FinOps is the relatively new practice of driving visibility and bringing financial accountability to the variable spending model of cloud
As cloud adoption matures inside organizations, base loads become more predictable. This means that organizations can strike a balance between committed spend and agility with their cloud providers in order to maximize the return on their investments while keeping the agility they need.
However, as technology platforms become more dynamic, this can be a daunting task. As such, more firms are considering cloud financial operations (FinOps), which unites business strategy with enterprise-wide accountability to manage and optimize cloud spend.
FinOps is the relatively new practice of driving visibility and bringing financial accountability to the variable spending model of cloud. Essentially, finance and IT develop a series of best practice measures to quantify and provide insight into the associated cost of cloud usage. The objective is to create a cloud financial model that balances commitment with agility, delivering the needs of the business, whilst continually monitoring and optimizing architectures to ensure performance and availability.
Understanding cloud migration
Cloud migrations represent a major shift in how an organization enables IT and digital initiatives.
The goal of any cloud migration or adoption initiative is broadly to fuel digital transformation by moving focus away from running technology and towards innovation through technology. One good example is the deployment of cloud-native application platforms such as serverless microservices, which enable IT staff to focus on application development or more business-outcome-focused activities rather than just “keeping the lights on”.
These dynamic environments mean that automation must play a larger role. In general, organizations should seek to develop programs and utilize tools that allow them to continually improve security, automation, cost management, resource utilization and compliance concurrently, with each optimization creating multiple benefits whenever possible.
Pooling expertise to unlock the best of cloud
What is the best way for enterprises to organize their strategies and teams to achieve cloud objectives? As enterprises continue to increase cloud investments, they should also consider how to grow their cloud expertise. Cloud maturity includes centralization and coordinating decision-making across teams.
This is where the establishment of a Cloud Center of Excellence (CCoE) may be helpful. The benefits include improved governance, better overall operational efficiency, increased confidence in cloud security, increased accountability, better understanding of cloud bills, easier auditing processes, and more accurate levels of billing departments for their cloud use.
As more firms invest deeper in cloud; and the number of cloud users matures — they need to consider the business value gained from these resources.
FinOps a crucial part of cloud transformation
While FinOps are a key component of a CCoE, many firms still lack visibility into the various aspects of their public cloud operations, and are therefore unable to monitor and optimize costs.
One way cloud decision makers can take a proactive approach to managing their cloud costs is by implementing a FinOps practice. More than simply managing and monitoring costs, FinOps takes a holistic view of the cloud’s business value along with an organization’s objectives.
In any cloud deployment, FinOps teams have to balance the need for speed/performance, quality and cost. Just as you do not need to drive at race car speed to get to the grocery store, the highest level of performance may not be needed 24/7 for every scenario. FinOps will help organizations optimize and right-size their cloud usage, therefore bringing about greater efficiencies in cloud deployment and overall cost.
So, how can we establish this practice quickly? Partnering with a Managed Service Providers (MSPs) is an effective way, as many offer managed cloud and financial operations as their core services. Through their MSPs, firms can take a more holistic approach to increase control, optimize their IT resources and budgets more effectively, and deliver critical services such as network, application, infrastructure, and security. This in turn helps to drive the cloud’s business value over time.
For example, when a CCoE is combined with a dedicated MSP in cloud operations, enterprises can go even deeper into their cloud journey and often gain a more well-rounded approach to their cloud transformation projects. Firms that have adopted the MSP approach usually report gaining expertise they did not have internally; increased IT team productivity; enhanced security and compliance; and reduced overall cloud costs.
Clearly, FinOps and its implementation is one avenue that organizations can consider in the next phase of their cloud journey.