Cloud consumption is growing rapidly, but keeping track of spending can be quite the challenge. Enter FinOps, a financial discipline intended to optimize the way enterprises spend on cloud.
Driving business agility while reducing costs made CIOs migrate to the cloud en masse. However, renting cloud services creates new problems, such as managing bills populated with thousands of line items generated by instances running across the globe.
More increasingly, enterprises are adopting FinOps, short for Financial Operations. It is the practice of bringing financial accountability to the variable spend model of cloud, designed to calculate the costs of public cloud services provided by vendors such as Amazon Web Services (AWS) and Microsoft Azure. The approach aims to assist enterprises in better planning, budgeting and forecasting spending requirements for cloud consumption. The market for public cloud services will grow at an annual growth rate of 16.6% by 2022 reaching $360 billion, according to Gartner.
In order to fully reduce the cloud consumption bills and take most advantage of FinOps, the following FinOps best practices must be taken into consideration.
- Determine who is spending on what
Set up performance indicators. Information is at the center of FinOps culture. You need to understand exactly WHO spends HOW MUCH and on WHAT service. “tag” your resources, allowing you to figure out what resources an application accesses. This is extremely crucial in enterprises in which thousands of people are accessing hundreds of applications.
- Only use and pay for what you need
By dimensioning your infrastructures as close as possible to your needs and understanding if resources are under or over-provisioned.
First, you need to ensure that the size of the resources matches your operational needs. A resource that is oversized costs double. Second, make sure that all funded resources are effectively utilized.
- Rationalize spend
Consider using reserved instances, a reservation of resources and capacity for a particular availability zone within a region. This enables you to buy computing horsepower you know you’ll need at a lower cost than on-demand procurement.
- Build apps suited for the cloud
If you’re a high-volume transaction business, design your apps so that they could scale horizontally, which will enable you to add or subtract resources when needed.
To sum up, the FinOps culture leads to lower cloud costs, more efficient use of cloud services, and more factual communication between operational and financial stakeholders.