Many businesses and organizations are moving to the cloud and using the resources there due to the numerous benefits that come with it. However, there are also disadvantages, as an organization can accrue many cloud costs without knowing about it.
This is why many companies are making FinOps a work culture to combat the increasing cloud costs, but how does this work? Below, this article will provide in-depth details on how to use FinOps as a Service to reduce cloud costs.
What is FinOps as a Service?
FinOps is the short form of finance operations, and it is a concept in a business approach that puts the cloud expenses of a company into consideration. Apparently, this business approach resulted from the massive waste recorded by businesses using cloud services.
Some of them pay for services they don’t need or, in some cases, overpay for short-term resources. Hence, they are employing the FinOps approach as a method of ensuring they don’t waste their finances on resources they don’t need while at the same time keeping their performance at a high level.
In simple terms, FinOps is concerned about a business achieving its goals without necessarily wasting so many resources in doing so. One of the key points of FinOps as a service is that it introduces accountability in the organization, thereby making each team account for the cost and quality of work.
To understand FinOps better, there are two main beliefs about this concept:
- Optimization: Implementing FinOps in a company passes on the belief that there’s always room for improvement. One of the primary benefits or advantages of FinOps is that it ensures that the cost, speed, and quality of running a business in the cloud are appropriately optimized.
- Efficiency: FinOps is a concept that is very big on the efficiency of a business—it detests a business spending so much while achieving so little. Basically, FinOps believes that even with the smallest resources, a business can utilize them efficiently to come up with the best results.
How does FinOps Work?
The entire concept of FinOps and even FinOps solutions such as GlobalDots work predominantly in three pivotal phases, and they include:
1. Inform Phase
The inform phase is when organizations get information regarding their activities in the cloud, their resources, and their spending. In other words, this is the phase where the business gets visibility or insight into its cloud costs and resources.
Generally, each cloud provider, such as Microsoft Azure, AWS, and Google Cloud, provides clients with specific information regarding their cloud resources and activities, such as consumption data and billing. However, many organizations use more than one of these cloud platforms. Hence, there’s a need to get visibility, information, or insight in a united or centralized manner to have a clearer view of the whole cloud situation.
Another crucial role of this information phase isn’t only about using multiple cloud solutions or platforms. Also, many departments in an organization might be using different cloud resources. The engineering or development department needs comprehensive visibility about the cloud resources they use since they always do so on a large scale.
2. Cloud Cost Optimization
Cloud optimization is the focal point of the whole FinOps concept. Optimization isn’t only about reducing the amount a business spends in the cloud but also ensuring that it doesn’t affect high-quality performance. Optimization involves a lot of things, ranging from right-sizing the number of cloud resources a department uses to improving their reservation planning.
Using manual methods in cloud cost optimization is complicated and can lead to many errors. Hence, many organizations are deploying automated solutions like GlobalDots to ensure they effectively and efficiently optimize their cloud costs.
3. Continuous Management and Operation
A mistake some organizations make is that they start implementing FinOps for some time and then stop once things start moving in the right direction. This is not how it works—a business must ensure the continuous implementation of FinOps if they don’t want cloud costs to pile up again.
Making the FinOps concept a culture in an organization should be the goal, as it ensures that cloud costs don’t start piling up again.
Why did FinOps become very Important for a Business/Organization?
There are some critical reasons why FinOps became indispensable for many businesses, and they include:
1. Decrease in Accountability
The whole belief of FinOps is that a business should be accountable for the amount of money they spend on cloud resources and what they achieve afterward. However, many organizations lack the quality of accountability, as many of them spend so much money on cloud resources while achieving so little.
Hence, FinOps was introduced to ensure that businesses are accountable for the amount they spend and their output or results.
2. Increasing Cloud Costs
Many cloud platforms are coming up, and this sometimes means different cloud resources going up or down in price. In the case of increasing cloud costs, an organization has no option other than to turn to FinOps to guarantee optimization.
The implementation of FinOps also helps organizations track their expenses and identify opportunities that can help them reduce costs.
3. Lack of Transparency
There’s a lack of transparency in many companies regarding the cloud resources they use and the amount they spend on it. This lack of transparency is often due to the absence of comprehensive visibility to help track down cloud costs.
4. Partial Cloud Cost Optimization
Some organizations try to optimize their cloud costs, but the problem is that they are not usually consistent with the optimization process. Sometimes, the techniques they employ to optimize cloud costs are not complete, manual, or holistic.
Hence, automated cloud optimization solutions such as GlobalDots ensure consistent optimization for as long as possible.
In summary, FinOps is a concept that upholds the position that an organization operates efficiently in the cloud and performs exceptionally without wasting cloud resources. Cloud services already cost a lot of money, and the effective way of stopping and preventing this is FinOps.
There are many reasons FinOps rose to great prominence with regard to optimizing cloud costs. Some of these reasons were due to the partial optimization going on, a lack of transparency, and decreasing accountability.
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