Cloud financial management is an increasing priority for businesses. According to a recent study, 61% of organisations plan to optimise cloud costs in 2021 and 51% of users overspend their budget on the cloud. “Tracking and consuming cloud spend is a complex and time-consuming task,” says Narinder Kumar, co-founder & COO, To The New, a Noida-based digital technology company. The sheer number of choices and plans coupled with inexperience in cloud optimisation may result in wasted resources and costs for many enterprises and startups alike, he adds, pointing to a Gartner study that says that more than 30% of the monthly expenditure on cloud services will remain unused, through 2022.
FinOps, simply put as cloud financial management, is a new paradigm to manage growing cloud spends. The methodology intends to assist businesses in better planning, budgeting, and forecasting. FinOps tracks spending and achieves effective cloud expenses while balancing performance and availability. According to Kumar, the FinOps lifecycle can be broken down into three main phases:
Inform: The company has insight into the allocation of its resources during the inform phase. The on-demand nature of the cloud allows for precise and real-time decisions. Dashboards provide a granular view of cloud spend, allocation, chargebacks, and tagging. Analytics help with insights into spend patterns, audit frequency, and recommendations for right-sizing and right costing.
Optimise: The second step is optimisation, in which the team must find cost-cutting options and take action. Companies must automate right-sizing of the current compute storage and network resources. The proprietary cloud resources & volume offered by vendors must be leveraged for discounts and savings.
Operate: This is the third and final phase. Companies here act in accordance with their stated objectives and keep track of their success. This will help in monitoring spend optimisation opportunities and the RoI from these opportunities. Periodical audits must be conducted to ensure effective monitoring while providing customer support.
According to Kumar, a company’s commitment to a FinOps framework is long-term. The process does not always go as anticipated, especially for young businesses. FinOps vendors enable companies to save millions of dollars in resources and maintain sustainability.