Cloud FinOps Is On the Rise
There’s no question that the cloud is now an established and permanent fixture in modern enterprise IT. Today, nearly 90% of the Fortune 500 use at least one cloud platform and 94% of all companies globally utilize cloud software in some capacity.
As cloud ubiquity grows in the present, forward-thinking CIOs and IT leaders are looking to the next shift on the horizon—from cloud-supported to cloud-run IT infrastructures.
Smart organizations are implementing business-specific cloud strategies that include public, private, hybrid, and multicloud components to align with their unique needs. They’re incorporating innovations like AI and edge technology to enhance capabilities and performance.
Unavoidably, this leads to more complex cost and performance management demands. Cloud FinOps has emerged as a critical discipline for managing cloud ecosystems effectively and collaboratively, with a dual focus on financial and operational priorities to drive strategic success.
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With FinOps framework in place, companies can design and maintain unified IT governance in the cloud and drive organizational efficiencies that boost business performance in other areas. They’ll also have a more holistic understanding of how the cloud is powering their business strategy (and its continuous improvement).
In this guide, we’ll cover what you need to know to embark on your own cloud FinOps journey, including the current state of FinOps and 6 ways to launch it successfully for your business.
Quick Takeaways
- Cloud FinOps is vital for balancing financial and operational demands in diverse and complex cloud ecosystems.
- Four in five companies globally now have some form of FinOps in place.
- Effective FinOps relies on collaborative decision-making across finance, operations, and technology teams.
- FinOps is valuable at every stage of the cloud journey, from initial cloud migration to more advanced cloud transformation.
- Executive buy-in is crucial for aligning organizational efforts toward true FinOps implementation and strategic action.
- FinOps best practices include: KPI monitoring, cloud management task automation, commitment-based discounts, and data-driven forecasting.
Understanding Cloud FinOps in 2024
As one recent Forbes writer aptly defined it, FinOps is theoretically “all about achieving optimized cloud value at scale.” It involves teams across finance, operations, and technology working collaborating to make informed decisions that enhance cloud operations and drive cloud cost optimization.
It’s fast-emerging as an industry best practice—4 in 5 enterprise organizations currently have some form of FinOps in place. FinOps goals are numerous and diverse, but leading themes emerged in the 2024 State of FinOps report from the FinOps Foundation.
Across cloud spend budgets (0-15M, 15-100M, and 100M+), the top-reported FinOps goals included “reducing waste or unused resources,” “managing commitment-based discounts (RIs, SPs, CUDs, etc.),” “accurate forecasting of spend,” and “full allocation of cloud spending.” This underscores the diversity of cloud benefits FinOps can deliver.
The top-reported challenge in achieving FinOps goals was alignment at the organizational level—more specifically, earning executive buy-in so FinOps priorities could better translate to real action.
This is the crossroads many CIOs and IT teams are grappling with now. They know the business criticality of cloud FinOps, but progress is stymied by challenges around obtaining wider support and scaling implementation. Not only do organizations need leaders to support cloud FinOps, they need them to actively participate in its ongoing practice.
FinOps Best Practices to Drive Success
The benefits of cloud computing (and critical buy-in we just mentioned) can be realized more easily using proven best practices across the FinOps lifecycle.
Whether your enterprise is launching its first cloud migration or implementing a later-stage cloud transformation, these strategies will help you improve cloud efficiency, get your stakeholders on board, and maximize performance results at every stage.
1) Map Your Current State Before You Start
Start by mapping out the current state of your cloud infrastructure to obtain a holistic view that can inform your FinOps strategy. Your map should include all cloud environments, end users, stakeholders, applications, cloud provider incentives, and purchase agreements.
Tag your cloud assets so you can organize and track them throughout your FinOps launch. Analyze your current state thoroughly at the start and identify the most pressing and/or high-value opportunities to optimize.
2) Build Your FinOps Team Intentionally
Your FinOps team should incorporate the diverse perspectives you’ll need to execute it successfully. Ensure you have representation from technical and non-technical teams in finance, IT, and operations for the most well-rounded collective mindset possible.
