As business goals evolve and companies respond to market fluctuations, cloud services have become essential for enterprises that want to be able to grow or decrease consumption on the fly, expand data protections, expedite procurement, and profit on geographically dispersed ‘locations.’
According to a Gartner report, worldwide spending on public cloud services would reach $332.3 billion in 2021, up 23.1 percent from 2020. In 2020, $270 billion was spent on public clouds. With technologies like containerization, virtualization, and edge computing becoming more widespread, cloud investment is increasing. Last year’s events enabled CIOs to overcome any apprehensions about transferring mission-critical workloads to the cloud. Some workloads were expected to remain on-premises, but the 2021 has proven that those fears were unjustified.
However, digitization has added complexity, and CIOs continue to confront challenges when it comes to capturing and reporting the return on investment (ROI) of the cloud. According to the 2021 State of FinOps Report, the most common are visibility, team empowerment, and integrating cloud financial management (FinOps) principles beyond public cloud spend.
Taking on the reoccurring conundrums necessitates a combination of best practices, appropriate tooling, and cross-functional business alignment.
Cost allocation for complete visibility
Transparency is almost completely identified as crucial cloud cost management. CIOs must be able to visualize cloud pricing and use data. How can they successfully manage spend or measure ROI if they don’t know where it happens and how much value is returned to the business?
To get complete visibility, it is vital to be able to categorize all public cloud costs and usage. In reality, most organizations struggle to collect this data from diverse sources and lack a solution to accurately aggregate it into a cohesive and actionable perspective.
Cloud cost management is complicated by the fact that cloud fees vary and are charged in a variety of ways. This has been exacerbated by the availability of cloud services to the line of business owners and teams, with technology no longer being channeled solely through IT departments.
Team empowerment and accountability
Unfortunately, even with the correct processes and tools in place, delivering an effective cloud financial management practice requires cross-functional awareness, support, and ownership.
Because infrastructure procurement choices are frequently distributed across engineering and DevOps teams, appropriately empowering people to act is crucial. This includes not just providing them with relevant information and recommendations, but also well-defined workflows and a way to measure the ROI of activities done. This necessitates the integration of the FinOps and DevOps tools used by engineers and developers on a daily basis, making it easy to implement recommendations and measure realized savings.
To ensure organizational alignment, leaders and operational teams must have access to essential information wherever and whenever they need it. Cloud cost management and optimization solutions must have configurable reporting, with the option to show or hide information based on role or permissions.
Looking beyond IaaS
Cloud financial management is multifaceted, and focusing solely on Infrastructure-as-a-Service (IaaS) misses spending in other crucial areas. Non-IaaS expenses, such as Software-as-a-Service (SaaS) and on-premises commitments, must be considered in the financial management of a whole cloud ecosystem.
Despite the intrinsic need to validate ROI, many CIOs and CTOs may not have a comprehensive picture of all expenditures associated with SaaS and other apps that employees rely on, particularly those purchased as band-aid solutions during lockdowns and periodically as offices reopened across the world.
The FinOps practice may be applied across all of these parts to provide a holistic management perspective, but it must be supported by the correct solution to assist teams in managing across these multiple environments.
CIOs must have cloud financial management capabilities, as well as the capacity to assess, optimize, and plan investments across their entire technology portfolio, regardless of service type (including infrastructure, platform, or software), provider, delivery model, or deployment destination – public cloud, private cloud, or on-premises.