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FinOps 101: Transform Cloud Cost Challenges Into Opportunities

by | Mar 20, 2024 | T.E.M. Thought Leadership

Realizing competitive advantages and savings from the cloud isn’t as easy as implementing a cloud infrastructure. The reality is that cloud technology comes with its financial challenges. In fact, 82% of technical executives, managers, and practitioners of cloud computing found managing spending a significant challenge due to the complexity of cloud pricing models, unused resources, and lack of tools to optimize costs.

Without optimization and oversight, companies struggle to track cloud usage accurately and allocate costs, leading to unpredictable and uncontrolled costs. For instance, 32% of cloud spending was wasted in 2023, up from 30% the previous year.

Enter cloud financial operations (FinOps). FinOps provides a framework and methodology to optimize cloud spend and unlock innovation. By embracing FinOps, organizations can transform the finance function while enabling business growth.

Why FinOps?

There are several reasons why companies should embrace FinOps. By doing so, they can:

  1. Optimize cloud costs: FinOps provides visibility into cloud spend and helps identify waste to reduce costs. It enables up to 20%–30% savings on cloud expenses through rightsizing, eliminating unused resources, applying better purchasing techniques, and more.
  2. Enhance decision-making: FinOps generates granular cost analytics and attribution to inform strategic decisions on resource allocation, pricing, and migrations aligned to business goals.
  3. Increase accountability and compliance: It establishes clear ownership of usage and spend across teams, ensuring budget adherence and improving security and regulatory compliance.
  4. Innovate and grow: FinOps frees up capital from cloud savings to fund growth initiatives and facilitates faster delivery of products and services.
  5. Future-proof the budget: As cloud usage grows exponentially, having FinOps ensures costs don’t spiral out of control by making budgets predictable despite dynamic cloud pricing.

What to consider when implementing FinOps

First step: Get executive buy-in and support

Leadership endorsement across finance, IT, and business teams drives cultural change and FinOps adoption. It signals cost consciousness is a top priority and ensures the necessary resources for the initiative. Executive support also facilitates a shift toward cloud investment and cost accountability. To get leadership FinOps support for the ultimate results, consider:

  • Clearly defining roles and responsibilities

    Use a RACI matrix (or one of the other responsibility-assignment-matrix variants) to map accountability across FinOps personas of cross-functional teams, including engineers andfinance leaders. It clarifies who is responsible for performing tasks, who is accountable for the outcomes, who should be consulted during the process, and who must be informedabout the project’s progress. This model ensures clear communication and accountability, preventing overlap and confusion in roles and responsibilities.
  • Starting small to show value

    Run FinOps pilots on limited scope to demonstrate cloud cost optimization success. With quick wins, organizations can build momentum for a larger rollout.
  • Choosing the right tools

    Leverage a partner like SpyGlass to assess existing tools and gaps for visibility, cost allocation, optimization, and ongoing support.
  • Focusing on business outcomes

    Frame success metrics around cost savings, innovation velocity, uptime, and other strategic goals. This tactic allows businesses to focus on outcomes that drive growth and innovation, not just cost efficiency, providing a more holistic view of business performance.

  • Getting engineers onboard

    FinOps relies on developer collaboration to be successful. Not only must they tag resources appropriately for high-quality data, but they must also be able to access high-quality data. After all, a single line of code could be the difference between $100s or $1000s in waste. With access to timely finance data, engineers can make better building decisions that lead to more cost-effective development.

  • Maintaining continuous improvement

    Position FinOps as an evolving practice and keep refining processes. This approach ensures FinOps practices mature alongside the company’s cloud usage, maintaining relevance and effectiveness over time.

  • Developing diverse expertise

    Hire for soft skills and specialized cloud finance/engineering skills and train personnel on tooling and best practices. Soft skills such as communication and teamwork lead toproductive collaborations, and technical skills enable teams to manage cloud resources and security efficiently. Training on best practices and tooling further enhances the team’s ability to innovate and optimize cloud operations, ensuring the organization stays competitive and secure in the digital landscape.

How to avoid FinOps pitfalls

Avoid potential downfalls and realize the best cloud computing infrastructure savings from FinOps by dodging the following key actions:

  • Delayed executive involvement
  • Emphasizing only cost-cutting
  • Choosing complex tools prematurely
  • Treating FinOps as a one-off project rather than a culture shift

These missteps can lead to costly inefficiencies, lack of organizational buy-in, and missed sustainable growth and innovation opportunities.

How SpyGlass feeds FinOps finesse

SpyGlass offers a comprehensive approach to technology expense management, crucial for optimizing cloud costs and achieving cost efficiency. SpyGlass provides:

  1. SnapShot Audits: A SnapShot Audit achieves financial transparency around cloud costchallenges to help you understand your current cloud spend and identify areas for optimization.
  2. Expertise in technology expense management: With decades of industry expertise, SpyGlass guides you through the complexities of cloud cost management, helping you avoid common pitfalls such as overspending and underutilizing resources.
  3. Strategic partnerships: As a strategic partner, SpyGlass works with you to comprehend emerging trends and integrate cutting-edge technologies for mastering cost efficiency in the cloud.
  4. Cloud strategy development: SpyGlass helps you develop a cloud strategy to ensure cloud investments contribute to overall business success.

Harness the power of the cloud and FinOps

The transformative potential of cloud computing is undeniable: unparalleled cost savings and efficiency gains. However, the journey to realizing these benefits is fraught with challenges, notably managing and optimizing cloud spend. Through FinOps, companies curb unnecessary cloud expenditure, potentially saving 20%–30% on cloud costs.

Through services like the SnapShot Audit and strategic guidance in technology expense management, SpyGlass is an invaluable partner for cloud FinOps, guiding you through the complexities of cloud cost optimization. Ultimately, the combination of cloud computing and FinOps, supported by strategic partners like SpyGlass, represents a powerful lever for you to drive efficiency, innovation, and growth in today’s digital economy.

Ready to take control of your cloud computing expenses?

Start a SnapShot Audit as part of your FinOps strategy.

Contact SpyGlass to inquire about a no-costs-up-front SnapShot Audit.