FinOps Becomes More Important as Cloud Spending Grows

Businesses need FinOps solutions to help them monitor, control, and optimize their cloud spending to ensure they get the most value from such investments.

Cloud spending is on the rise as businesses move more and more of their data, applications, and infrastructure to cloud. Some estimate that cloud computing costs average about 20 percent of total IT spending or more. And that spending is growing rapidly. Unfortunately, many businesses have little visibility into that spending. That is a critical factor that is bringing great attention to FinOps.

Intel defines FinOps as “a management practice that promotes shared responsibility for an organization’s cloud computing infrastructure and costs.” And the FinOps Foundation says it is “an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.”  

Some say FinOps is short for financial operations. Many others say it is the blending of finance and DevOps, where the heart of the matter is ensuring increased communications and collaboration between business and engineering teams.

There are many other definitions, all of which center on FinOps giving businesses the ability to monitor and optimize cloud spending.

See also: Are Cloud Costs and Sprawl Casting a Shadow? How FinOps Can Help

Why is that so important? There are many reasons. A couple of the biggest ones are:

Massive cloud spending that is only going to grow: A recent Gartner forecast found worldwide end-user spending on public cloud services is forecast to grow 20.4% this year to a total of $494.7 billion, up from $410.9 billion in 2021. In 2023, end-user spending is expected to reach nearly $600 billion, according to the same forecast. Cloud spending is expected to continue to grow after that. Gartner predicts that enterprise IT spending on public cloud computing will overtake spending on traditional IT in 2025.

Lack of visibility into cloud spending: In an earlier RTInsights article, Paige Roberts, Open Source Relations Manager at Vertica, a Micro Focus company, noted: “The advantage of cloud managed services is more about ease of use, speed to deployment, easy administration – not cost savings. Cloud costs are far higher than most organizations expected when they made the leap.”

Additionally, she noted that cloud analytics workload costs often vary wildly and unpredictably from month to month. “It is not an easy thing to explain to a CFO why your department needs six times the budget this month over last month. Not only do costs fluctuate on cloud analytics platforms, but they often do so automatically. Some cloud analytic services tout compute auto-scaling as a feature while charging by how much compute you use. This means that without the knowledge or control, the costs are automatically scaled upward.”

Enter FinOps

In its State of FinOps 2022 report, the FinOps Foundation found that Global 2000 companies continue to adopt FinOps. It also found that “FinOps isn’t just a technical discipline nor solely finance-based – it’s a cultural one that brings together finance, engineering, product, and management.”

One challenge many businesses find is that there is no one tool to help with all aspects of FinOps. As would be expected, many businesses start with their cloud provider. All of the major cloud providers offer tools to help monitor and manage spending at a basic level. Most provide basics, like cloud resource consumption.

The problem is that businesses have a hard time tying spending back to specific departments, groups, and projects. The issues get worse in hybrid and multi-cloud environments. The tools from the providers are typically focused on that provider’s services and associated spending. And many tools do not tightly integrate into existing budgeting and forecasting solutions.

As a result, most businesses use multiple tools to help with their FinOps efforts. In fact, the FinOps Foundation found that “many respondents continue to rely on a mix of native tooling provided by AWS, Azure, and Google Cloud, and third-party tools, with an average of 3.7 tools being used. It also found, surprisingly, that “homegrown tooling solutions are the ones with a marked increase compared to last year.”

A final word

As cloud spending grows, businesses need insights into how much is being spent and what value different business units and groups get from their cloud spending.

They need FinOps solutions that provide the details and aid them in controlling and optimizing their cloud spending to ensure they get the most value from such investments.

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