With organizations more and more embracing digital transformation, cloud computing has become the de facto mode of IT development and operations. To differentiate your business from others, unique digital processes are more important than ever. So, not only hosting your common administrative systems in the cloud is necessary for scalability, reliability, security and performance, but also building your own data-, integration- and workflow systems in a cloud native way.
Moving more and more workloads to the cloud, brings along new challenges. Not only with regard to architecture in all its aspects, but also when it comes to keeping control of your cloud spend. In larger organizations, Cloud FinOps is implemented to manage cloud spend. People who are dedicated to this job are becoming more common within companies above a certain size. But in smaller organizations, FinOps is one of the tasks DevOps teams or cloud administrators have. Especially in the latter case, managing spend often gets the lowest priority, because focus is mostly on keeping things running smoothly and building and deploying new features that the business wants in order to grow the business. FinOps then becomes an afterthought in most cases.
Traditionally, IT departments in organizations get a yearly budget to build and operate solutions and maintain the infrastructure. Some of it is done inhouse and some of it is outsourced. Many organizations are struggling with allocating cost to the business units, departments or projects that are depending on these solutions. This automatically means that the business in most cases are not aware of the impact of certain architecture or design decisions. Helping them better from an IT and cloud spend perspective would make businesses more successful. Especially when IT can advise them based on learnings from the past when it comes to the most efficient cloud architecture, solution development and deployment.
Looking at how businesses migrate to the cloud and build new solutions, there is one common practice: migration is lift and shift (moving virtual machines from a hosting environment to the public cloud) and building new solutions mainly uses container technology or native cloud PaaS services (serverless). On average, what we see is that around 60% of cloud workloads are virtual machines. Simply because this is the easiest way to do it, and, don’t break what works. Followed by containers (roughly 25%), because that gives you a great amount of flexibility and portability and you can more-or-less use old development paradigms. And lastly around 15% of the workloads are running serverless (cloud native PaaS). See https://data.finops.org to get more detailed insights on this. When it comes to cloud spend, VMs are the most expensive to run, followed by containers, followed by serverless. But, here it comes, the effort it takes to migrate to containers or serverless is much higher. Mainly because you need to re-architect and re-build most of it. And because your cloud environment keeps on growing (hopefully eliminating legacy solutions on the go), it means staying on top of the cloud spend for this mixed set of resource types will remain very important. Also because your cloud provider often changes things and adds new, shiny features. It takes lots of effort to stay on top of all these changes, next to your “day job”.
These are all still quite basic needs. When growing in maturity, FinOps should not only be about the efficiency of deployed cloud resources, but more and more about the effectiveness: does the workload actually contribute efficiently to generating more business? (see Gartner’s research on this here: https://www.gartner.com/en/doc/749534-cios-need-an-it-financial-plan-not-just-an-it-budget)
Where bridging the gap between IT and the business is already quite difficult to achieve when it comes to just cloud spend and creating awareness about it within the business, it is a crucial step to become more mature in Cloud FinOps. In order for the business to become more self conscious. It becomes even harder when it comes to getting insights and having the ability to steer the business and IT in the right direction when effectiveness comes in the picture. This means the cooperation between business and IT needs to become even tighter, but it also means that collaboration between departments (for example marketing, sales and operations) needs to be improved in a huge way. Augmented FinOps (see Gartner’s 2023 Hype Cycle for Emerging Technologies here: https://www.gartner.com/en/articles/what-s-new-in-the-2023-gartner-hype-cycle-for-emerging-technologies) can, for example, help bring insights in the correlation between marketing, sales and operations workloads. And at the same time helps you increase efficiency. Like that, it helps you bring insights in possible adjustments, in order to improve effectiveness of IT workloads and thereby increase the ROI on your cloud investments.
So, in short, we see the following high level maturity levels in Cloud FinOps:
- Crawl – gain basic insight in cloud spend and adjust based on operational metrics such as usage patterns, load and performance needs on an organization wide level. Especially when just starting, the out-of-the box tools provided by the cloud vendors are used here.
- Walk – get more in depth insights in cloud spend and being able to allocate spend to business units, departments or projects. And being able to forecast spend and work with budgets. Have the more advanced monitoring and analytics tools in place to help bridge the gap between IT and business.
- Run – add more advanced insights to monitor the IT spend on the effectiveness for your business. This means integrating business KPIs. Use the right tools to really help inform the business and together make plans and implement them to increase the effectiveness of your IT infrastructure and solutions.
In the end, you want to know what your cloud spend per unit is. A unit being a customer order, insurance policy, client, manufactured car, etc. That helps you increase the effectiveness and efficiency of your IT operations to really become more successful as a business. Augmented Cloud FinOps comes to the rescue here. This is a continuous effort.
In summary, Cloud FinOps is not only about having a team in place that manages and monitors the efficiency of your cloud and help them communicate with the business. The more mature you get in Cloud FinOps (you will transition into Augmented Cloud FinOps), the better you have the tools and processes in place to really cooperate with the business, have them become more self-conscious and in the end really contribute to the effectiveness of your IT infrastructure and solutions in order to get the best ROI on your cloud investments. And continue to do so.