Financial management is key to a successful migration to the cloud. First of all, because it allows you to focus on the expectations of the operation: with a more concentrated vision, the organization can better consider the activities necessary to make it happen.
It also allows you to reduce hidden costs and critically assess the company’s current situation so that you can better predict where it will be once it has migrated to the cloud.
Cloud adoption represents a significant evolution for the company. Successfully achieving this is a matter of financial management.
Financial management: mistakes to avoid
Financial management is so important to the success of cloud migration that a set of best practices and methodologies has been compiled into a specific “doctrine”: FinOps. FinOps is essential to ensuring that cloud adoption across the organization is aligned with business objectives. In practice, it ensures that the cloud works from an economic point of view and not just a technological one.
But there are other considerations to be made when it comes to cloud financial management.
1 – Migrate everything
For example, it is not necessary for the organization to migrate its entire infrastructure and all its applications to the cloud. Some data may be better kept on a private server, for example.
Otherwise, the company may incur higher costs than necessary: because the “pay-as-you-go” logic of the cloud also means having to manage the applications and data migrated to the cloud intelligently and, above all, in an organized manner. And this brings us to the second common mistake.
2 – Overcommitment
Migration to the cloud is (rightly) perceived as a phase of rebirth for the organization. However, it often happens that more resources than necessary are purchased with the idea that the excess capacity will find a reason to exist anyway.
This logic stems from a time when companies had to buy hardware and therefore tried to make it as long-lasting as possible so that it could still meet the company’s needs years later.
In cloud logic, however, overcommitment transforms unused resources and instances into unnecessary costs. And therefore avoidable ones.
3 – Not setting budgets
Another key aspect of cloud financial management is identifying budgets. It may seem obvious, but setting financial limits and configuring forecasts appropriately (especially with a reliable data base) means making the best decisions to stay within the business plan and, even more importantly, within the return on investment targets. Conversely, not doing so can lead to spending more than necessary and losing control over cloud spending. Another key aspect of cloud financial management is identifying budgets. It may seem obvious, but setting financial limits and configuring forecasts appropriately (especially with a reliable data base) means making the best decisions to stay within the business plan and, even more importantly, within the return on investment targets. Conversely, not doing so can lead to spending more than necessary and losing control over cloud spending.
4 – Don’t exploit hierarchies
Cloud financial management needs data because data is the basis for the best decisions: those based on real information. Therefore, it is also important for the organization to be careful when establishing hierarchies based on which some users can access certain data and others cannot.
In other words, it is essential that senior managers have access to high-level statistics, dashboards, and insights so that they can make the best decisions for FinOps.
5 – Not considering assets
Finally, a common mistake is underestimating the importance of meticulous control of software assets. It is a common scenario: over the years, the organization has changed software, installed new software, updated some licenses, and replaced others. This means that the company is faced with a software portfolio that is not easy to evaluate. It is essential to integrate asset management tools that help to regularly check the status of software assets in order to avoid unnecessary costs.
Financial management: what you really need
FinOps is therefore the key to successful cloud migration. This is because, first and foremost, it aligns cloud implementation with business needs, but even more so because it helps streamline operations, optimize resource usage, and thus maximize the value of applications, processes, and data.
When organizations move to the cloud, they need to develop a customized plan—based on the specific needs of the company—and implement software asset management to assess the “as is” situation and get an overview of which licenses are no longer in use, for example, in order to optimize costs and make better decisions.
Ercole by Sorint.Lab is an effective software asset management solution that suggests the best actions to take to maximize the value of your software assets and ensure a successful migration to the cloud.