Why We Need FinOps for Cloud Cost Management

By Van Diamandakis
Apr 08, 2021

FinOps for cloud cost management aims to wrangle the multitude of new costs and benefits associated with the shift to cloud computing. But the move to the cloud can be like buying and moving into a new home: once the dust of the move settles and the excitement wears off, you start to notice that the new house has a host of new or unplanned costs that are not all expected.

Defining FinOps for Cloud Cost Management

FinOps, as defined by the recently-founded not-for-profit FinOps Foundation is “the operating model for the cloud, which is resulting in a shift that combines systems, best practices and culture to increase an organization’s ability to understand cloud costs and make informed business decisions.” FinOps is critical for cloud cost management because it ”increases the business value of cloud by bringing together technology, business and finance professionals with a new set of practices and standards around cloud financial management.”

The FinOps professional ranks are growing. Nearly 800 Finops practitioners took the FinOps Foundation survey and they collectively spend nearly $45 billion on the cloud every year.

The (Un)usual Suspects of Cloud Computing Costs

The costs associated with migrating to the cloud are many, diverse, and frequently unexpected.

Research from Pepperdata found that 64% of respondents were most concerned with cloud “cost management and containment” and a recent survey by IDG and Insight found that unexpected cloud expenses are extremely common:

  • 70% of respondents said they had experienced public cloud costs up to 62% higher than anticipated.

  • 37% of enterprises struggle to control cloud costs.

As any homeowner knows, the way to start controlling expenses is to first understand them, then figure out how to mitigate them. FinOps is the practice of monitoring, measuring, and mitigating costs while maximizing the value delivered from the cloud.

The Toolbox for FinOps Stakeholders is Slim

The FinOps Foundation survey found that stakeholders struggle to contain cloud expenses.

  • Half don’t have the tools necessary to handle the tremendous management overhead associated with massive cloud usage.

  • 49% work manually, juggling cloud spending with no automation tools.

  • Of those that have adopted automation, 31% had automated notifications, 29% had tagging hygiene, 13% had automated rightsizing and 9% automated spot use.

Cloud services and the way they are deployed can make controlling costs challenging – especially without automated tools. Add multi-cloud into the mix, and financial oversight complexity grows dramatically. What’s more, multiple employees and contractors usually have access to cloud resources – which by nature expand to accommodate demand. But the virtually boundless elasticity of cloud resources has a cost – and one that can result in unexpected outlays at the end of the billing cycle.

Lacking a fully-outfitted toolbox for oversight, FinOps stakeholders are flying blind. This was especially notable at the height of the pandemic, when timelines were compressed, and companies needed to deliver on-demand access to data and applications to newly-remote employees F-A-S-T. Companies had no choice but to throw money at the cloud without necessarily reviewing vendor options and packages as thoroughly as they normally would.

And this is likely why the FinOps Foundation study found that half of the spending on public cloud was for on-demand services, which is the most costly. 49% was for reserved, savings or committed use coverage, the next most expensive option. And only 13% was for spot use, the least costly service.

3 Quick Wins for FinOps Cloud Cost Management

These issues are magnified if the workloads are not optimized for the new cloud environment. Here are a few quick wins that can help align your migration strategy with better cost optimization practices once the data is in the cloud.

  1. Plan how you are going to manage cloud computing costs before you migrate data from on-premise storage to the cloud
  1. Build cloud costs into your migration plan from the start. (WANdisco LiveData Migrator automates the data migration process so organizations can spend their resources to optimize their applications and workloads for the new environment.)
  1. Move beyond a lift and shift strategy because this approach does not account for the greater risks of unexpected cloud costs and advanced capabilities available in the new environment.

What’s Next for FinOps and Cloud Cost Optimization: Gearing Up for Growth

The good news is that technology is catching up with FinOps requirements. The FinOps Foundation survey showed that the most popular tools to manage cloud costs were (in no particular order) Cloudcheckr, GCP Cost Tools, CloudHealth (VMWare), Azure Cost Management, Cloudability (Apptio) and AWS Cost Explorer.

And nearly half of FinOps professionals are using these cloud-native tools. Yet most of the other half (43%) still use third-party tools, and 11% are using manual or homegrown methods and utilities. This leaves the Excel spreadsheet as a key strategic forecasting tool for FinOps – an undeniable opportunity for FinOps software developers looking to grab marketshare. The reason? FinOps, like the cloud, is here to stay. Survey respondents predict that their resources and teams will grow by over 40% in the next year.

Van Diamandakis, SVP Marketing at WANdisco

Van is a proven Silicon Valley technology executive with over 25 years of operational experience that draws upon his track record leading global marketing transformations, driving to meaningful financial events including IPOs and acquisitions. Van has been at the forefront of B2B technology marketing and brings a unique ability to marry creativity, data, technology and leadership skills to rapidly build brand equity and successfully navigate tech companies through inflection points, accelerating revenue growth and valuation.



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