The promise of reduced capital expenditures and the ability to convert fixed costs into variable ones make cloud solutions appealing. However, transitioning to the cloud can sometimes result in higher-than-expected expenses due to a lack of visibility and control over resources, inefficient use of services, and unforeseen pricing intricacies. According to one survey, 66% of business executives reported that their organizations’ cloud initiatives have not lowered the total cost of ownership of IT systems.
This highlights a key challenge: Achieving effective cloud cost management requires more than migration. It demands a strategic approach to understanding and controlling expenditures. A separate report shows the current cost challenges associated with the cloud: More than one-third of organizations cited the unpredictability of costs as a key impediment to cost control, and 31% cited the complexity of pricing models.
RELATED: How to manage cloud spending and optimize costs.
How To Get Cloud Cost Visibility
Clearly, a critical factor in managing cloud costs is gaining better visibility into resource use and expenses. Businesses need to understand precisely how much cloud capacity they consume, identify optimization areas and adjust usage accordingly. Some cloud providers offer this as part of their service, but their insight may be limited to their specific platforms instead of looking at the cloud more holistically.
This ability to assess and manage cloud resources is essential for preventing wasteful spending and ensuring that the cloud delivers its promised economic benefits. In response to this need, an emerging practice known as cloud financial management, or cloud FinOps, has gained traction as a solution for optimizing cloud expenditures.
Cloud FinOps is an operational framework that strives to bring financial accountability to cloud computing’s dynamic and scalable nature. Essentially, it seeks to align cloud operations with business and financial goals through an integrated approach to resource management. It encourages collaboration among technology, finance and business teams to effectively manage and optimize the costs associated with cloud services.
The FinOps framework is built on three key pillars:
- This involves creating visibility into cloud spending by leveraging tools and dashboards that track and report on usage and costs. This transparency allows organizations to understand cloud consumption patterns and identify cost-savings opportunities.
- Here, organizations focus on implementing strategies to maximize the value of cloud investments. This includes rightsizing resources, taking advantage of pricing models such as reserved instances or spot instances, and eliminating unused or underused services.
- Finally, this pillar emphasizes the need for continuous monitoring and governance to ensure that cost optimization is an ongoing process rather than a one-time effort.
By adopting cloud FinOps, organizations can gain the control and insight to manage their cloud expenditures strategically. However, implementing FinOps effectively requires a shift in organizational culture and mindset. It involves fostering collaboration across departments and establishing best practices for cloud management. This includes setting clear policies for resource use, establishing accountability for cloud spending and ensuring that all stakeholders are engaged in the cost management process.
