The double edge of FinOps: Avoiding the waste cycle to gain meaningful insight

Article by Nathan Besh, Senior Director, Product Management and Technical Evangelism, Apptio

FinOps is a bit of a double-edged sword. It is about maximizing value by improving efficiency throughout the business. With the Cloud, it is possible to look at efficiency hour by hour or minute by minute. In these challenging times, it is important for companies to continue to innovate, not only on their products and services but also on how they allocate their resources. Reducing portfolio clutter and redirecting resources to opportunities can reap the highest returns. The right investments can accelerate the digital transformation journey and create new revenue streams while ensuring the foundation stays intact.

In the 13th edition of BFSI IT Summit 2022, I shared an example of a company’s database that may be heavily used during the day, but dormant during the nighttime, which could actively incur costs without delivering value. So, you can look at that component and not only go to the cloud, but you can utilize the best parts of the cloud so, at two o’clock in the morning, you’re not paying anything because it’s pay-as-you-use, and there’s no usage.

Proponents will point to potential savings of hundreds of thousands or millions of dollars. Organizations love to hear that, it’s a great headline, and they start to get really excited. But that is actually getting caught in what I call the waste cycle.

Waste in the cloud is paid for thrice

Waste in the cloud is expensive because, in effect, you are paying for it three times: when it is created, when it is analyzed and identified as waste, and when it is removed. The cost of achieving the potential savings may not be insignificant. It could consume some or even outweigh the potential savings.

Just trying to fully understand your cloud costs & usage can take a lot of time and effort.

Just looking for redundancies and unused components takes a lot of effort. Similarly, removing the waste is usually far from simple. In order to extract the real value from FinOps you need to get out of the waste cycle and stop believing that a reactive approach is doing FinOps. Ultimately, understanding what needs to be done to stop it from happening again is by far the most important challenge.

It’s about business insights, and asking the tough questions like “Why is this waste here, how did it get here, and how did we allow it to continue?”.

FinOps provides insight and clarity

There is a temptation to say FinOps enables organizations to understand the costs in the cloud. But I prefer to think of it as providing insight and clarity to improve efficiency. It is the way that you extract maximum business value from your actual investments.

Before it can be fully utilized, the tools need to be configured correctly, and users need to be trained. For large organizations, the size and scale of the operations mean there are challenges with the tools you want to use.

We are talking at least hundreds of thousands, millions of lines of information that need to be processed multiple times a day. On top of that, the data needs to be enriched. Things like your organizational information, your account structure, and things like tagging, so that you can ask it a business question and get a meaningful business answer back.

Changing perception of hybrid cloud

Another subtopic the panel discussed was the trend of moving to a hybrid cloud. I think the perception of hybrid really needs to change. It is interesting to see over the last five years, the change in messaging, and also the change in investment.

Vendors and the industry are putting a lot of effort into making hybrid clouds work, resulting in a streamlining in its implementation, including tools that now span the cloud and on-premise. It’s very feasible from an operational perspective to operate in a hybrid model, but also much more feature-rich. Any innovation that happens in the cloud, all that good stuff is instantly in hybrid as well. A unified view of your hybrid IT investments—whether on-premise or in the cloud—as well as consumption across business units helps identify excess or duplicative consumption and optimize your investments.

FinOps solutions turn your raw data into powerful, actionable insights that CIOs and CFOs can use to communicate with other business leaders to modify behavior and alter consumption.

Ultimately, what is important is that companies get started with FinOps. As long as those first steps are taken, then you will receive immense benefits and returns from FinOps, and will continue to build your FinOps capability and evolve your FinOps journey.

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