Cloud technology, which forms a considerable and ever-growing part of global IT efforts, plays a pivotal role in shaping an organization’s cost-reduction opportunities, efficiency initiatives, and future market-focused competitive efforts.
However, significantly transforming your operations to harness the power of the cloud requires best practices, frameworks, a culture of collaboration, cost transparency, and much more.
Organizations are all-in but don’t have the in-hand cards to win
The latest data bears out this complicated reality.
According to recent data from the FinOps Foundation, FinOps (financial operations) continues to proliferate within companies globally (including most of the Fortune 500). Where are these organizations in terms of maturity?
Nearly 68% of respondents are at the crawl stage, around 23% are at the walk stage, and 9% are at the run stage. And yet, Accenture research found only 42% have yet to achieve any material value from FinOps.
While most IT leaders genuinely believe that FinOps is the answer to cloud cost complexity, it’s clear there is still a lot left to learn.
Moreover, many cloud industry leaders believe they’ll have to wait years before seeing any positive outcomes from their FinOps practices — according to a recent study from CloudBolt Industry Insights (CII) conducted by Wakefield Research, 75% of respondents say they anticipate it will take 24 to 36 months.
Even so, there remains an unprecedented commitment to the cloud, with 86% of companies reporting an increase in cloud initiatives, according to the same Accenture data. So, while most IT leaders genuinely believe that FinOps is the answer to cloud cost complexity, it’s clear there is still a lot left to learn and build upon to make the best outcomes a reality.
The FinOps inflection point
The truth? FinOps is more than just a buzzword; it’s a mindset that brings together finance, operations, and engineering teams in perfect harmony. By fostering a collaborative culture of cost transparency, FinOps instills a sense of shared responsibility across departments, allowing organizations to make informed decisions and optimize cloud resources efficiently.
From this year’s FinOpsX conference and beyond, here are some best practice takeaways you can consider to help ensure your cloud transformation is successful across every metric, with FinOps at the forefront of every decision.
1. Build a rock-solid foundation with a cloud center of excellence (CCoE)
Create a CCoE or a team or group of individuals within your organization responsible for creating and implementing cloud-related best practices, guidelines, and governance policies.
Before beginning your cloud journey, this team should present a “state of financial health” using agreed-upon KPIs (key performance indicators) and discuss antipatterns, trends, and success blockers. It should comprise two cross-functional teams — often a cloud engineering team and a cloud steering committee.
Some key responsibilities of a CCoE include the following:
- Owning and executing the cloud strategy.
- Driving collaboration and best practices across key stakeholders.
- Evaluating and utilizing technology to support business initiatives.
2. Start a conversation with every stakeholder
The efficacy of cloud-based initiatives hinges on the coordinated efforts of people, processes, and technology to fulfill their pledged value. Although roles like cloud architects and other cloud-focused personnel are crucial for handling everyday cloud activities, it’s equally vital for business stakeholders.
This group includes members of the C-suite, finance, legal, procurement, and various other internal teams to understand cloud technology fully. This knowledge will help formulate the business’s most effective strategies and solutions.
Meet with your cost leaders regularly to review cost trends, set optimization goals, remove blockers, enable, and train. Think: cross-functional workshops, roundtable discussions, lunch and learns, and demos to get the conversation going.
If you’re feeling creative, develop a friendly competition among different departments or teams through cloud cost gamification. Set cost-reduction goals and reward the teams that achieve the most significant savings through FinOps practices, fostering a sense of ownership and encouraging collaboration.
3. Lose the manual processes; implement cloud cost management tools instead
Empower cost leaders with round-the-clock access to cost management tools, enabling them to generate pertinent reports, dashboards, budgets, forecasts, and more.
Additionally, the pay-as-you-go model, a feature of numerous cloud cost management tools, allows you to pay only for your actual needs, delivering immediate return on investment (ROI) via automated cost optimization.
4. Share the cloud knowledge and its power
At its root, cloud knowledge management is how your company organizes and supplies the foundational information employees and other individuals require to understand the cloud system you are creating.
To achieve this, collaborate with your learning and development department to curate training materials and disseminate best practices in FinOps, provider updates, and industry insights.
5. Make everyone an expert through training
Stakeholder management within leadership involves aligning all stakeholders toward a shared understanding of the organization’s goals and objectives. This alignment allows for a cooperative effort to realize these ambitions. Moreover, leaders must be able to identify and efficiently resolve potential discord among stakeholders.
Stakeholder training requires clear communication, consistent training sessions, and open feedback systems. This crucial process will help ensure all stakeholders feel included and valued and ultimately drive the success of your transformation.
6. Create cloud champions with internal marketing
Seize opportunities to openly communicate the organization’s goals, updates, and success stories. Employees can better comprehend their role in the cloud-centric digital transformation by utilizing internal marketing strategies.
This comprehension often leads to heightened engagement, motivation, and productivity in their roles, ultimately fostering advocates for the project. Think: cloud champions program, where enthusiastic and knowledgeable employees can become advocates for cloud adoption.
And these champions can mentor and assist others in understanding cloud concepts and best practices.
7. Keep your eyes on FOCUS as multicloud management remains a critical challenge
The FinOps community has recently started the critical (and foundational) process of establishing benchmarks for cloud financial management. Most importantly, these industry-wide standards can give organizations a common ruler to measure their cloud initiatives.
And the open source industry specification FOCUS (FinOps Open Cost & Usage Specification) holds the potential to streamline and broaden the success landscape for FinOps.
Launched by FinOps Foundation, this new spec for sharing cloud cost, usage, and billing data can provide a consistent structure for reporting cloud cost data and empower companies to expedite their cloud adoption. This precedent could be crucial for fueling the second wave of growth.
8. Understand that the struggle with the cloud “basics” is still real (operational vs. transformational FinOps)
It’s essential to remember that despite the progress in the field, many FinOps practitioners are still grappling with the foundational aspects of the cloud. These challenges range from understanding cloud pricing models and cost optimization strategies to establishing effective communication between IT, finance, and business units.
These primary hurdles underscore the need for ongoing education and more transparent frameworks in the evolving FinOps landscape. Coincidentally, this progression mirrors the DevOps trend, where the disparity between high performers and those lagging continues to expand.
The future of cloud and FinOps is bright
The widespread adoption of cloud computing has catalyzed numerous transformative tech trends, such as artificial intelligence (AI), the Internet of Things (IoT), and remote and hybrid working. Looking ahead, we can anticipate its role as a facilitator of even more groundbreaking technologies, encompassing virtual reality and augmented reality (VR/AR), the metaverse, cloud gaming, and potentially even quantum computing.
With its transformative potential in cloud financial management gaining momentum, what’s on the horizon for FinOps is truly exciting. Even so, many organizations struggle to unleash the cloud’s full potential. Despite most organizations having formal FinOps teams, real value remains elusive, and many expect to wait years for positive outcomes. But it doesn’t have to be this way.
As cloud technology begins to reshape nearly every part of the information technology paradigm globally, the takeaways and trends outlined above are crucial to mastering FinOps and unlocking its true power for cost optimization and strategic growth.
With a comprehensive and successful FinOps game plan based on these guidelines, your organization can go all in on the cloud and deliver a winning hand.