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FinOps: A New Paradigm for Cloud Cost Optimization
FinOps: A New Paradigm for Cloud Cost Optimization

March 2, 2022

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Cloud Financial Management is an increasing priority for organizations. According to a recent study, 61% of organizations plan to optimize Cloud costs in 2021 and 51% of users overspend their budget on the Cloud. Tracking and consuming Cloud spend is a complex and time-consuming task. The sheer number of choices and plans coupled with inexperience in Cloud optimization may result in wasted resources and costs for many enterprises and startups alike. According to Gartner, more than 30% of the monthly expenditure on Cloud services will remain unused, through 2022.

FinOps is a new paradigm to manage growing Cloud spends. The methodology intends to assist businesses in better planning, budgeting, and forecasting. FinOps tracks spending and achieves effective Cloud expenses while balancing performance and availability. Using best procurement practices and real-time data, it aims to make the Cloud operating model more accountable. When properly integrated, FinOps provides considerable cost savings, efficient resource utilization, and billing transparency.

Most businesses now employ Cloud strategists to assist in the analysis and management of Cloud resources. These teams bring financial accountability to variable Cloud spend with a prescriptive model of actions.

The FinOps lifecycle can be broken down into 3 main phases as below-

  1. Inform
    The organization has insight into the allocation of its resources during the inform phase. The on-demand nature of the Cloud allows for precise and real-time decisions. Dashboards provide a granular view of Cloud spend, allocation, chargebacks, and tagging. Analytics help with insights into spend patterns, audit frequency, and recommendations for right-sizing and right costing.
     
  2. Optimize
    The second step is optimization, in which the team must find cost-cutting options and take appropriate action. Organizations must automate right-sizing of the current compute storage and network resources. The proprietary Cloud resources & volume offered by vendors must be leveraged for discounts and savings.
     
  3. Operate
    This is the third and final phase. Organizations here act in accordance with their stated objectives and keep track of their success. This will help in monitoring spend optimization opportunities and the RoI from these opportunities. Periodical audits must be conducted to ensure effective monitoring while providing customer support.

Conclusion

A company's commitment to a FinOps framework is long-term. The process does not always go as anticipated, especially for young businesses. FinOps vendors enable companies to save millions of dollars in resources and maintain sustainability. Any organization can effectively execute a FinOp transformation with proper guiding principles.

 

This article was originally posted in Financial Express.

 

About the Author

Narinder Kumar TO THE NEW

By Narinder Kumar, Co-Founder & COO, TO THE NEW

With over two decades of rich experience in the IT Industry, Narinder is the COO and Co-Founder at TO THE NEW. Having worked across diverse industries, different countries and performed different roles, Narinder has immensely contributed to making TO THE NEW one of the most respected digital product engineering companies in India. 
 
Narinder describes himself as a practicing Technologist, learning Entrepreneur, and passionate Product Developer. He is a big proponent of Cloud, AI/ML, Data Engineering, and Security and firmly believes that technology can indeed help in making the world a better place to live. At TO THE NEW, he is responsible for leading global operations and actively provides guidance and direction to various teams including Cloud, OTT, Project Management, and R&D. 


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TO THE NEW is a Singapore headquartered technology services company that designs, builds & runs digital products and platforms for enterprises, SaaS, and consumer tech companies. TO THE NEW is recognized by global analyst firms like Gartner, Everest, ISG, and Zinnov for our capabilities in digital engineering, Cloud, Data & Analytics. The company also leverages its deep partnership with all the leading hyperscalers like AWS (Premier Partner), Azure, and GCP to provide end-to-end Cloud professional and managed services to our customers. Founded in 2008, TO THE NEW is one of the fastest-growing companies with a growth rate of over 60% since 2017. Our passionate team of 2000+ "Newers" is spread across our delivery centers in Delhi, Dubai, NYC, and Sydney. TO THE NEW is a consistent winner of the prestigious "Great Place to Work" award since 2015 and ranked #47 in the top 100 companies in India to work for in 2019.

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