budget: Enter the required information in the Basic Information and Budget Plan sections.
Complete the Basic Information section for the budget.
Basic Information
Description
Budget Name
Define a suitable name based on the budget's purpose and scenario.
Enterprise/Organization/Account
For a management account (MA) with Financial Management or a multi-account organization enabled, you can create a budget for the MA or member accounts.
For a member account under Financial Management, you can create a budget only for your own account.
Budget Scope
Set the specific scope of the budget by dimensions such as cost center, owner account, region, product, product detail, and consumption type.
For a single budget, click Add to create multiple scopes.
Cycle
The period for which the budget amount is aggregated. You can set it to yearly, quarterly, or monthly.
Start and End Dates
Select the effective start and end dates for the budget based on the rolling period. We recommend that the date range does not exceed 24 rolling periods.
Remarks
Add supplementary information for the budget.
After you complete the basic information, your historical spending and future spending predictions are displayed on the right.
Complete the Budget Plan section.
Budget Plan
Description
Budget Plan Type
Select based on the rolling period and date range:
Static field: Within the date range, enter a Fixed Amount. The budget amount will be the same for each rolling period. The spending amount corresponds to the 'Amount Payable' on the bill.
Different values: Within the date range, you can customize the budget amount for each rolling period. The time you can set varies for different rolling periods:
If the rolling period is monthly, you can set the budget amount for up to 12 periods.
If the rolling period is quarterly, you can set the budget amount for up to 4 periods.
If the rolling period is yearly, you can set the budget amount for up to 3 periods.
Total Budget
This field is not editable. The total budget for each rolling period is automatically calculated based on the date range, rolling period, and budget plan type.
After you confirm the budget information, click Next.
Set Alert: Configure alert rules and notification methods for the budget. Click +Add Alerts to configure the alert. You can set up to five alerts for each budget.
Alert Content
Description
Alert Object
Actual cost (this period): Sends an alert by comparing the actual spending of the current rolling period with the budget for this period.
Predicted Value of Current Cycle: Sends an alert by comparing the predicted spending of the current rolling period with the budget for this period.
Accumulative Predicted Value: Sends an alert by comparing the predicted spending from the budget start date to the current date with the total budget.
Accumulated actual: Sends an alert by comparing the actual spending from the budget start date to the current date with the total budget.
Threshold Type
Fixed Value: A fixed amount. An alert is triggered when spending exceeds this amount.
Percentage: Calculated as a percentage of the budget amount.
Threshold
An alert is triggered when the actual value exceeds the maximum threshold.
Alert Remarks
Add supplementary information for the alert.
Message Settings
Set the method for receiving alerts. Go to the Message Center to set message recipients. Make sure that the recipients you select have a verified mailbox to avoid missing notifications.
Confirm budget information: Review the budget information, budget amount, and alert settings. After you confirm that the information is correct, click Submit to create the budget and its alerts.
You can view the actual and predicted values for a cost budget two days (T+2) after it is created.
For cost budgets, an alert notification is sent only once on the day after (T+1) an alert threshold is exceeded.
If the effective period of the budget has not started, no alert notifications are sent. A new alert takes effect after 12:00 (UTC+8) on the next day (T+1). For example, if you configure an alert at 09:00 (UTC+8) on Day 5, it takes effect after 12:00 (UTC+8) on Day 6.
Create a usage and coverage budget
Log on to the Expenses and Costs console. On the Budget Management page, click Create Budget.
Select a budget type: On the Create Budget page, select Usage or coverage budget and click Next.
Set Budget: Enter the required information in the Basic Information and Budget Plan sections.
Complete the Basic Information section for the budget.
Basic Information
Description
Budget Name
Define a suitable name based on the budget's purpose and scenario.
Enterprise/Organization/Account
For a management account (MA) with Financial Management or a multi-account organization enabled, you can create a budget for the MA or member accounts.
For a member account under Financial Management, you can create a budget only for your own account.
Deduct Resources
Supports savings plans, reserved instances, and Storage Capacity Units.
Usage or coverage budget
Usage (%): Usage reflects the utilization of resources. A higher usage rate indicates that the resource or instance is being used more fully.
Coverage: Coverage reflects the deduction ratio for pay-as-you-go resources. A higher coverage rate indicates more effective cost reduction.
Budget Scope
Savings plans: You can set the budget scope by dimensions such as resource type and instance ID.
For a single budget, click Add to create multiple scopes.
Cycle
The period for which the budget amount is aggregated. You can set it to yearly, quarterly, or monthly.
Start and End Dates
Select the effective start and end dates for the budget based on the rolling period. We recommend that the date range does not exceed 24 rolling periods.
Remarks
Add supplementary information for the budget.
After you complete the basic information, a chart on the right displays your historical usage.
Complete the Budget Plan section.
Budget Plan
Description
Budget Plan Type
Select based on the rolling period and date range:
Static field: Within the date range, enter a Budget in Percentage. The budget will be the same for each rolling period.
Different values: Within the date range, you can customize the budget percentage for each rolling period. The time you can set varies for different rolling periods:
If the rolling period is monthly, you can set the budget percentage for up to 12 periods.
If the rolling period is quarterly, you can set the budget percentage for up to 4 periods.
If the rolling period is yearly, you can set the budget percentage for up to 3 periods.
Total Budget
This field is not editable. The total budget for each rolling period is automatically calculated based on the date range, rolling period, and budget plan type.
After you confirm the budget information, click Next.
