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Accenture research found that a value gap is emerging between planned and actual value realized, with only one in three companies (35%) reporting that they have achieved expected cloud benefits, with cost being cited as a key barrier to achieving this.
As the cloudOrganizations are increasingly relying on the cloud to run their businesses. However, they often face common issues that could lead to excessive cloud spending. From Complex billing and pricingOverspend is common due to lack of transparency and accountability in reviewing supplier costs.
In addition, IT leaders in organizations are increasingly being asked to show how their cloud spending supports the business strategy as well as how it aligns with the target targets. This is how they can solve it. Let’s dig deeper.
Representing ROI on cloud investments
Investments in cloud technology and their use across industries are widespread, growing, and continually evolving. In fact, Global spendingThis year, cloud services are expected to be worth nearly $500 billion. Although many companies are already implementing cloud-migration strategies to their advantage, they aren’t seeing the full benefits that they had hoped for.
The rapidly growing field of cloud financial operations (aka “cloud banking”) is the answer. Finops() A methodology that promotes collaboration between finance, business and devops to minimize cost overruns.
These are the fundamental principles of finops:
- Collaboration is key for teams
- Everyone is responsible for their cloud usage
- Reports should always be available and accessible on a timely basis
- Business value of cloud should drive all decisions
- Cloud computing is a variable-cost model that everyone should use
A company that has finops capabilities can often reduce cloud spend. 20-30%This will allow for better alignment between cloud spend and business metrics, as well as supporting strategic decision-making.
Finops must change their culture and behaviors to foster collaboration between finance, devops and business teams. The cloud operating model can be made transparent, accountable, and under financial control so that each department knows the true cost. This transparency is essential for optimizing cloud use and ensuring that individual business units and application owners are accountable for cloud usage and costs. It also aligns spending decisions with business value.
This means that the entire organization can be more aligned around the total cost to own the cloud estate. What would your reaction be if your cloud expenses suddenly doubled? If revenues quadrupled, then twice the cloud spending is fantastic news. Finops allows this level of visibility for businesses.
How can leaders set up finops? This requires collaboration between IT and business to optimize cloud management and optimization. The following recommendations are made to companies:
- It is possible to accurately project, forecast, and allocate cloud costs back to consuming business units (non shared and shared costs). One example: A tech hardware company that showed cloud consumers where the money was headed led to several decommissioning of abandoned sandboxes.
- Allow real-time monitoring, tracking, and reporting of cloud cost in accordance with forecasts. This will allow you to quickly identify and fix issues. One financial services team saw their daily spend on a serverless function increase from $0.12 per day to $14,000 after a configuration error was made and then pushed to production. It is important to catch errors like this early.
- Continuously optimize cloud usage by reducing unnecessary spend and purchasing commitments where appropriate to lower unit costs. Report on any savings achieved. The 2021 State of FinOps survey uncovered that the average finops team size at “Walk” level maturity was seven full-time people. The team’s measurable benefits include increased visibility, accountability, and the realization of tech-value through savings tracking.
- Cloud services are constantly evolving, so you can use them to re-imagine your workloads and increase speed. The hyperscale cloud providers collectively invest $10 billion per month in capabilities for customers.
- Start using the cloud provider’s carbon footprint tools. Cloud use can be a powerful force either for good or ill for sustainability. This is why more companies are setting carbon goals publicly and reporting them on to the stock exchange and other stakeholders.
Finops is a business necessity across all industries. It is a way for organizations to reduce costs and increase their business value, which proves its value continuously.
Mike Eisenstein is the cloud optimization practice lead for Accenture and Dean Oliver is the cloud finops lead for Accenture Technology Strategy & Advisory
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