Using public cloud services means rethinking your IT financial management. Going from an investment mindset (with 3-year investment plans) to an instant usage and subscription model, requires efficient cost management to avoid excessive and unjustified expenses. To ensure optimal changeover, it is important not to wait until you have migrated all your applications to the cloud before setting up a financial arrangement.
Centred on both technical and financial operations management, a new type of governance has been developed known as FinOps. The discipline of FinOps brings together a set of skills, practices, and tools that aim to measure usage and optimise costs.
Avoid excessive cloud spend
Rightscale’s State of the Cloud 2018
report, identifies optimisation of cloud spend as the top priority for 58% of companies surveyed; this is a 5 point increase over the previous 12-months. The study also found that the importance assigned to optimisation of spending increases with company age; this correlation is the case for 69% of companies who have advanced cloud usage models. The study also revealed that improving financial reporting using the cloud was a priority for 44% of respondents.
With its on-demand resources, the apparent simplicity of the cloud naturally encourages an increase in usage, going as far as to encourage unjustified, unnecessary and often excessive expenses. There is no shortage of such examples:
- An application where execution servers have been shut down, but database and storage are still running;
- A test environment deployed for a routine check which is then never decommissioned;
- An infrastructure running 24/7, whereas the business application it hosts only runs during work hours;
- Lack of consideration of resource usage, resulting in poor resource reservation and application.
In isolation, these unnecessary expenses can have a small impact on overall cloud costs. However, built up over time, they can become very costly for businesses.
Think FinOps: educate, control, optimise
To efficiently delegate resources and services to users, a company must share good practice and be equipped with the means for controlling usage. This issue has given rise to a new function known as FinOps, that is a mix of engineer and/or architect profiles with skills in finance. FinOps has 3 main aims:
Educate: raise awareness, enable digital transformation, and focus on response within large organisations where applications managers are closest to the users. To succeed in this, it is important to establish adequate governance, particularly one that does not consider the infrastructure separate from the application.
Control: measure and identify excessive spending, exponential use, unsuitable or unnecessary resources (zombies) as quickly as possible using Cloud Cost Management tools. If necessary, inform users in order to cross-check this information with real application usage or better still, with a budget forecast. By consolidating an overall vision, the aim is to optimise usage or plan for large-scale modernisation of the application in order to benefit from usage-managed services (by developing a DevFinOps approach).
Optimise: regularly apply optimisation recommendations and use resource reservation opportunities efficiently, which can reduce unit usage from between 50% to 70%. Depending on usage rules; the level of automation; and, the age of the processes, optimisation can allow for monthly savings of up to 10-25% of the cloud costs. This is part of a long-term plan, supported by regular reporting to ensure transparency and to facilitate decision-making.
FinOps: the digital sobriety and innovation partner
management is a major activity for companies who are heavily investing in the cloud to accelerate digital transformation. By making substantial and appropriate savings, you can ensure your organization is part of the move to digital sobriety. This offers better digital use models and determines new investment capacities when leading innovative, potentially high-value, projects.