Cloud computing has revolutionised the way we do business, opening the way to digitally transformed operations that are faster, more efficient and more in tune with your customers’ needs. But despite the hype, not every workload is a suitable candidate for migration to the cloud. This is an important truth; placing the right workload in the right location (on-premises or in the cloud) will affect your ability to meet corporate goals in future.
Eventually, digital transformation touches every aspect of your business – including purchasing and procurement, particularly as cloud computing uses a completely different model of billing compared to traditional capital-spend funded data centres. Lower IT costs has been one of the headline promises of cloud. However, in practice, often at best savings are more modest than hoped and, at worst, cost have spiralled to much higher levels than budgeted for.
The good news is that true cost savings and business value really can be achieved, and this is where ‘FinOps’ comes in. Before the pandemic, cloud overspend was projected to reach $21bn this year, representing a serious threat to strategic growth for many businesses.
Assessing IT workloads and assigning them to the correct location will improve performance and security on a technical level, but also allow your business to realise cost savings and avoid over-spend.
What is FinOps?
According to working group The FinOps Foundation:
“FinOps is shorthand for Cloud Financial Management. It is the practice of bringing financial accountability to the variable spend model of cloud, enabling distributed teams to make business trade-offs between speed, cost, and quality.”
One of the key aims of FinOps is to help businesses get a grip on their cloud spend. The pay-as-you-use billing model is incredibly useful for rapid development, deployment and scaling – but it also complicates your attempts to predict cost and control budgets.
The more complex your use of cloud services – number of teams, workloads, vendors – the more important the transition to FinOps.
To be effective, cloud implementation must be an integral part of the corporate vision. The strategy needs to explain how your business sees the future, the business models you want to adopt and how you will adapt to new market changes. With a formalised vision, you can design procurement processes to match.
Cloud platforms are incredibly easy to use, allowing your development teams to spin up resources as and when required. Governance tools provide a way for your business to monitor and control usage to ensure some degree of control over spend.
Training for a specified responsible role
Effective FinOps requires a new skill set – and preferably a dedicated employee. This individual, often a cloud architect, will be responsible understanding business requirements and the cloud governance systems so that they can balance purchasing and operations in line with strategy.
Identifying the right candidate workloads
Not every workload belongs in the cloud – your IT team needs to define those which must be retained in house and those which can be migrated to a hosted service. They must then identify the correct provider and service level for each of the candidate workloads to ensure the correct balance of performance and price.
All of the major providers (and several third parties) offer tools to help with workload planning, which will help with purchasing and planning.
Why purchasing and procurement needs FinOps
During the pandemic, new requirements, such as large-scale remote working, have helped to accelerate cloud uptake and consequently spend. But now these early wins are being scrutinised and need to be made to work harder now and for the future. This is particularly relevant as many firms have found their cloud bills to be higher than expected.
With the ability to spin up virtually unlimited resources whenever required, FinOps is essential for helping businesses retain oversight of their spend and maximise value from that spend. There are real savings available for both IT and the wider organisation – but they are not always simple to achieve.
Cloud overspend is a real and significant problem. As mentioned previously, Gartner projected “cloud waste” to reach $21bn this year – thanks to accelerated, wider adoption, this figure may actually be even higher now.
Building a FinOps team establishes a partnership between finance and technical roles. This trust confirms that both parties are aligned to a common strategy and that purchasing decisions are made for the good of the company, not simply as a penny-pinching exercise. Ultimately, FinOps is about working together to manage iterative spend over three to five years, which will cause a dramatic change in the role of procurement for your organisation.
Given that the stakes are so high, instituting FinOps is a crucial step in the digital transformation of your business, evolving the procurement function to be as effective and responsive as your DevOps function.
Why you should partner with Maple
Maple has the skills and experience you need to transition to FinOps – and to achieve the savings you need. We have a proven track record of delivering hundreds of thousands of pounds worth of savings to public and private sector organisations.
We’re always happy to provide tactical assistance, helping to benchmark against you current suppliers to prove value. And our established relationships with key cloud vendors means that we can provide expert advice across AWS and Microsoft Azure.
We’re also honest – we know that cloud is not the answer to all your IT challenges. We’ll give you a straightforward view of those workloads are suitable candidates for cloud migration – and those that are best retained on-premises.