If you are involved in the public cloud world, you have probably heard the term FinOps thrown around, but do you know what it means? More importantly, can your organization execute on a FinOps approach to benefit from its promise to bring financial accountability to cloud spend?
FinOps: What it is and why it is important
It is short for financial operations, and the FinOps Foundation defines it as “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.”
Unlike the traditional data center which requires capex investment, the public cloud operates on an opex pay-as-you-go model. The upside is that you do not have to tie up financial resources now on infrastructure you will need in the future or to support peak usage but is otherwise underutilized. But there is a downside as well; if you cannot effectively monitor and manage your workloads in the public cloud, your business could end up paying a high price, whether that is due to availability problems, performance issues, spiraling costs, or some combination.
The challenge is that IT leaders who grew up in the traditional data center have not built the skills and tools needed to support the accountability they are being held to in this new environment. Furthermore, it is not just IT’s problem to solve. The move to the public cloud is far more likely to be undertaken as a business transformation initiative than a simple technology project, which means there is a lot at stake. This is why FinOps is not about saving money; it is ultimately about making money. Smarter cloud spend does not just support operational efficiency; it can drive more revenue, grow the customer base, and accelerate the velocity of strategic product and feature releases.
Getting from here to FinOps: Key considerations
The FinOps philosophy breaks down siloed procurement in favor of cross-functional best practices. This sounds logical, but given the inherently siloed nature of most enterprises, it is much easier said than done. According to the FinOps Foundation, successful FinOps requires stakeholders to be able to access “near-real-time data they need to influence their spend and help them make intelligent decisions that ultimately result in efficient cloud costs balanced against the speed/performance and quality/availability of services.” Again, no one will argue with the logic of this but many organizations, if they are being honest, do not know what it means in practice and how to make it happen.
Before you can determine what data is required, what decisions need to be made, and what trade-offs must be balanced, you need to understand the real-world challenges organizations are wrestling with:
- Matching capacity with workloads up front is challenging. You need to make sense of thousands of configuration options for cloud resources, then calculate the amortized value of your programmatic discounts based on instance usage to determine savings potential. Doing this manually on an ongoing basis is impossible given an ever-expanding list of configurations and continual shifts in your workloads.
- With countless pricing and capacity variables available, it is difficult to understand the factors driving your cloud costs on an ongoing basis.
- In an on-premises environment, unused resources are a given. In the public cloud, however, they are an unnecessary—and potentially expensive—cost. But finding that waste can be difficult, especially given the rate of change in the environment.
- You can benefit from substantial discounts by purchasing reserved instances, but if you are not careful, you could end up paying for capacity you do not use, which can cause those savings to evaporate.
Solving these challenges requires precision observability and deep insight into your cloud configurations and costs across multiple cloud providers and accounts.
Virtana Optimize: Optimize for enduring savings
Virtana Optimize supports your FinOps journey by enabling you to gain visibility into your current cloud costs, identify wasted resources and expense, understand jumps in spend, and alert on unexpected changes. Our real-time data collection and analytics deliver ongoing recommendations for cost management and resource optimization that ensure you can scale smarter while meeting your SLAs and staying on budget.
The Cost Savings Dashboard makes it easy for you to immediately realize opportunities to save money on AWS and Azure bills. You can drill deep into recommendations and set policies that will programmatically balance performance and cost against your determined acceptable level of risk. Bill Analysis Reporting will help identify unexpected jumps in spending by providing better insights into and segmentation of your data. You can examine charges sorted by Attribute and Tag to develop a deep understanding of where your expense is occurring and alert on unexpected jumps. This will help you substantiate costs when reporting to management and other stakeholders. Cost vs. Utilization Reporting provides per-instance visibility into spend and performance. Additionally, you have insight into programmatic discount and data transfer costs for your organization’s charge back or other expense allocation mechanism.
Virtana is your FinOps partner
See how Virtana Optimize can empower your organization’s FinOps practice: Request a demo.
David McNerney
Product Manager, Virtana