Define and communicate clear roles and responsibilities for your team. This delineation enhances accountability and provides team members with a clear understanding of how their actions impact cloud costs and budget.
Keep in mind that a comprehensive cloud financial management initiative like FinOps has wide-reaching impacts. Educate your stakeholders during the planning process to earn their buy-in and demonstrate the value FinOps can deliver for them and their teams specifically.
3) Implement Real-Time Tracking of FinOps Goals and KPIs
Your planning team should outline detailed goals that encompass the entire FinOps lifecycle, including an implementation timeline (with milestones), cost saving targets, efficiency/productivity goals related to specific business units, and overall optimization plans.
Adopt tools that provide advanced, real-time insights into your cloud usage and expenditures. These tools power faster and more informed decisions, and a better ability to adjust to changing demands and prevent budget overruns.
Real-time data is key to remaining agile and responsive in a dynamic cloud computing environment. Important KPIs to monitor include:
- Total cost vs. forecast (and variance %)
- Idle instances (<30 days and >30 days)
- % of oversize instances
- Usage tracking (ex: weekdays vs. weekends)
- Average price per hour of compute
- Storage and Snapshots
Specific KPIs will vary by enterprise—especially in regard to their level of prioritization. The key is to clearly define, prioritize, and track the key metrics that matter most to your strategy to drive continuous improvement.
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4) Leverage Automation for Optimum Cloud Cost Management
Automate routine cloud management tasks such as rightsizing instances and scheduling downtime for unused resources. Automation reduces the risk of human error, cuts down on unnecessary costs, and boosts efficiency, allowing your teams to focus on strategic activities rather than mundane operational details.
5) Utilize Commitment-Based Discounts
Engage in commitment-based discounts like reserved instances and savings plans to lower your cloud expenses. These options require upfront planning and commitment, but offer considerable long-term savings. Understand your cloud usage patterns to make the most of these approaches.
6) Forecast with Accuracy
Use predictive analytics tools to develop accurate forecasting models that project cloud spending based on historical data and expected growth. This is critical for maintaining budget discipline and avoiding financial surprises.
Conduct regular cloud budget reviews and make adjustments to align your cloud investments with your business objectives to continually improve cloud efficiency.
7) Make Collaborative Decisions
Foster a collaborative working environment where finance, operations, and IT teams work together to make decisions about cloud usage. Hold meetings and adopt collaboration tools to make cross-functional communication easy.
Ongoing and open communication ensures that decisions are balanced and consider all relevant priorities.
8) Strategic Use of Multicloud Environments
Manage cloud resources strategically across multiple cloud providers to optimize costs and enhance service delivery. Multicloud strategies allow you to leverage the best capabilities and pricing models offered by each cloud service provider. This approach reduces cloud costs and increases flexibility and resilience in your cloud infrastructure.
Building Culture: Making FinOps Work Long-Term
FinOps requires leaders from across the organization to stay accountable for their cloud usage. This kind of standard—especially when it’s new and/or comes with an increase in oversight—is often met with natural resistance at the start.
You’ll need FinOps practitioners to educate stakeholders at every level of your organization about the value of FinOps, and to help enforce new processes, guidelines, frameworks, and parameters it puts around using the cloud.
From purchase approval requirements to access permissions to tech stack optimization decisions and more, company leaders will be more amenable to change if they know about it and understand its purpose.
It’s critical to not let FinOps be a barrier for cloud innovation and deployment but rather a tool to maximize its value. That’s why your FinOps planning team is so important—they’ll have the critical role of getting colleagues and teams on board to maximize cloud FinOps ROI.
Partner with Protera on Your FinOps Journey
Partnering with an expert cloud managed service provider ensures you have the expertise, resources, and strategic vision to execute your cloud FinOps strategy with confidence and success. For more than 25 years, Protera has pioneered innovative cloud solutions, and FinOps is no exception.
Our comprehensive Cloud Managed Service (CMS) offering includes FinOps guidance and support to help you deploy cloud assets in ways that maximize efficiency and cloud cost optimization.
Talk to a Protera expert today to learn more and get started.
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