Cloud FinOps: Navigating the Path to Cost Efficiency

Cloud FinOps is an area of pain for many organizations as they embark on their cloud journey. Cost can quickly ramp up as organizations are unlocking value through business-driven demand.  This can lead to significant discrepancies in actual spend vs. forecasted budget.  Building some governance and structure around what FinOps could look like requires changing the way cross-functional teams work together to drive fiscal accountability and the concept of a cost-conscious culture.  Whether your hyper-scale cloud provider is Amazon, Google, or Microsoft; the fundamental concepts of this approach can be transferable.   Below are some of the guiding principles that can make sense for organizations as they relate to building out or maturing a FinOps practice:

1. Accountability – Creating a sense of accountability by driving a cost-conscious culture is important within the organization.  This should not equate to inhibiting innovation but creating fiscal awareness around enabling value will incur a cost to the business.

2. Cross-Functional Teams – A centralized team or POD is typically recommended, but this will require input and collaboration from leadership, product\engineering teams, finance, and core IS functional teams.

3. Optimized by default – Workloads should be right-sized for purpose, monitored for efficiency, and measured through appropriate reporting to ensure the best use of resources deployed.

4. Continuous Improvement – The right solution today, may not be the most appropriate solution tomorrow.  Constantly evaluating, questioning, and willingness to transform solutions to drive additional value or decrease costs must be embraced.

5. Reporting and Accessibility – Ensuring data is available and accessible to all levels of the organization is super important.  The closer to real-time this data is available, the more impactful it can be to drive accountability and unlock value.

Where do I start?

The thought of FinOps can be overwhelming for most and hyperscale cloud providers have great frameworks, but lack prescriptive guidance on where to start.  We have had much success with leveraging the FinOps Framework Overview; which is a set of best practices, standards, and guidance by The FinOps Foundation and its open-source community. Some of the key areas that can be impactful are as follows:

1. Maturity Assessment – Diving deep into where you fit into a maturity model today vs. where you want to be tomorrow.  Examples below:

1. How are we doing cost reporting today and what tools do we use?

2. What does the current team layout look like today?

3. What are the types of tasks and processes that are run daily, weekly, monthly, and quarterly?

4. Are there any automated tasks that exist today(IE – Anomaly Detection)

2. Defining Success Metrics

1. Defining Short-Term Success Metrics

2. Defining Audacious Goals Long Term

3. Assess the Current Costs

1. Working with your hyperscale cloud provider or partner to run a cost optimization assessment. 

2. Typically we see a 10-15% decrease in monthly cloud spend through our assessments through optimizing, right-sizing, committing, or removing orphaned resources.

What are my options if I have already started?

“We have the basics defined, and reporting in place, but are looking to grow our maturity; what’s next?”  can be the next question you have in mind.  This is a fun space to be in, but analysis paralysis can set in.  Here are some key areas that we have seen having an impact with:

1. Anomaly Detection – Building some advanced automation into automated anomaly detection.  Some great examples are below:

   ● Resource Spikes > $100 per day – Proactively engaging a workflow engagement when resource spikes occur to get near real-time alerting.

   ● Leveraging AI AI-based detection algorithms.

   ● Budget alerting and forecast vs. actual alerting.

2. Scaling out the Team – Determining How to scale beyond a single person FinOps Practitioner within the organization.

3. Rate Optimization and Contract Negotiations – Many hyperscale cloud providers offer the ability to discount and invest in both your existing spend and projected growth.  Negotiating new workloads and multiyear commitments can bring significant investment from your cloud providers.

4. Advanced Reporting – This can be a combination of native tools or potentially exploring 3rd party toolsets to create better reporting and visibility.

5. Showback\Chargeback models – This will more often complement advanced reporting options, but will also include working with your business stakeholders to help appreciate a sense of ownership\accountability with alignment on a cost-conscious culture.

Of course, there are many other avenues for us to explore, and would love to chat in more depth and detail about how the JOT Digital team can help with your FinOps journey!