FinOps is a concept in the cloud computing sphere, which reduces your company’s expenses. As a financial cloud management approach, FinOps is gaining momentum now owing to cloud computing popularity. Accepting its principles and rules, each company is able to do a cloud cost analysis and get business activity in order. FinOps emphasizes the importance of a proper approach to cloud budget and prevents money wastage. One of the main FinOps principles is regarding making informed decisions and managing your needs which can be named as an optimization.
Cloud optimization allows to achieve a balance between cost, workloads performance and compliance to the infrastructure. It’s important to make the right choice and prioritize resources. Considerable difficulties are connected to an effective cloud health monitor strategy, cloud usage analysis and optimization without appropriate ongoing process of FinOps enablement. Also, using several cloud providers makes cost management more complex. Consumers often encounter the misunderstanding of the procedures in the cloud. They cannot see current processes and have no clear notion of what they’re paying for. Furthermore, consumers have no appreciation of what kind of resources they’re using and their features like degree of reliability, rate of work, detailed equipment performance etc. There is a necessity to have transparent relationships between a cloud service provider and users. In this case some special services to analyze the cloud costs might come in handy. They cluster costs and demonstrate where cash flow is going. Any company, regardless of its size, has to do cloud usage optimization on an ongoing basis, as otherwise a success won’t last long.
Top 6 cloud management challenges
Expenses are composed of network traffic, computing resources and storage usage. Due to automation and orchestration, cloud computing pledges greater cost reduction, for instance, through a reduction in total cloud cost spending by uncontrolled resources identification, waste management, booked capacity for higher discounts and correct measurement of computing services‘ size for scaling. However, organizations are confronted with many issues in managing these resources. FinOps is aimed to solve these challenges seeing as FinOps is a set of concepts regarding cost-effective ways to manage needs, connected to cloud technologies and your cloud spends, providing the maximum use at the lowest price.
OptScale, a FinOps and cloud cost management platform, is available on cloud marketplaces
Monitoring and visibility
Lack of visibility is often found among the cost management issues. As said before, it’s hard to control all processes in a cloud. Uncontrolled traffic resources and work processes, in other words “zombies”, having no useful tasks already, can significantly increase spending on computing. Problems can be solved through the rise of transparency of the current processes and centralization of management. Cloud computing transparency, being one of the key factors, plays a major role in cloud management. For ensuring transparency, choose a reliable cloud service provider and don’t evade policy of reporting violations and request for conformity audit reports. Greater transparency enhances confidence between consumers and providers and, ultimately, will establish the future of a cloud. Better monitoring and visibility can be achieved through cloud management solutions, which are increasingly popular.
Collaboration is an essential part of any work, contributing to successful business development. Small companies should have interaction at least between VP of Engineering or CTO with CFO. For medium-sized organizations and bigger, the process of collaboration is more sophisticated than for small ones. It is desirable to have a FinOps team consisting of members, who are responsible for company strategy, budgeting, financial forecasting and control, etc.
The rise of IT budget
Also potential problems can include the increasing IT budget. In the case of sharing IT budgets between many groups in the organization, it is difficult for decision makers to control how and where IT budgets are spent. FinOps gives such solutions of this problem:
- Cost control. The most important is to understand where expenditures come from.
- Performance tuning. You are able to spend where you need and can redistribute resources.
- Decision-making in real time. Having data in real time, you can predict and make decisions.
- Combine IT and finance. Create an interdisciplinary team, composed of financiers and IT specialists. Collaboration provides you with the right budget, cost optimization and allows you to avoid a wastage of money.
The difficulty of estimating
The budget management also requires an estimation as one of specific skills and the right data. The lack of skilled resources such as qualified specialists can be a problem. Based on the history of spending and data on expected workload, through statistics, FinOps can evaluate demands in the future, allocate resources tentatively, if it is necessary, or can estimate the cost. If you are able to plan the use of resources for the future, you can reserve them in order to be sure of their preparedness for the planned work.
Cloud consumption and optimization
Consumption is defined as the totality of all resources, using in a cloud. Although the concept is simple, implementation differs by service providers. To comprehend cloud consumption, it helps to realize its fundamental elements: resource types, metering, and billing. Regarding the last point, cloud consumption costs can rapidly spin out of control, become more difficult and hard to oversee. There’s a high probability to get a bill much larger than the business case had predicted. Other main points are the ways to identify wastage through consistent budget monitoring and a full understanding of spending. Providing business units with information on their project’s private and public cloud spend can make an impact on everyone becoming more responsible. It’s helpful to communicate with business units because this collaboration will help you determine what can be done in the cloud and this comprehension will be a foundation to improve the effectiveness in the future. The availability of FinOps groups, which makes possible cost optimization in a cloud, is a big plus for any company. There are opportunities to save on resource usage and use additional capacities. FinOps is a relatively new term and concept, denoting active collaboration between specialists in IT sphere financial experts. The most important thing is to understand where costs come from and how to control them.
How your company can benefit from implementation of the main FinOps principles
Reducing cloud bills
Traditional data centers had plenty of shortcomings including huge delays, limited usage of resources and, most significantly, very expensive infrastructure. Cloud technologies development has solved the majority of those challenges because infrastructure became close to developers. However, when cloud technologies are used inappropriately, being not so expensive, they cannot be cost-effective. To avoid big cloud bills and effectively cut cloud costs, there’s best decision – to learn more about FinOps. Its fundamentals are visibility, cost optimization, control and collaboration. It seems common but it won’t work without taking it seriously.
Full cloud transparency for better cost management and control
The principle of visibility allows you to identify business units and manage them and their actions in cloud resources with preserving historical data and not only fix the ongoing conditions but also develop a process of getting visibility. The next level is the distribution of funds and usage for the intended purposes including an opportunity to manage and make a cost forecasting. Funds control has a lot of pros: you’ll forget about “zombies”, due to utilizing only necessary resources for your business, you’ll know your budget, you’ll be able to predict situations and precise plans for the future.
Opportunities for cloud optimization and performance improvement
Cloud optimization is a useful point on the road to success. Lack of knowledge about your network conditions such as cross-region and outbound traffic, unnecessary and unused resources (“zombies”), folders duplicate or inactive users’ folders in your storage can stand in your way. Furthermore, it is necessary to understand your needs and where the expenses come from. Ability to observe historical data of cloud spending is important in order to optimize processes.
Team collaboration for establishing long-term optimization and cost-saving processes
Business development cannot exist without collaboration. Executive staff, financial analysts and controllers, engineers and DevOps leads should be involved and work coherently for effective cloud management. FinOps adoption enables you to implement collaboration, engage engineers in cost-saving and optimization processes. Also it’s a great solution to have a FinOps team in an organization. The FinOps team consisting of strategists and finance people is responsible for a cloud usage strategy, a cloud budget, setting cloud usage practices, etc.
There are plenty of cloud cost optimization tools which will be valuable to improve the situation connected to cloud budget. However, with no accepting and implementing FinOps principles, they won’t be enough for success because FinOps is aimed to assist you in getting the most out of the best of cloud technologies without outspending. Also FinOps helps to overcome the challenges mentioned above: the lack of transparency and skilled resources, difficulties connected to monitoring, the rise of IT budget and many others.