How to leverage FinOps with Managed Services to Survive a Recession
Companies thought migrating to the cloud would give them a competitive edge over others. It appears lucrative because of a promise of low operating costs and higher efficiency. While Cloud technology has unlimited potential, many organizations fail to realize the benefits.
An increasing number of organizations found out that migrating to the cloud and maintaining its infrastructure is among their top operating costs. They also face visibility issues as they cannot determine where their cloud budget is going.
And when there is an imminent recession likely to hit the global economy, organizations first think about cutting down their unnecessary costs. As the cloud becomes a costly overhead, how will the companies manage their clouds in an obvious economic downturn?
Companies can no longer survive without implementing cloud technology. Complex e-commerce platforms, remote sales opportunities, increasing demand of buyers, and managing employees worldwide all have intensified the need for clouds. The agility and flexibility that this technology offers have opened new ways of doing business that cannot be ignored.
But, how to make the cloud initiative pay?
That is where the FinOps comes in.
As per the 2022 cloud Infrastructure report, many organizations believe that FinOps is an essential practice, however, only a few have implemented one. 96% of the enterprise respondents believe that FinOps is important for their organization’s cloud strategy, however only 10% practice a mature FinOps structure in place.
What is FinOps?
FinOps is an abbreviation for Cloud Financial Operations. It combines culture, organization, and data to help organizations to optimize their cloud expenditure. Many Managed Service Providers (MSPs) already provide cloud cost optimization services. They can guide you about where you can cut costs. But until you have a holistic picture of the sources of cloud waste, it becomes difficult to control costs.
FinOps give a cloud spend model where you will get a complete picture of the expenditure and usage across all clouds. It becomes much easier to remove sources of waste and drive in better business outcomes. So, MSPs must start offering their customer FinOps services to thrive in the recession.
How FinOps can help?
At the time of economic downturn, enterprises need to justify every expense. They must be strategic with the business value they can generate with their spending. They need to consider everything like expenses, speed of delivery, competitive advantage, and value generated. All of these are provided by FinOps.
Since FinOps need unique skills and strategic expertise, companies must look for external parties to do the job. Thus, it is an ideal program that MSPs must include in their portfolios.
Here are some of the potential benefits of FinOps that can help you to truly see the results:
1. Cost control and savings
Cloud fiscal management along with managed services are designed to deliver maximum rewards to the cloud users and control costs across all the departments. Cost optimization in the cloud is a challenging aspect for many organizations. The cloud bills are technical and complex to make out overhead cloud spending.
FinOps mainly solve two significant problems that make cloud cost optimization difficult. These are:
• A deep cost and performance analysis
• Clear metrics
Both of these give an insight into the cloud usage expenditure, identify the valuable services and help select the areas where optimization is possible
2. Reinvest savings for development and faster delivery
With FinOps it becomes easier to identify the areas of cloud waste and propose a customized cost optimization solution. But, implementing it remains a challenge. It is only possible if the engineering, business, and finance teams collaborate and take responsibility for their cloud usage. They must agree on a data-driven cloud expense approach.
Companies can derive the following benefits:
• Reduce waste and start generating revenues
• Invest revenue yield for research and innovation purposes
• Bring in new features utilizing cloud speed
• Raise the user satisfaction
3. Visibility of performance
Each managed service provider gives their clients their cloud consumption data, insights, and bills. But it fails to recognize exactly who is spending how much, where, and why in your total cloud infrastructure.
In an organization developers and engineers are usually the main users of cloud resources. If they have full visibility of their expenditure along with proper planning from where they can cut waste, it is possible to control cloud spending.
4. Predict future consumption and costs
The finance team is responsible for budgeting and forecasting. But cloud spending is not fixed. The engineers, developers, and finance teams must work together to predict the future cloud consumption model keeping in mind all the possibilities like the introduction of new features, the addition of a database, future workload, disasters, and other variable factors.
FinOps based on past data and the overall possibilities of cloud expenses helps in developing an accurate cloud forecasting model that gives an understanding of how much budget you need to allocate for the cloud.
We have compiled FinOps Best Practices and AWS Tools for Cost-Effective Cloud Management
Many companies across different industries have successfully implemented public cloud and are achieving impressive results. The companies followed a few basic rules. They have worked with managed service providers to install a well-planned cloud operating model. They have adopted FinOps to channelize their cloud expenses properly. All the organizational departments have worked together to maximize the cloud opportunity.