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From Overspending to Savings: 5 Ways How FinOps is Revolutionizing Cloud Economics
From Overspending to Savings: 5 Ways How FinOps is Revolutionizing Cloud Economics

September 8, 2023

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Highlights:
  • Traditional financial institutions are adopting cloud technology to stay competitive in a landscape disrupted by agile FinTechs, relying on the cloud for innovation and efficiency. However, 94% fall prey to overspending. 
  • Implementing FinOps practices can lead to significant cost reductions, often exceeding 30%. It promotes efficiency, data-driven decision-making, and adherence to compliance standards, which are crucial in the financial sector’s regulated environment.
  • Organizations like GE Digital, Finastra, Capital One, Nasdaq, and Square have harnessed FinOps principles to achieve substantial cost reductions while maintaining operational excellence.
  • Microsoft Azure provides a suite of tools and services, including Azure Cost Management, resource tagging, Cost Explorer, Reserved Instances, Azure Advisor, and third-party integrations, to facilitate effective FinOps implementation for financial institutions.

In the ever-evolving landscape of financial services, cloud computing has emerged as a transformative force, reshaping how traditional banks and financial organizations operate. While traditional banks are gradually embracing the cloud, many FinTech companies have already raced ahead in harnessing its potential, leveraging their agility and digital-first mindset to gain a competitive edge in the financial industry.

This shift to  cloud computing represents a significant departure from traditional IT infrastructure management. In the past, organizations would invest in physical hardware and software licenses, and these fixed costs remained relatively stable regardless of how much or how little they used their IT resources. However, with the advent of cloud computing, the rules of the game have changed. In recent years, traditional banks have embarked on a transformative journey to migrate their operations to the cloud, drawn by a compelling array of advantages such as cost-efficiency, scalability, and enhanced innovation capabilities. 

In a cloud pay-per-use model, organizations are billed based on their actual consumption of cloud resources, such as virtual servers, storage, and data transfer. This means that every action and decision made within the cloud environment directly impacts the organization’s expenses. Running workloads, deploying applications, and storing data all come with associated costs, and these costs can quickly add up if not managed carefully. Organizations can no longer operate in the cloud with a “set it and forget it” mentality. They must now be acutely aware of the financial implications of their cloud usage. Ignoring or neglecting these cost considerations can lead to budget overruns, financial inefficiencies, and a competitive disadvantage.

  • According to a report by Flexera, 30% of cloud spend is wasted.
  • A study by Forrester found that 94% of enterprises are overspending in the cloud.
  • The average enterprise spends an additional 30% on cloud computing than it originally planned.

Organizations are turning to a discipline known as “FinOps,” short for Financial Operations, to address this challenge. FinOps is a framework and set of practices designed to bring financial accountability and efficiency to cloud operations. It involves cross-functional collaboration between finance, IT, and operations teams to establish cost visibility, allocate cloud expenses accurately, and optimize spending.

FinOps helps organizations proactively manage their cloud spending to strike a balance between innovation and cost control. It provides tools, best practices, and guidelines to monitor usage, implement cost-saving strategies, and make data-driven decisions. By adopting FinOps principles, organizations can ensure they are getting the most value from their cloud investments while staying within budget constraints, ultimately helping them maintain competitiveness in an increasingly cloud-centric business landscape.

Click here to read more about Why FinOps Is a Must-Have in the Cloud


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