Cutting Costs in Cloud Computing Without Compromising Quality
You’re a senior executive in a large multinational. The amount of data available to you is exploding – the opportunities and the challenges that data presents are multiplying. Your multi-cloud use is growing fast as you move your expanding roster of applications and your infrastructure off-premises. Spending on public cloud (estimated to reach ~$600Bn in 2023) is increasing at a rate of about 20% a year, and your on premise cloud infrastructure budget is expanding at a similar rate. To make matters more complicated, your cost and revenue centres are spread worldwide.
So, how on earth do you ensure you have control of all that❓
It’s essential your organisation gets the best value from your investment in cloud; one recent report concluded that almost a third of spending on the cloud is wasted. Meanwhile, colleagues and customers expect and deserve the best from your IT infrastructure; hourly downtime costs can run into hundreds of thousands of euros or dollars, staff downtime costs money and saps morale.
You know as well as anyone that your decisions are only as good as the financial data that informs them. So, in order to make the right decisions, not just about cloud spending but also about the allocation and use of resources, you have a challenge; to make sure you’re getting the information you need so you have a clear overview across your cloud estate.
This is where FinOps comes in.
FinOps (the term is a mash up of ‘finance’ and ‘DevOps’) is primarily about cloud cost management i.e., financial transparency and accountability.
The key element, culturally and organisationally, is bringing together finance, business and IT teams. Each has a stake in your cloud operations. IT develops and runs them; business relies on them to help deliver its goals and finance pays for them. Yet in many organisations these three partners operate in a semi-detached manner even though this makes it harder to arrive at good, data-driven cost management decisions.
It’s important to stress that FinOps is not a fancy term for cost-cutting. It’s being able to see if cloud services are being used cost-effectively; if they are not, what areas could generate more benefits with more resources and where those resources might come from. Sometimes, this approach enables tightening the budget, while FinOps actively clears away obstacles by facilitating informed conversations among functions about the best deployment of money and people, thereby opening new opportunities for innovation and development’
Through close collaboration and a culture of taking responsibility for the costs each initiative generates, organisations can squeeze more value out of every dollar or euro spent on cloud and liberate funds to explore more further opportunities.
Cloud Cost Transparency
The first element of this, is ensuring excellent visibility. You’re aware, for instance, that your cloud usage costs you $200,000 per month, but do you know how that breaks down between your various applications and infrastructure and whether it generate value or not? Given more detailed financial data finance, business, and IT teams can assess the ROI or value in each instance.
Some relatively easy wins, such as identifying unused cloud resource spend, will emerge, along with numerous other optimization opportunities. These include negotiating better deals for baseline capacity and surge requirements, saving money by moving a virtual machine to a more cost-effective node, and calculating the benefits of running certain services on private instead of public clouds, and vice versa. Transparent cloud costs empower business, finance, and IT to establish KPIs for benchmarking spending and performance, fostering more nuanced discussions about the value of a specific application or service to the business.
Of course, these decisions will rest on good cloud cost management reporting, and that, in turn, raises questions about how best to make sure reports get to your stakeholders on time. Many organisations choose to set up a dedicated, centralised FinOps team to coordinate cloud cost management across the organisation, one that is responsible for ensuring a single source of ‘truth’ across and negotiating and buying cloud capacity and services.
Being aware of how dispersed your multi-cloud spending is, putting FinOps in place and reaping all the benefits it offers, might seem a daunting task.
But just as AI gives you capacity headaches, AI can take them away.
Next time, I will explore how using AIOps to automate much of your FinOps reporting and optimization can achieve this.