Jesse Stockall is Chief Architect, Snow Software.
Amid rising cloud spend and constrained IT budgets, FinOps—the practice of managing and optimizing cloud infrastructure with a cross-functional team of IT, cloud, finance and engineering—has gained tremendous traction. While it’s beneficial for organizations taking stock of their growing cloud infrastructure, the new practice cannot optimize every facet of your cloud environment. Here’s how you can shine a light on what you’re likely missing.
A Continued Cloud Rush
Cloud computing is continuing its upward trajectory this year. Gartner has forecasted greater growth in 2023 with an increase of more than 20% from $491 billion in 2022 to $597 billion in 2023. What was once a casual climb with cautious cloud adoption and slow-moving migrations has become a rocketing ascent, further fueled by generative AI.
Every year more companies are adopting cloud to support further digital innovation, including streamlining operations, improving agility, increasing scalability and generally delivering a better customer experience. Often, the ultimate goal is for cloud migration to serve as a tool to reduce costs, although most organizations quickly learn complex cloud environments can have the opposite effect on budgets without the correct guardrails in place.
CIOs are being asked to cut costs and create efficiencies in an uncertain market. The persistent push to the cloud, alongside and in direct conflict with pressing cost-cutting mandates, is part of why FinOps has become increasingly important.
Identifying The FinOps Gray Areas
While still in its early stages, the established FinOps framework does a good job of managing and optimizing cloud infrastructure, including virtual machines and databases. Teams can assign ownership, identify unoptimized resources and take advantage of cost-saving measures. In this way, the FinOps process operates similarly to a more traditional IT asset management (ITAM) program, but for the cloud.
FinOps and ITAM practices are important for saving money and gaining organizational efficiency. What hasn’t been addressed within FinOps yet are the often costly managed cloud services that run inside your cloud environment. While these services exist within your cloud environments, they differ from the capabilities offered directly by the cloud provider, sitting somewhere in between cloud and SaaS.
These services sit entirely outside of any established operational management framework for managing cloud costs. Frequently procured through informal channels and maintaining their own unique requirements, these tools are not often billed by cloud providers, despite living within the cloud. Instead, invoices are sent to the individual departments, like a SaaS application. These services also have their own billing metrics and contract terms, and like traditional SaaS contracts, can quickly sprawl out of control.
This is just one example of services that live in a gray area of FinOps and are often left unmonitored and unmanaged. It’s a good example of an opportunity for FinOps professionals to collaborate with ITAM teams, who typically are trained in managing and monitoring these gray areas of software use within an organization.
Gaining Visibility To See The Opportunities
Whether management of these services falls under the purview of FinOps, ITAM or a combination of the two, teams are unable to make headway into problems of consumption or optimization without clear visibility into their entire IT ecosystem. It’s the age-old adage of, “You can’t manage, let alone optimize, what you can’t see.”
To get a better handle on these costly cloud services that operate outside the realm of a typical FinOps or ITAM practice, start by building a bridge between your FinOps and ITAM teams if there is a disconnect between these groups. Information sharing is an important best practice for any organization and will go a long way toward optimizing everything living within your cloud environment.
With the right people at the table, the next step is ensuring they’re equipped with the right tools to do the job. Enterprise software tools that track, manage, and optimize costs, licenses, and right-size usage are crucial to gaining control over uncategorized products within your organization’s tech stack. FinOps, which oversees cloud cost management, and ITAM, which oversees SaaS sprawl and management, will need to come together to oversee the proper management of these products.
Without the right tools and processes in place, it is difficult if not impossible to understand the entire scope of products and services being utilized in your organization’s tech stack. Granular data, including when and how each product is being used and by whom, can help teams navigate what’s necessary and what’s not in the face of constricting budgets.
Cost Savings Through Collaboration
FinOps is a powerful framework for gaining control over growing cloud spending, but the practice is still considered in its early stages. There are numerous opportunities for further exploration of how FinOps can delve further into cost optimization and governance across cloud environments. Consolidating or encouraging collaboration between FinOps and ITAM groups can help ensure the full view of all IT products and services is being monitored and appropriately managed by all key parties, no matter where they live.