Cloud Financial Management is an increasing priority for organizations. According to a recent study, 61% of organizations plan to optimize 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. The sheer number of choices and plans coupled with inexperience in Cloud optimization may result in wasted resources and costs for many enterprises and startups alike. According to Gartner, more than 30% of the monthly expenditure on Cloud services will remain unused, through 2022.
FinOps 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. Using best procurement practices and real-time data, it aims to make the Cloud operating model more accountable. When properly integrated, FinOps provides considerable cost savings, efficient resource utilization, and billing transparency.
Most businesses now employ Cloud strategists to assist in the analysis and management of Cloud resources. These teams bring financial accountability to variable Cloud spend with a prescriptive model of actions.
The FinOps lifecycle can be broken down into 3 main phases as below-
The organization 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.
The second step is optimization, in which the team must find cost-cutting options and take appropriate action. Organizations 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.
This is the third and final phase. Organizations here act in accordance with their stated objectives and keep track of their success. This will help in monitoring spend optimization opportunities and the RoI from these opportunities. Periodical audits must be conducted to ensure effective monitoring while providing customer support.