It’s a familiar scenario: A company accepts the cloud’s promise of economics and flexibility, launches cloud-first initiatives, and within months suffers sticker shock. Then panic sets in.

Disappointment, finger pointing, and action to curb all cloud investment as companies scramble to rein in runaway cloud spending. It was around this time that business leaders discovered FinOps to control “IT waste”.

According to FinOps Foundation, it is an evolving cloud financial management discipline and cultural practice that enables organizations to achieve maximum business value by helping engineering, finance, technology and business teams business to collaborate on data-driven spending decisions.

For Nathan Besh, senior director of product management and technical evangelism at Apptio, those using FinOps to reduce wasted cloud costs are missing the big picture. “That’s probably the biggest problem I see emerging today: FinOps is being treated and promoted as a tool to reduce waste and costs. FinOps is a bit of a victim of its own success.

Instead of a tactical and more reactive approach to FinOps, Besh urges companies to take a more strategic view of FinOps. So, instead of talking about how to reduce waste, we should ask ourselves how long has this waste been there and why is it there in the first place?

“There must be the desire of the [business and IT leaders] not making headlines for the next pay raise, but thinking long-term and building capacity for immense returns in the future,” Besh says.

go long

There are good reasons to take a strategic approach to FinOps.

First, cloud spending is blowing corporate wallets faster than ever before. Due to the COVID-19 pandemic and significant digitization efforts around the world, Gartner estimates cloud spending will overtake traditional IT by 2025.

“This means that any waste is now a significant issue in terms of overall organizational spend, and it makes business sense to invest heavily in FinOps. It’s also a concern for many more companies as cloud adoption continues,” says Besh.

Cloud platform providers are beginning to see the value of FinOps. AWS has its Well-Architected Cost Optimization article, Azure has its Well-Architected Cost Optimization article, and GCP has released its Cloud Architecture Framework on Cost Optimization. New free tools and resources, such as Well-Architected Labs, help customers implement FinOps.

Like the invasion of Ukraine and the pandemic, unforeseen macroeconomic events are other reasons companies need to be smarter about cloud spending. “Organizations view FinOps as the key function to increasing efficiency and gaining insights into areas where they can improve efficiency across their enterprise,” Besh says.

blame the messenger

Besh thinks part of the reason companies are reacting with FinOps instead of taking a more strategic approach lies with FinOps practitioners.

“We need to focus more on business results and efficiency. There’s been way too much focus on meaningless metrics and KPIs that look good on paper but don’t make sense or impact the business,” Besh says.

However, moving from technical metrics such as “% utilization” or “% coverage” to ones that measure an organization’s FinOps capability, such as “% of our employees trained in FinOps” or “% of our work that we measure the effectiveness of’ is not easy.

Extending the responsibility of release teams to go beyond code is an option. “Making release teams responsible not only for delivering the right code, but also for managing fixed and variable costs is not easy. How do you motivate them to be more responsible for cost management? »

Deploying the right FinOps platform can help provide the answers. Besh, who calls his company’s platform a “force multiplier,” believes such a platform can scale and push data from the cloud and reduce the effort to get insights.

“A FinOps platform is there to help you better understand the organization – what challenges you have, where you have them, and possible ways to overcome the challenges, how to address the challenges given your unique organizational priorities, will the effort be worth the result, and if you’ve already solved it elsewhere in your organization so you can build on that success,” he says.

The economy of change

The right FinOps platform goes beyond telling you what you need to change for greater efficiency. It also highlights the true cost of making this change.

“There is no point in providing a recommendation that costs more to implement than it pays off. This can only be achieved when organizations invest in platforms and implement their organizational insights, capabilities, and business rules so that recommendations and insights are meaningful to that specific organization and specific users,” Besh says. .

You just have to ask Koch Industries. The organization used Apptio Cloudability’s account group mappings and views to organize their spend by company and create global filters on their cloud data so that each company could view their spend selectively. The high level of security and efficiency enabled it to support the various activities of its subsidiaries and successfully deploy its cloud platform.

Deploying the platform across all enterprises has enabled implementation teams to adopt best practices and embed good cloud hygiene tasks, including decommissioning outdated resources and improving beacon coverage. It also allowed IT and finance to work closely together to better manage cloud cost management.

“This model of collaboration across teams and disciplines is now called FinOps and enables Koch to act as the organization-wide FinOps business hub. The combination of skills from the disciplines of accounting, technology, business, and engineering is part of what makes Koch’s approach to cloud cost management so strong,” says Besh.

Apptio can do this because of its legacy. “More than a decade ago, we created the Technology Business Management (TBM) framework, which fostered alignment across business units to provide a cohesive way to connect business value to technology investments. FinOps is, in essence, an extension of that work – the results are the same, the methods are different,” says Besh.

Apptio is now expanding its ecosystem of products and features to ensure customers have best-in-class tools and stay ahead of existing and new challenges with the ever-changing cloud and technology landscape.

The cost of missing out

Besh predicts that asking the right questions with FinOps will only grow in importance as IT becomes a critical business driver for innovation, deliver better products and services and improve the customer experience. For example, it can help companies make critical business decisions about whether certain cloud products are worth building and will succeed in the market instead of following others or waiting for good cases of use.

“We are already seeing signs of this – venture capitalists are already asking for proof of FinOps capability and processes in startups before continuing to provide additional funding. It won’t be long before we see shareholders and shareholder advisory firms asking the question of how responsible you are with their money, especially with the recent focus on FinOps’ cousin – sustainability. Waste has a direct impact on areas of sustainability, and FinOps is the solution to address that,” says Besh.

Sitting on the fence and deciding if FinOps is for you is also not an option. “If you don’t, your competitor will and you will simply cease to exist,” Besh warns.

Winston Thomas is the editor of CDOTrends and DigitalWorkforceTrends. He is a Singularity follower, a blockchain enthusiast, and believes we already live in a metaverse. You can reach him at [email protected].

Photo credit: iStockphoto/Ildo Frazao