Cloud management proposes a paradigm shift compared to the management of on-premise data centers. While in a local context, for example, overcommitment is often considered a good habit, because it guarantees the hardware a longer life even if it initially offers more resources than necessary, in a cloud environment (whether hybrid or multicloud) it represents an additional item to the “costs” section that must be addressed in a totally different way.
Organizations are finding themselves in the complex situation of needing to adopt cloud infrastructure and platform models to be able to scale their capabilities and be able to align with market competitiveness, but also of having to change the approach to cost management, which compared to an on-premise scenario is different.
FinOps mode is the answer. The acronym FinOps incorporates the terms “financial” and “operations” to identify an innovative paradigm of operating expense management in the cloud. A cultural change that brings together business, processes and teams so that the conscious use of the cloud makes resources available to all departments, but with accurate budget planning and proactive cost monitoring.
Cloud management: the challenges
Cloud management has become central to the economy of all organizations. Nowadays, we can no longer do without the cloud; but achieving a full migration also means converting the organization of the enterprise towards a model where the resources of the cloud – which are distributed to all departments and all employees in the company – are managed in a contextualized way.
In other words: the company needs to make sure that its cloud-related spending is aimed at creating business value and that it brings the desired results. Otherwise, managing the cloud may mean an increase in costs that is disproportionate to the benefits obtained.
The main challenge, therefore, is to optimize costs, monitor them and be able to graft a cultural change into the organization that guarantees at all levels the accountability and awareness of what the cloud means, how it must be interpreted and what kind of best practices should be implemented so that cloud management does not suffer phenomena such as overcommitment
Cloud management: the benefits of FinOps
FinOps is a cloud management operating model that brings together best practices, corporate culture and systems to achieve business objectives by optimizing cloud resources. It should be clarified that the objective of FinOps is not in itself to reduce the costs associated with the cloud, but rather to be able to understand and manage them optimally through the lens of value creation.
FinOps starts from the assumption that the cloud is a paradigm shift and needs a different model. In an on-premise environment, control of resources is delegated to a few people. In a cloud environment, on the other hand, the use of resources is distributed at all levels and across the entire company: a radically different approach is needed so that the company is not overwhelmed by unexpected, anomalous and excessive costs compared to the value created.
The benefits of adopting a FinOps model include
- the ability to accurately predict cloud expenses with systems and processes that increase the visibility of cloud costs and allow you to measure results;
- the optimization of resource allocation and use;
- reducing the risk of overcommitment and the presence of unused instances;
- the improvement of return on investment;
- the increase in collaboration between various business teams.
The FinOps method allows you to align the cloud strategy with the business strategy, encourages collaboration between departments of the organization and promotes innovation. Implement an effective cloud governance model to optimize associated spending.
FinOps evolves cloud management
In many companies, the cloud has brought intense repercussions on various departments and often the various teams find themselves having a partial perspective on how the cloud is interacting with the rest of the company’s business: technical figures, for example, have poor visibility on the actual costs, while those who work in the financial department struggle to understand the many options and SKUs (Stock Keeping Unit numbers for tracking inventory) provided for Public Cloud systems.
FinOps is a cultural change that transforms the organization allowing to control the cloud rather than suffer it, through an operating model that increases awareness at all levels, implements the systems and processes to empower individuals and generates the organizational conditions to measure the creation of value through resources in the cloud.
Ultimately, the cloud has changed the way we do business, FinOps helps companies control the cloud.