Set Alert: Configure alert rules and notification methods for the budget. Click +Add Alerts to configure the alert. You can set up to five alerts for each budget.
Alert Content
Description
Threshold
An alert is triggered when the usage or coverage rate falls below this threshold.
Alert Remarks
Add supplementary information for the alert.
Message Settings
Set the method for receiving alerts. Go to the Message Center to set message recipients.
Confirm budget information: After you review the budget information, click Submit to create the budget and its alerts.
You can view the actual values for a usage and coverage budget one day (T+1) after it is created.
View budgets
View budget information
Log on to the Expenses and Costs console. On the Budget Management page, you can view the budgets you have created, including information such as Type, Budget Name, Total Budget, Actual Total Amount, and Status:
Type: Cost budget or Usage or coverage budget.
Total Budget: The total cost, usage rate, or coverage rate from the budget start date to the end date.
Actual Total Amount: The actual cost, usage rate, or coverage rate incurred from the budget start date to the current date.
Estimated Total Amount: The predicted spending, usage rate, or coverage rate for the entire budget period.
Actual Total Amount/Total Budget: The actual progress of the budget.
Budget Scope: Click the View button to view the scope information, such as associated accounts, products, and regions.
For each budget, you can perform operations such as Edit, Copy, and Delete. You can also download and export the budget list.
View estimate-to-actual analysis
Select a budget and click Estimate-to-Actual Analysis in the Actions column on the right to view a comparison between your budget and actual spending.
The predicted value is based on your historical spending and may differ from the actual costs. The prediction data is for reference only.
Estimate-to-Actual Trend: Shows the monthly growth trend of the total actual spending and total predicted spending.
Current Period Estimate vs. Actual: Shows the ratio of the current period's total actual spending and total predicted spending to the current period's total budget. Predictions are not supported for usage and coverage budgets.
Budget Records: Shows the actual value, budget value, and the difference between them for each rolling period within the budget's start and end dates.
Spending Details:
For a cost budget, click Actual Expenses for a single rolling period to navigate to and view detailed spending data for that date.
For a usage and coverage budget for a savings plan, click Actual Expenses for a single rolling period to navigate to and view detailed resource spending data for that date.
Alert Settings: Click Set Alert Notifications in the upper-right corner of the page to modify the alert settings for this budget.
Legacy console instructions
Log on to the Expenses and Costs console. In the navigation pane on the left, click to perform operations. The overall process is the same as described above.
How to create an effective budget
An effective budget provides a clear financial roadmap, enabling cost optimization without sacrificing business growth.
Step 1: Analyze historical spending data and establish a baseline
Review your cloud spending bills from the last 3 to 6 months to identify fixed and variable monthly expenses:
Stable costs: Identify relatively fixed monthly expenses, such as long-running servers, reserved instances (RIs), and database services. These form your cost baseline.
Variable fluctuations: Look for cyclical fluctuations, such as peak and off-peak consumption changes between day and night, to better predict future trends. Identify abnormal peaks, such as cost spikes caused by sudden events, data migrations, or performance tests. Exclude these one-time costs from your baseline.
Step 2: Refine cost estimates based on business growth
Communicate with relevant business and development teams to understand recent business changes:
New projects or features going live: Are there new applications to deploy? What new cloud services, such as AI or machine learning (ML) services, are expected to be introduced? Estimate the initial costs.
User or traffic growth: This may require you to reserve computing and bandwidth resources for higher traffic.
Architectural changes: Are there plans for service migration, technology stack upgrades, or architectural refactoring?
Data volume growth: Is your monthly data storage requirement steadily increasing? This will affect the expected costs for storage and backups.
Step 3: Refine the budget scope for accurate cost allocation
Break down the overall budget into smaller sub-budgets with clear team responsibilities. Consider segmenting the budget by the following dimensions:
By project/product line: You can set a budget for each independent product or project.
By team/department: You can allocate budgets to specific teams, such as the development team, QA team, or marketing department.
By environment: You can set separate budgets for production, staging, and development environments to prevent resource abuse in non-production environments.
By cost center: For large enterprises, you can divide budgets according to internal financial cost centers.
The segmentation dimension should be combined with the budget management scope. This requires you to create an association mapping when you plan the account system and design the cost center structure.
Step 4: Set the amount and reserve a buffer
The cloud environment is flexible and uncertain. We recommend adding a buffer of 10% to 20% on top of the historical average spending and estimated incremental costs. This buffer can be used to handle sudden performance issues, urgent scale-out needs, or unexpected usage growth.
Therefore, the final formula is: Budget Amount = (Historical Spending Baseline + Future Incremental Costs) × (1 + Buffer Percentage)
Step 5: Configure alerts and a tiered feedback mechanism
You can use alert rules to receive advance notice of budget progress to ensure timely control:
Set multi-level threshold alerts:
50% (Notice/FYI): Send a reminder email to the project owner, informing them that 50% of the budget is consumed and the current status is normal.
80% (Warning): Send a warning message to the team, reminding them to monitor the spending growth rate and check for any abnormalities.
100% (Critical): Send a top-level alert to the owner and finance department, indicating that the budget is exhausted and requires an immediate review.
We recommend using "predicted spending" alerts. When the predicted spending is about to reach 100% of the budget, you will have enough time to adjust the actual consumption.
Step 6: Conduct regular reviews and iterations
Hold monthly or quarterly cost review meetings to analyze the estimate-to-actual drift and its causes. Determine if there are any unconsidered cost items and if the current business development goals are being met. Dynamically adjust the next budget based on the review results for continuous optimization.