The Importance of FinOps
December 2019 saw AWS ReInvent return with 65,000 of the biggest and brightest IT minds descending on Las Vegas.
For me, it was a great opportunity to learn about the biggest trends, latest developments and of course, speak with the fantastic array of innovative product companies exhibiting.
FinOps (financial operations) was the buzzword that kept cropping up for me when speaking to both cloud management vendors and buyers alike.
But what is FinOps and why is it so important?
Increasingly, enterprises are turning to FinOps, a business management discipline combined with technology, designed to track the costs of public cloud services provided by the big hyperscalers today… i.e AWS and Azure.
The aim of this discipline is to support companies to better plan, budget and forecast spending requirements for cloud consumption.
Fundamentally there are a number of key aspects which a core FinOps practice is based upon; Collaboration between teams i.e finance and engineering, accountability on ownership and usage, ensuring a centralised team is in place to drive FinOps, on-time FinOps reports and taking advantage of the variable cost model of the cloud.
FinOps, which many people also refer to as "cost optimisation," is crucial as companies migrate more core IT functions from data centre's to the cloud, whether that be to AWS, Azure or Google. Without it in place, the spending just continues to increase.
Within this market, there remains a lot of waste, both of IT budgets and resource utilisation. 80% of 300 financial and IT leaders surveyed by 451 Research say that poor cloud financial management has had a negative impact on their business; 57% of respondents worry daily about cloud cost management, while 69% regularly overspend their cloud budget by 25 percent.
The big issue about cloud costs is not overly surprising to me. If you look back in recent years, it has been predominantly around businesses moving to the cloud with storage and compute. People have benefited from the fierce competition between the multiple cloud providers, AWS, Microsoft Azure and Google Cloud Platform, but once you're in the door, that’s when the upsell push begins!
The market for public cloud services will grow at a compound annual growth rate of 16.6% by 2022 when it will top $360 billion, according to Gartner. As Enterprises continue to migrate and leverage the benefits of the cloud, it is crucial they map out a structured FinOps organisation, otherwise, they might well be in for a nasty surprise at the end of the month!