Preparing for FinOps Success: A Quick Readiness Guide
The growth of spend in public cloud services worldwide has grown from $145bn in 2017 to $490bn in 2022 (Statista, 2023). With this massive growth in spending comes a critical need for businesses to identify any areas of potential cloud overspend and waste. Forbes reported in 2020 that ‘Executives estimate that at least 30 percent of their cloud spending is wasted …’
How does your business compare? Do you actually know how much you spend on the cloud? Would you know where to begin to uncover potential sources of overspend to reduce, or take advantage of optimisation opportunities?
FinOps — Cloud Cost Optimisation
The practice of FinOps (Cloud Cost Optimisation) is an emerging professional discipline that controls ongoing cloud consumption by working with stakeholders across the business to manage and optimise cloud consumption costs. Sounds straightforward enough?
Simply put; FinOps is the solution to a problem.
IT departments are satisfied that cloud is the optimal technology for their business and at the beginning of the cloud migration, is a sound financial decision. However, this latter component can quickly unravel if not effectively monitored and managed and can lead to a rapid escalation of costs. There are a number of key areas that can create waste and overspend in cloud, including;
· The ability to swiftly deploy new (potentially unnecessary) configuration items such as servers at the click of a button
· Misunderstanding in the configuration of item pricing levels
· Missing out on contractual/commercial non-intrusive opportunities
The result is a gradual increase in cost with little or no oversight and more often than not, a large and unexpected invoice creating what is often referred to as ‘bill shock.’
Crawl, Walk, Run
If you don’t have a FinOps practice, our advice would be to start small (crawl) — find a problem that is easy to fix and will have a measurable commercial impact, such as negotiating a better discount or reserving instances for future use as opposed to buying on-demand. Using this as an example internally will help to positively promote your cause and obtain buy-in from the all-important C-Level to invest more resource in this activity.
Once you have sponsorship from your board and your practices and processes are beginning to reap benefits, your internal task force will develop organically. With practice structure, processes and results starting to bear fruit (walk), you can examine more closely your cloud resources; do you have any that are over configured, do not need to be available 24/7 or are unused?
Reconfiguring or optimising your cloud resources can reduce your ongoing consumption costs considerably and improve performance if under-configured resources are discovered.
Over time, a more proactive approach (run) will evolve. Eventually, the ‘old way of doing things’ will gradually disappear as the evidence for FinOps becomes overwhelming, to such an extent that dissenters are quickly identified and reminded of company policy.
However, as a developing practice, finding the right personnel with the appropriate skills to support this process can be challenging. The FinOps Foundation reported in their State of FinOps 2022 that typical barriers to entry for adopting FinOps include the availability of the right internal resources and FinOps tools to embrace automation.
Fortunately, there are a couple of alternatives that you could consider if resource is proving difficult to find or you are just not sure where to start. This is where engaging with a partner with specialist skills in FinOps can help.
· Advise & Guide on FinOps Approach
If you require specialist FinOps methodology advice and guidance, a partner can help you design processes, advise on intrusive and non-intrusive areas for improvement and act as a point of contact for any issues that fall outside the skills set of your in-house resource, or indeed backfill during a peak in your business activities.
· Completely Outsource FinOps Practice
Alternatively, you could outsource your FinOps practice to a partner on a predictable commercial model with financial KPIs and frequent reporting. This arrangement would assume the partner has access to your cloud platform and relevant stakeholders to deliver re-configuration recommendations and would act as gatekeepers to the implementation of new cloud services.
Summary
Regardless of your approach to FinOps, or indeed how mature your practices are, there is always an opportunity to reduce your cloud spend through technical and commercial measures. Version 1’s FinOps Readiness Assessment is the ideal starting point to assess and report on the governance of your cloud estate, offering a detailed scope of work for optimisation through to supporting the implementation of the measures.
As experts in SAM methodologies and managed services, it is important to remember that FinOps is a discipline that should work in tandem with your overall SAM practice as FinOps only considers cloud cost and not your investment in on-premise software.
For more information go to our FinOps dedicated website page where you can download our readiness assessment datasheet, whitepaper or watch our fireside chat. Contact us with any questions.
About the Author:
Karl is a Principal Licensing Consultant at Version 1, providing global Microsoft license expertise to organisations and ensuring customers get the best value from their Microsoft assets.
