Navigating the multicloud world: a FinOps journey
In my role as a CTO, I have had the privilege of meeting with industry leaders managing the IT systems for various organizations. These departments weren't just responsible for complex IT infrastructure; they also played a vital role in critical business processes. The common theme in our discussions with CIOs and CTOs was the challenge of efficiently managing hybrid cloud expenses.
Hybrid cloud: A double-edged sword
In the ever-evolving landscape of cloud computing, single-cloud setups have become outdated. Today, adopting multi-cloud and hybrid cloud solutions is essential for businesses looking to stay competitive. While these strategies offer flexibility and scalability, they bring along a host of financial challenges.
One such encounter involved a substantial healthcare department responsible for overseeing IT systems for hospitals and enhancing patient care. Their passion for improving patient outcomes was evident in every conversation, but every new innovation increased the complexity of managing diverse cloud resources.
Amidst this complexity, a common challenge emerged: effectively controlling cloud spending. A commitment to better patient outcomes should not be hindered by unexpected cloud costs, inefficient resource usage, or a lack of financial transparency.
To address the financial complexity of multi-cloud operations, many organizations are turning to FinOps – financial operations for the cloud era. FinOps help enterprises align innovation with fiscal responsibility, and for many can be the first step on a transformative journey.
Regaining control of costs
When businesses integrate cloud management into their daily operations, it shows a strong commitment to effectively managing costs. It becomes a part of the organization and highlights the importance of wisely handling expenses related to cloud services.
Cloud management tools are essential for managing cloud costs and provide insights into how different departments and functions utilize cloud services. These insights enable data-driven decisions to be made and ensure the optimal utilization of resources.
Financial discipline requires accountability, especially when it comes to expenses. This principle applies equally to managing cloud costs. By assigning individuals as owners of the cloud budget at various organizational levels, businesses can establish responsibility and ensure active oversight of each cost element. This not only brings clarity, but also fosters a sense of accountability.
Additionally, businesses need to establish expectations regarding expenditure. Setting benchmarks for cloud spending and implementing mechanisms for managing deviations from these benchmarks allows companies to prevent potential cost escalations before they become significant financial challenges.
Sometimes people may provision resources then forget about them, which could increase expenses. Businesses can prevent this situation by setting up alerts for dormant resources to promptly identify and address these overlooked costs. Responding to these alerts is incredibly important, and addressing them can rectify discrepancies before they have a chance to impact your costs. Adopting this approach helps prevent oversights from turning into significant financial implications.
In the changing cloud environment, regular optimization becomes essential. This involves evaluating and tuning resources based on evolving needs. Whether scaling up to meet increased demand or scaling down, regular and informed optimization actions are crucial.
Businesses should also consider exploring the benefits of reserved capacity. By committing to longer term usage agreements, companies can often take advantage of discounted rates for cloud services. Over time, these discounts can lead to savings — making reserved capacity a wise strategy for many organizations.
How does FinOps work?
FinOps continuously collects data through customer resources and cloud cost management tools. This information becomes the foundation for the cloud consumption dashboard, which provides reports on cloud expenses, ongoing monitoring, in-depth cost analysis and valuable suggestions for optimizing costs.
How can your company benefit from FinOps?
Maintaining visibility across cloud ecosystems offers significant advantages for companies operating in the multi-cloud and hybrid cloud landscape. The benefits include:
- Promoting a sense of accountability, which is essential for financial management. Businesses can accurately allocate costs to specific departments or units when they have a deep understanding of their cloud framework. This transparency not only helps in budgeting but also prevents any surprises that can disrupt financial planning.
- Generating tangible cost savings. By incorporating automation and diligently following tailored FinOps guidelines for cloud set-up and management, companies can unlock substantial reductions in their cloud-related expenses. In some cases, these savings could reach up to 25%, providing a significant financial advantage for the organization.
However, the advantages of embracing FinOps principles go beyond mere cost optimization. It also enhances overall efficiency. By fostering collaboration among departments and aligning cloud expenditures with business objectives, businesses can reclaim lost time, increase productivity, and ensure peak performance across the enterprise.
In a world where multi-cloud and hybrid cloud strategies are the norm, FinOps is not just a methodology but a strategic imperative. It empowers organizations to navigate the complexities of the cloud landscape with confidence, enabling them to thrive in an environment where agility, accountability and efficiency are paramount.
FinOps is not just a methodology but a strategic imperative — empowering organizations to thrive in an environment where agility, accountability and efficiency are paramount.