It’s no secret that stocks in 2022 are off to a less than favorable start, and tech investors are becoming increasingly selective about the risks they’re willing to take – many pulling back from parts of the market that are sensitive to inflation and rising interest rates. Businesses big and small – and particularly startups – are understanding the need to tighten their budgets due to the shift in the market. But it’s not all doom and gloom.
While organizations look for ways to cut costs in the seemingly obvious places, they often miss the fact that Cloud spend is one of their biggest expenses. The truth is that Cloud spend is often the largest spend for organizations (after salaries), especially for tech companies big and small, both bottom and top lines for enterprise P&Ls. It has become exorbitant, and it is likely to increase further.
Often, CFOs, COOs and team leaders feel as though they can’t control Cloud costs, allocate the costs to the various business units, products, or services, or explain these costs to management or investors. But it doesn’t have to stay this way.
FinOps is the most efficient framework in the world for companies to manage their Cloud costs. At its core, it is a cultural practice that enables companies to drive better utilization with constant visibility into Cloud spend. Organizations with a healthy FinOps culture can be more efficient (do more with lower spend), better control their costs and cost allocation, gaining clearer visibility into how to price their product and improve product pricing by utilizing cloud resources and cutting down costs significantly.
Today, it is quite clear that FinOps offers companies the reassurance of not just saving money but making money. A healthy FinOps culture can cut spending by 20-40% and allow companies to improve their product & services pricing. After all, an efficient Cloud spend can drive more revenue for the business.
To regain control over resources and forecasting, your organization should adopt a FinOps culture. A simple, three-phase approach could achieve this:
- Inform: This is the first phase in the FinOps journey, empowering organizations and teams with visibility, allocation, benchmarking, and FinOps best practices, which can reduce your costs dramatically.
- Optimize: Goals are set for measured improvements to the Cloud. You will receive a list of tasks/action items and their potential savings. Once organizations and teams are empowered, all they need is to define priorities based on the ROI and the estimated efforts. Optimization of the cloud footprint is immediate and visible.
- Operate: Organizations start to continuously monitor their cloud spend, eliminate Zombies, and constantly adjust cloud resources to the actual requirements. Evaluation of business objectives and the metrics they are tracking against those objectives, are clear for Finance, Product, Teach teams and management
To conclude, the role of creating a FinOps culture is to make sure that when you get your (usually highly complex) Cloud bill, you already know how to cut the costs. It is important to adopt a proactive approach – casting a fresh eye over all your Cloud usage and carrying out continual monitoring to assess your position. Whilst uncertain times can be uncomfortable, they can also bring enormous opportunities.
Written by Ran Blumenfeld, Head of FinOps at CloudZone by Matrix