Cloud uses for business continue to grow. By 2024, Gartner predicts, more than 45 percent of “IT spending on system infrastructure, infrastructure software, application software and business process outsourcing will shift from traditional solutions to cloud.” But the more enterprises shift spending to the cloud, the more they must manage costs. That’s why experts recommend FinOps a financial operations practice that helps teams take control of cloud usage, is beginning to emerge. Over 60 percent of businesses globally have already adopted a FinOps approach, and experts predict wide-scale adoption in the next two to three years. It promises to solve one of the toughest challenges of cloud computing: its cost.
According to a recent Accenture report, cost savings remain the most elusive of anticipated cloud outcomes, with only 39 percent of organizations fully realizing expectations. If enterprises are to achieve their desired cost benefits, FinOps is among the modern architectures and operating models they must embrace.
READ MORE: Find out how FinOps can help you manage cloud spending.
What Is FinOps and Why Is It Important?
FinOps is a blend of finance and DevOps that optimizes cloud spending. The FinOps Foundation notes: “FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.”
Terms including “cloud financial management, “cloud financial engineering, “cloud cost management,” “cloud optimization” and “cloud financial optimization” also apply, but FinOps is the most common.
RELATED: Learn how to optimize IT costs in your organization.
Many businesses are still in the early adoption phase for FinOps. According to a FinOps Foundation survey, roughly 68 percent are at the “crawl” stage, 23 percent are the “walk” stage and just 9 percent are at the “run” stage. An Accenture study shows that 42 percent of organizations have gained business value from their FinOps efforts.
It’s important for enterprises to get the most value out of the cloud and stay cost-efficient, which is why IT leaders say it could be the answer to cloud cost complexity.
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How Does FinOps Help Manage Cloud Costs Better?
Businesses are overspending on the cloud, with 76 percent of enterprises and small businesses spending more than anticipated on cloud services. And according to Flexera, approximately 30 percent of cloud spending is wasted.
Naturally, IT leaders want to eliminate this overspending by getting better financial reporting on cloud costs, which 42 percent of IT leaders are planning to do in the next year.
FinOps is also helping organizations to manage budgets, allocate resources more effectively, and manage complex governance and compliance regulations. By increasing cloud transparency and identifying how spending is divided among departments, IT leaders can see which areas of the cloud are most effective and which ones are not.
76%
The percentage of enterprises and small businesses that are spending more than anticipated on cloud services
Source: raconteur.net, “How FinOps Helps Cloud Users Beat Sky-High Costs,” March 20, 2023
Blending engineering, finance, technology and business teams, FinOps ensures that financial matters pertaining to the cloud (including the initial yearly budget and true quarterly costs) are visible for team, just like the performance data of adopted cloud solutions. With this concrete breakdown, every team member has ownership of cloud costs and is further incentivized to increase efficiencies.
Overall, FinOps enables cloud engineering teams to excel and cloud costs are also more optimal thanks to cross-departmental collaboration.
DISCOVER: What is DevOps and how it can help your organization?
What Solutions Exist to Manage Cloud Costs?
FinOps is a practice, not a software. But as enterprises turn to FinOps, there are a variety of cloud management solutions they can implement to help manage cloud costs.
For example, Inscape by CDW is a cloud and Software as a Service management platform. Using machine learning technology, it helps organizations simplify their cloud management, improve security, heighten visibility, and reduce operating and licensing costs, all while saving valuable time.
Alternatively, partners such as Microsoft, Flexera and Snow Software also offer FinOps software tools designed to provide visibility into cloud costs. So, whether an enterprise is just starting to embrace FinOps or has already implemented it, there are a variety of software solutions available to help businesses achieve cloud cost optimization.
