The case for financial operations (finops) in a cloud-first world
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Testimonials found that a value gap was emerging between planned value and actual realized value, with only one in three companies (35%) reporting that they had achieved the expected benefits from the cloud , with cost being seen as the main barrier to achieving this.
Like cloud As the digital core of business today, organizations often encounter common problems that can lead to overspending in the cloud. Are from Complex pricing and payments Due to the lack of accountability and transparency in looking at supplier costs separately, overspending is quite common.
Furthermore, technology leaders in organizations are increasingly being asked to demonstrate how their spending in the cloud is supporting the business strategy and that it aligns with relevant objectives. how. How can they solve this? Let’s dig deeper.
Show ROI on cloud investments
Investments in the cloud and its use in industries are widespread, growing, and ever-evolving. In reality, global spending on cloud services is expected to reach nearly $500 billion this year. Although companies are implementing a strategy to migrate to the cloud, many have not yet achieved the benefits they initially imagined.
The answer lies in the rapidly evolving field of financial cloud operations (aka finops), a method that advocates working collaborative relationships between developers, finance, and business teams to minimize cost overruns and close the value gap.
The fundamentals of finops include:
- Teams need collaboration
- Everyone has ownership rights to their use of the cloud
- Reports must be accessible and timely
- Decisions need to be driven by the business value of the cloud
- Everyone should take advantage of the cloud’s variable cost model
Deploying finops capabilities within an organization often offers the immediate measurable benefit of reducing cloud spending by 20-30% while enabling better alignment of cloud spending with business metrics and strategic decision-making support.
To be successful, finops requires a change in behavior and a culture that fosters collaboration between developers, financial and business teams. By building financial control, transparency, and accountability into the cloud operating model, companies can assign the true financial cost of the cloud to each relevant part of the organization. office. This transparency is critical in optimizing cloud usage and ensuring individual business units and application owners are responsible for their own cloud usage and cloud costs. , which aligns spending decisions with the business value provided.
In short, the entire organization is better aligned around the total cost of cloud real estate ownership. What would you say if your cloud costs suddenly doubled? Well, if quadruple revenue has to do with that, double spending in the cloud is great news. Finops allows this level of business visibility.
Applying the finops model
How can leaders put the first blows in the right place? It requires an internal alignment between IT and the business working together to manage and optimize the cloud. We recommend companies to take the following actions:
- Enables the ability to accurately estimate, forecast, and allocate cloud costs back to consuming business units (shared and unshared costs). For example, at a tech hardware company, simply showing cloud consumers where money is going has resulted in the decommissioning of several abandoned sandbox environments.
- Enables real-time cloud expense tracking, tracking, and reporting in line with forecasts to quickly detect and resolve issues. A financial services team saw daily spend on a serverless function increase from $0.12 to over $14,000 as a result of misconfigurations pushed to production. Early detection of mistakes like this is crucial.
- Continually optimize cloud usage through reducing unnecessary spending, as well as purchasing commitments, where appropriate to reduce unit costs and report on savings achieved. The State of FinOps in 2021 Surveys have found that the average finops group size at the “Walk” adult level is seven full-time. Savings tracking is how this team represents measurable value alongside the soft benefits of improved visibility, accountability, and technology value realization.
- Leverage the continued innovation of cloud services to evolve and reimagine workloads to increase speed, improve value, and lower costs. All in all, the super cloud providers are investing $10 billion per month in the capabilities available to their customers.
- Get started with carbon footprint tools now available from cloud providers. Cloud use has the potential to become a powerful driver for sustainability benefit or disadvantage, and an increasing number of companies are setting public carbon targets and reporting them to the stock market and related parties.
All in all, finops is an increasingly pressing business requirement across industries. Its value is proven continuously by enabling the organization to instantly reduce unnecessary costs and increase business value.
Mike Eisenstein is cloud optimization practice lead for Accenture and Dean Oliver is cloud lead for Accenture Technology Strategy & Consulting
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