Up until now, the need to control cloud costs has often come as an afterthought – only after things have spiralled out of control. At that point, when you are truly in “firefighting” mode, the business cannot afford the luxury of weeks and months of analysis to get to the root of the underlying issue and then act on recommendations.
A targeted diagnostic is often the preferred method - a minimally intrusive assessment that looks at providing practical recommendations for immediate or short-term results in 1-2 problem areas, with an aim to get results within 2-4 weeks. The findings from such a diagnostic can provide significant quick savings to the business with minor adjustments and tweaks, with no or minimal negative impact on the operating model.
Examples of simple tweaks could be right-sizing over-provisioned compute instances, shutting down unused resources (saving up to 10-15%), switching off dev-test environments outside of normal working hours, etc.
Beyond the quick-wins-focused diagnostic, organisations are looking at putting in small teams and seeking specialists to review existing cloud contracts and advise on how to improve them. This could mean better utilisation of existing discounts and credits across the portfolio of cloud services, and also improve the discounts from what they have been already negotiated to.
The case to leverage specialists for cloud cost control (as opposed to driving the initiative internally)
While it may seem obvious at the outset, businesses often get overwhelmed, and struggle to prioritise and execute successful cloud cost control.
Organisations find it daunting to drive cost transparency, baselining, and cost reduction initiatives by themselves. There are many reasons for this, including:
- Lack of visibility of cloud spend impact to the organisation’s bottom line
- Prioritisation of rolling out new products and features which continuously re-baselines spend
- Reactive involvement from procurement and finance in the initial planning phases and the final reconciliation phases (quarterly or annually), but never in-between
Hence, when it comes to cloud cost control, teams can struggle to; 1) arrive at a consensus to agree to the cost-saving measures as it can seem like a distraction, and; 2) secure buy-ins from the relevant stakeholders and; 3) successfully execute a cost-saving initiative, as they have higher priority items to act upon.
In our experience, employing a specialist external party to drive and run this exercise has proven to be more successful than doing this internally in the organisation. This is because the external party can come in with a specific mandate (of reducing cost), objectively assess the environment with no bias, and aggressively drive the cost reduction exercise with a razor-sharp focus in a time-bound manner.
The case for sustainable cloud cost control (FinOps)
While a one-time cloud cost take-out exercise goes a long way in reducing immediate pain and plugging in visible wastage and leakage, it does not necessarily stop poor and inefficient cloud financial practices that might be prevalent in the organisation. This is where FinOps comes in.
FinOps aims to drive cloud cost transparency in the organisation by bringing together business, tech and finance teams to work collaboratively towards driving the most efficient use of cloud resources. While FinOps as a concept has been around for a long time, it has gained substantial traction and secured mainstream adoption over the last few years or so.
Hosted under the auspices of Linux Foundation, The FinOps Foundation has emerged as a thought-leadership body in this area. Flexera’s ‘State of the Cloud 2023’ report lists over 70% of organisations have dedicated FinOps teams, and 68% of large enterprises using multi-cloud FinOps tools.
There are six FinOps principles that provide guardrails for organisations:
- Accountability: All teams should take ownership of their cloud usage and costs.
- Awareness: Everyone should have visibility into cloud spending and usage patterns.
- Optimisation: Teams should continuously look for ways to improve their cloud usage and costs.
- Efficiency: Teams should use cloud resources efficiently and avoid waste.
- Scalability: Teams should plan for the future and scale their cloud resources as needed.
- Collaboration: Teams should work together to achieve financial goals and optimize cloud spending.
These principles are important to an organization for several reasons:
- Cost Optimisation: By following these principles, organisations can optimize their cloud spending and reduce costs, which can have a significant impact on their bottom line.
- Better Decision Making: The principles provide greater visibility into cloud usage and costs, which can help teams make informed decisions about resource allocation.
- Increased Efficiency: By focusing on efficiency and avoiding waste, teams can use cloud resources more effectively, which can result in improved operational efficiency and faster time-to-market.
- Greater Accountability: By encouraging accountability and ownership, teams can work together to achieve financial goals and ensure that cloud resources are used in a responsible and sustainable way.
- Improved Collaboration: The principles promote collaboration between teams, which can help break down silos and improve communication and teamwork.
In summary, the six FinOps principles provide a framework for organisations to achieve financial excellence in the cloud. By following these principles, Cloud spend can be optimised, decision-making improved, efficiency increased, accountability promoted, and collaboration improved.
Read our other takes on Cloud, including ‘Cloud strategy and spend in the face of uncertainty’ and ‘Why Cloud course-correction is not only necessary, but also imminent’.
Or if you would like to talk about reviewing your cloud contracts, or thinking about what the fuss is with FinOps, reach out to our specialist digital team: