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Why Enterprises Need to Adopt FinOps Practices for Cloud Data Cost Control

Before an organisation implements a FinOps framework to get its cloud data spending under control, it must win approval of all internal stakeholders. There are four crucial tasks to complete on this journey.

By Clinton Ford

Popular SaaS company Basecamp announced last year that it was quitting the cloud[1] and moving all of its data to traditional on-premises infrastructure. This decision came as a response to its escalating cloud bills — amounting to more than $250,000 each month.

In what appears to be growing defiance of the general trend of migrating on-premises workloads to the cloud, several companies like Basecamp are choosing to exit and return to on-premises, due to rising costs. As early as in 2021, 48% of respondents participating in a survey by 451 Research had repatriated some of their workloads from cloud providers.[2]

Ballooning cloud bills are of course the number one reason for cloud exit, cited by 451 Research’s survey respondents. Indeed, cloud spending and the waste associated with it have both escalated over the last few years. Gartner reported recently that the worldwide public cloud end-user spending is expected to reach over $599 billion, up from $421 billion in 2021.[3] In India, cloud spending grew by nearly 22% in 2022, a recent study by Bessemer Venture Partners noted.[4] A recent EY-FICCI survey found more than half of larger organizations across India are adopting the cloud to modernize their data infrastructure.[5]

For many Indian companies that have had to fight prolonged internal battles to embrace public cloud in the first place, the idea of backtracking and quitting might be unthinkable. Yet, the pressure to do precisely that is rising worldwide. A June 2022 survey by IDC reports that 71% of respondents expect to either partly or fully migrate public cloud workloads into a dedicated IT environment over the next two years – down from about 85% in 2019[6].

Migration to or from the cloud is an expensive and time-consuming proposition to begin with, and most companies that have undertaken this journey once are simply ill-equipped to make the return journey.

Fortunately, there is now a way to manage and control rising cloud costs without extreme measures or quitting the cloud altogether. FinOps, sometimes referred to as cloud cost management or cloud optimization, is a new framework that is rapidly gaining popularity and traction among large enterprises with significant investments in cloud.

For instance, Segment, a customer data technology company, reduced their infrastructure costs by 30% in six months[7] by using multiple sources and apps to get the level of fidelity they needed.

The framework defined by the FinOps Foundation is “an evolving cloud financial management discipline and cultural practice that enables organisations to get maximum business value by helping engineering, finance, technology, and business teams to collaborate on data-driven spending decisions.”

As businesses seek to prioritise monitoring and rightsizing their corporate cloud spending, implementing a FinOps framework is well worth the effort. However, before adopting a FinOps approach, it is critical to get internal corporate buy-in, and that requires getting the conversation started.

In our experience, the following are some key steps that FinOps champions – those who seek to implement the framework in their organisation – can take to better prepare their organisation for FinOps adoption.

FinOps champions must begin with identifying and engaging with key decision makers. Effective change management – in this case, a transition from unpredictable cloud spending to continuous governance – necessitates getting the right set of executives on board with the idea. It is absolutely essential for the advocates of the discipline to identify pivotal stakeholders and potential early adopters within their organisation to harvest their insights and pave the way to a comprehensive FinOps strategy.

The second step involves articulating and communicating the benefits across teams. Cross-functional teams must understand the value of a new approach as it applies to their role and responsibilities. The key is to convey FinOps principles in a way that aligns with stakeholders’ unique needs and struggles. Once the benefits of FinOps become evident, the implementation process gets simpler.

Thirdly, the champions must address organisational and departmental concerns. To truly nudge an enterprise towards a new discipline such as FinOps, it is crucial to recognise issues both at the organisational level, as well as individual job level. A holistic understanding of the skill/function gaps that exist, enables FinOps champions to have a better grip of the issue at hand and effectively demonstrate the value of FinOps with strong real-world instances.

Finally, FinOps champions must outline the roadmap for FinOps implementation that covers the entire journey. A good roadmap would start with defining the practice, addressing the anticipated challenges, establishing Key Performance Indicators (KPIs) to gauge progress, and showcasing adoption within the organisation.

Getting started with FinOps takes effort, patience and a lot of persuasion, however the business results enterprises witness after incorporating FinOps, outweigh the initial challenges. A thorough understanding of possible hurdles along the way, effective communications as well as a clear and well-reasoned roadmap can go a long way towards making the journey effective and rewarding.

 

About the Author

(The author is Clinton Ford, VP of Product Marketing at Unravel Data, is passionate about unifying data science, engineering, and business, and the views expressed in this article are his own)

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