Today, cloud computing costs typically account for around 20% of total IT spend. It only takes a company one outrageous cloud bill to wake up and smell the waste. As a result, cloud spending is now being scrutinized in much more detail, and organizations are demanding more discipline on cloud costs. Finops offers the possibility to monitor and optimize cloud expenses. Hence, it becomes a big part of any cloud deployment.
Finops is a good thing, but not all cloud Finops programs are created equal. Let’s talk about the most common missing or misunderstood Finops features:
Failure to understand the business value derived from cloud spend. Many cloud finops programs and their users see any kind of savings as a good thing as it leads to a better bottom line.
The problem arises when they don’t consider generating business value. Some cloud savings may inadvertently reduce or eliminate an important soft business value. For example, finops might recommend limiting the use of cloud-based AI systems due to higher costs, without understanding that these key systems can generate a 100x return on all AI spend. Upon review, that $0.10 saved by the finops team actually cost $10.00 in unrealized business value.
Of course, unrealized business value metrics are often the most difficult to define and track. Finops programs and teams need more than a rudimentary understanding of cloud spend and how to reduce that spend, but they also need to understand the connections between business value and specific types of spend.
ignoring human costs. Personnel costs also need to be factored into cloud spending. Often they are not.
This will get you in trouble when cuts in cloud spend require more man-hours to achieve the same net effect. So a negative net benefit. The finops team can only understand this by looking at the number of man hours spent on the same business processes before and after savings adjustments. Hopefully, finops will run through virtual “what if” scenarios before implementation. You need to monitor and optimize both to get the most value for the business.
Monitoring error all public cloud providers that the company uses. It confuses me when a company has two or three different public cloud providers but only monitors the costs of a single provider.
This is a holdover from the single provider days. Most companies started with a single cloud provider and then built a finops program around that provider. Many have even standardized Finops tools owned by that provider and typically aren’t able to monitor or analyze other cloud providers’ spend when they come on the scene – and those additional clouds are always popping up. Those building systems within organizations need to be able to track the best solutions from other vendors.
The lesson here is that you need to monitor and control spending from all the different cloud providers even before those providers become part of IT’s responsibilities. Monitoring a single cloud provider, even if that provider provides 80% of your cloud services, means you’re only getting part of the story. This story is almost guaranteed to be scary as your business moves to multicloud.
We’re just getting started with cloud Finops programs, although the cloud has been around for a long time. As with many parts of the cloud, get finops right the first time or expect some pretty costly mistakes.
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