CTO, AtScale, empowering customers to democratize data, implement self-service BI & build more agile analytics for better decision making.
getty
I recently got a call from my IT department asking why I was driving a significant amount of Azure spending in the past month. Before we were in the cloud, this type of question never came up. Rather, it was me asking IT for more servers to run my workloads. Whether or not I was using our on-premise computing resources was irrelevant—that is, until I ran out.
My experience is not at all unique. In our modern, post-cloud world, every organization has gone from unmetered, unfettered access to compute resources to a metered, easy-to-inspect, pay-by-the-second cloud spending nightmare. What we gained in endlessly scalable, elastic compute, we lost in our ability to run workloads without anyone watching. This new reality demands an elevated level of fiscal responsibility and shared ownership, especially as it relates to analytics.
The cloud computing pay-per-use model means organizations can no longer run workloads without considering the costs those workloads generate. It's now imperative that organizations manage their cloud spending to stay competitive.
We'll dive into the discipline called "FinOps," which offers a new approach to responsibly managing cloud spending across organizations.
What is FinOps?
According to the FinOps Foundation, "FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions."
In simple terms, FinOps is about driving real business outcomes while simultaneously managing cloud spending using data and shared cost ownership. FinOps demands a cross-functional approach, requiring collaboration between various stakeholders in an organization including finance, IT, procurement and the business. The primary goal of FinOps is to enable organizations to achieve optimal cloud utilization and avoid wasteful spending.
Why is FinOps important?
FinOps helps organizations achieve cost optimization by providing insights into cloud spending patterns, identifying areas of inefficiency and implementing corrective measures. With FinOps, businesses can gain a better understanding of their cloud utilization, track their cloud expenses and optimize their resource usage to improve performance and reduce costs.
The benefits of implementing a FinOps discipline include:
1. Better cost management by shining a light on inefficiencies and wasteful spending.
2. Increased cross-team collaboration by driving ownership of cloud costs and connecting them to identifiable outcomes.
3. Improved visibility into resource allocations and investments to better quantify ROI.
4. Better governance by ensuring compliance with regulations and internal policies.
How can organizations implement a FinOps program?
FinOps is not a technology or a set of tools. Rather, a FinOps program is more of an organizational discipline that requires a cross-functional approach and collaboration between a number of stakeholders throughout an organization. You can implement a FinOps program at your organization in four key steps:
1. Establish a cross-functional team.
FinOps requires collaboration between finance, IT, procurement and the business.
At AtScale, we formed a team comprised of myself (CTO), our CFO, the head of IT and the head of our DevOps team. I was responsible for justifying our investments in cloud technology with our CFO. The heads of IT and DevOps had the responsibility of finding the most cost-efficient ways to deploy cloud resources and monitor their usage and utilization over time.
Working together as a team requires patience and negotiation. Our CFO requires a real ROI justification before spending any of the company's money, and IT is always trying to force us to do more with less.
2. Define cloud cost metrics.
A FinOps program needs to define cloud cost metrics that align with business goals and objectives.
The metric we focused on was cost per resource type, by department, by owner, over time. Tracking costs in one place is harder than it sounds since each cloud resource (databases, servers, storage, ingress/egress) has a different way of tracking them.
This is where our DevOps team lead played a big role. In order to track all of these costs, DevOps needed to build tooling that would extract cost data from each of our clouds' (AWS, Azure, GCP) billing systems and store them in a database. It was my responsibility (as analytics guru) to build out reports in Tableau on this cost database that we could use to track these costs over time.
3. Analyze cloud spending patterns.
A FinOps program must identify areas of inefficiency and wasteful spending by taking an inventory of all cloud spending. A FinOps program must continuously monitor cloud spending to ensure ongoing cost optimization.
We quickly discovered that we had been burning money on a bunch of cloud resources that nobody was actively using. We uncovered this just by taking the first step in putting this system together—taking inventory of the databases, servers and storage that we had running and were generating costs. Once we shut down the unused resources, we immediately cut our cloud costs in half. After implementing the tracking system, the visibility of tying owners to resources led to accountability.
4. Implement cost-saving measures.
By analyzing cloud spending patterns, a FinOps program can identify opportunities to optimize resource usage, rightsize cloud resources and negotiate better pricing with cloud providers.
Besides the immediate gain from shutting down unused resources, we achieved more cost savings by centralizing the provisioning of new cloud resources. In the "anything goes" model, we found more times than not that users would leave cloud resources running after their initial use. By creating a ticketing system for requesting new cloud resources, we made sure that those resources were reused when possible and properly shut down when not needed. These new procedures allowed us to cut our costs by another 50%.
FinOps can help you do more with less.
FinOps is a crucial discipline for organizations that want to manage their cloud costs efficiently and improve their financial performance. It provides visibility into cloud spending patterns, identifies areas of inefficiency and helps to implement corrective measures to optimize resource usage and reduce costs.
Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
