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Chapter 56: Observability & Cost Engineering

Your agent is deployed and automated. But can you answer: Is it healthy? Why did that request fail? How much is it costing? Observability provides the answers through metrics, logs, and traces. Cost engineering ensures you're not burning money on over-provisioned resources.

This chapter teaches the three pillars of observability (metrics, logs, traces) with OpenTelemetry, plus practical cost optimization for AI workloads—where LLM API calls can quickly become your largest expense.

What You'll Learn​

By the end of this chapter, you'll be able to:

  • Understand observability pillars: Metrics, logs, traces, and their relationships
  • Implement OpenTelemetry: Instrumentation for Python FastAPI services
  • Collect metrics: Prometheus for system and application metrics
  • Aggregate logs: Structured logging with Loki or cloud solutions
  • Trace requests: Distributed tracing across services with Jaeger
  • Build dashboards: Grafana dashboards for agent health and performance
  • Set up alerting: Alert on errors, latency, and resource exhaustion
  • Optimize costs: Right-sizing, spot instances, and LLM API cost management

Chapter Structure​

  1. Observability Fundamentals — Why observability? The three pillars explained
  2. OpenTelemetry Setup — Instrumentation, exporters, and collectors
  3. Metrics with Prometheus — Collection, queries, and PromQL basics
  4. Logging Best Practices — Structured logs, levels, and aggregation
  5. Distributed Tracing — Trace context, spans, and debugging slow requests
  6. Grafana Dashboards — Visualization, panels, and dashboard design
  7. Alerting & Incidents — Alert rules, escalation, and incident response
  8. Cost Engineering — Resource optimization, LLM costs, and budgeting
  9. Capstone: Observable Agent — Add full observability to your deployed agent

Prerequisites​

  • Chapter 55: Deployed agent with CI/CD
  • Running Kubernetes cluster (Minikube or cloud)

Looking Ahead​

You can now see inside your system. Chapter 57 adds traffic management (API gateway), and Chapter 58 secures everything for production use.