Three Benefits of Embracing a FinOps Approach to Cloud Management

As businesses increasingly migrate to the cloud, the transition brings both major challenges and new opportunities. Understanding the pain points is crucial for financial directors and technology decision-makers, who need to optimize cloud investments while maintaining stringent cost control.

A financial operations (FinOps) approach to cloud management can support both goals. Done right, this direction can help drive efficiency, free up resources and budget, and help meet business growth objectives, such as undergoing a digital transformation and expanding innovation.

FinOps-focused cloud management is a management practice that promotes joint responsibility for governing and managing organizations’ cloud infrastructure and its costs. FinOps can play a role in helping manage cloud migration costs by leveraging AI, building budgets and identifying cost increases

Achieving success with this approach requires understanding the challenges of cloud management and discovering the solutions that can help support adopting a FinOps approach to cloud management.  

Three common cloud management pain points and their solution

Three key challenges stand in the way of achieving optimization cloud management, including a variable cost approach, lack of cost attribution and a lack of organizational alignment. Here’s how they can impact your organization and how FinOps can provide an ideal solution.

Challenge 1: Variable cost obstacle

Shifting from fixed to variable costs can lead to unexpected expenses. The problem with variable cost is the possibility of unpredictable and fluctuating expenses created in a pay-as-you-go pricing model. Results can include out-of-control fees if use is not carefully monitored. This makes it difficult to budget and plan for cloud spending accurately.

Solution: Adopt a FinOps approach to manage a variable cost structure. This can help overcome this challenge and deliver these benefits:

• Identify monthly cloud expenses, so leaders can make informed financial planning and budgeting decisions.
• Enable tracking and analyses of cloud spending, using intuitive dashboards and automated, real-time reporting to provide better visibility and no surprises.
• Help decision makers conduct regular cost reviews to find savings opportunities, such as considering a multicloud strategy for better pricing and flexibility.
• Facilitate rapid implementation of governance policies and educate teams on cost-efficient practices.

Challenge 2: Cost attribution hurdle

Cost attribution helps organizations maintain control of their expenditures. In the cloud, a primary problem is a lack of visibility into cloud use, resources and spending. Without clear insight into what is being used, by whom and for what purpose, managing cloud spend can be nearly impossible. When an organization lacks clear insight into its real-world cloud resource needs, outcomes can include over- and under-utilization.

Solution: Adopt a FinOps approach to managing cost attribution. This can help overcome this challenge and deliver these benefits:

• Enable informed decision-making on cloud use, resource allocation and investments.
• Optimize resource use and right-size operation teams to support virtualized workloads.
• Eliminate resource waste with automated resource scaling to reduce unnecessary expenses.

Challenge 3: Poor organizational alignment

Siloed departments can hinder effective cloud management in a variety of ways. For example, silos can get in the way of seamless data sharing, create cloud use inconsistencies and weaken cloud resource optimization. The results include the risk of generating inefficiency and cost overruns.

Solution: Adopt a FinOps approach to organizational alignment. This can help overcome this challenge and deliver these benefits:

• Provide a centralized platform that delivers visibility on cloud usage, costs and resourcing across finance, technology and business teams.
• Offer clear communication channels to facilitate fast and effective information sharing, which in turn speeds up decision-making and helps manage resourcing and costs.

Continuous improvement with Rackspace FinOps

Effective FinOps is not a one-time event. It’s a continuous cycle of analysis, reporting and optimization. Rackspace Technology offers organizations a variety of FinOps solutions to help them achieve their cost management goals in the cloud.

Among the Rackspace solutions are:

• FinOps Workshop: Helps organizations insight into their cloud costs and get on the path to optimized cloud spend.
• FinOps Assessment: This includes a two-month overview of a company’s cloud environment. Following the assessment, Rackspace can identify low-effort, high-impact adjustments to the cloud to promote savings.  

Donny Cross, Vice President of Strategy at Rackspace, shares more insight on leveraging FinOps for cost savings in a podcast for Bank Automation News’ “The Buzz”.

“Financial institutions operated on relatively thin margins,” stated Cross. “So having strong governance, good controls and a handle on your cloud costs is super important. Also, from a regulatory standpoint, being able to be super transparent about your controls and the components of your cloud costs is critical in today’s environment.”

As the landscape of cloud computing continues to evolve, adopting a FinOps approach is a significant advantage for organizations that want to streamline their cloud spending and maximize the cloud’s value. By addressing the pain points of cost management, attribution and organizational alignment, businesses can position themselves for greater success in the cloud.