Digitalisation & Disruption

How FinOps help manage cloud cost optimisation complexity

Cloud computing has become an essential part of modern business, enabling organisations to scale, innovate, and compete in the digital age. However, cloud computing also comes with a significant challenge of managing and optimising cloud costs. That’s where FinOps comes in.

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Worldwide end-user spending on public cloud services is predicted to grow 20.4% to total $678.8 billion in 2024, up from $563.6 billion in 2023, according to the latest forecast from Gartner. However, many organisations lack the visibility, governance, and alignment needed to control and optimise their cloud spending. As a result, they often face issues such as:

  • Overspending on cloud resources that are not fully utilised or needed
  • Under-spending on cloud resources that are critical for performance and availability
  • Missing out on opportunities to leverage cloud features and services that can enhance business value and innovation
  • Failing to align cloud spending with business goals and outcomes
  • Struggling to balance cloud costs with cloud benefits and risks

These issues can have a negative impact on an organisation’s profitability, competitiveness, and customer satisfaction. That’s why it’s crucial for organisations to adopt a cloud financial management discipline and practice that can help them get the most out of their cloud spending.

Cloud cost management is not enough

Still, many organisations adopt only a cost management approach on their resources. Cloud cost management is not enough to fully leverage the benefits of cloud computing. Cloud cost management focuses on the technical aspects of cloud expenditure, while ignoring the business and operational aspects. Cloud cost management is also reactive, rather than proactive, and often fails to align cloud spending with business goals and value.

Furthermore, the recent Flexera study ‘2023 State of Cloud report’ indicates that enterprises concern around management of their cloud spend reaches the first place, even higher than security concerns.

That's where FinOps comes in

FinOps is a cloud financial management discipline and cultural practice that enables organisations to get maximum business value from cloud computing. FinOps goes beyond cloud cost management, by encompassing not only the technical elements of cloud expenditure, but also the financial and operational elements. FinOps involves collaboration among engineering, finance, and business teams, who work together to make data-driven spending decisions.

According to the State of FinOps Report, organisations that practice FinOps report significant benefits, such as:

  • Improved cloud efficiency and performance

    organisations can optimise their cloud resource utilisation and allocation, ensuring high performance, availability, scalability, and cost-effectiveness.

  • Increased visibility and accountability of cloud spending

    Companies can gain insight and control over their cloud spending, enabling them to track, report, and forecast their cloud costs and usage, and allocate resources to the right business units and projects.

  • Enhanced agility and innovation

    Organisations can take advantage of the cloud’s flexibility and dynamism, enabling them to respond quickly to changing market conditions and customer demands, and experiment with new features and services that can drive business value and innovation.

  • Reduced cloud waste and risk

    Firms can eliminate unnecessary cloud spending and minimise cloud risk and liability by identifying and eliminating unused or underused cloud resources, right-sizing cloud resources, and applying the best practices and policies for cloud security and compliance.

  • Higher customer satisfaction and retention

    Companies can deliver better products and services to their customers by ensuring optimal cloud performance, availability, and quality, and by passing on the cloud cost savings and benefits to their customers.

  • Achieve their ESG targets

    By using their cloud resources optimally and eliminating waste, organisations can reduce their carbon footprint.

In short, FinOps is more than just cloud cost optimisation. FinOps is a strategic and holistic approach to cloud financial management, that enables organisations to achieve their business goals while optimising their cloud spending. FinOps is not a one-time project, but a continuous journey, that requires cultural change, organisational alignment, and technical excellence. By embracing FinOps, organisations can unlock the full potential of cloud computing and gain a competitive edge in the digital era.

Some of the reasons that organisations hesitate to adopt a FinOps approach are: 

Increased spending and cost allocation

Can’t understand cloud spending, cloud unit economics, shared resources allocation.

Inaccurate reporting

No or little visibility on spending allocation, late reporting, different budgeting model (CapEx -> OpEx ), inability to forecast.

Not understanding where to begin

A lot of time needed to define strategy, plans, and actions to optimise spending. Plus, difficulty in setting correct KPI’s.

Choosing the right team structure

While engineers or finance experts are enough to develop and execute a successful strategy, business leaders should also be involved in early stages.

Resistance to change

Difficulty in empowering siloed teams to cooperate and be accountable, enforce governance, and compliance.

FinOps is based on three core principles

  • Collaboration: FinOps fosters collaboration among engineering, finance, and business teams, who work together to make data-driven spending decisions and create financial accountability. 
  • Iteration: FinOps adopts an iterative cycle of inform, optimise, and operate, which ensures continuous improvement and alignment of cloud spending with business outcomes. 
  • Automation: FinOps leverages automation and tooling to streamline and standardise cloud financial management processes and workflows. 

By using our more than 100 experts’ capabilities, industry best practices, and experience from more than 200 cloud projects, we developed the Zühlke FinOps management framework to help you navigate the complexity of your financial cloud journey. 

Finops Circle graphic: with core fields being "collaborate", "evaluate", "improve" and "automate". The area of evaluate includes: Track usage & expenses. Improve includes: Reconfigure & optimize. Automate includes: Empower & evolve. Collaborate includes: learn, understand & plan Figure 2: FinOps activity cycle

Our approach is based on team collaboration, continuous feedback, and is tailored to your individual needs, budget, risk appetite and expectations.

Finops Cycle: beginning with "initialization", continuing with "fine tuning", "execution" and ending with "final state".

If you are interested in learning more about FinOps, or want to start your FinOps journey with Zühlke, please contact us today. We would love to hear from you and help you achieve your cloud financial management goals, tackle your technical debt, and reduce your time to value.

Contact person for Switzerland

Jürg Borter

Chief of Cloud

Jürg Borter is Chief of Cloud and thus responsible for everything on offer around the "Journey to the Cloud". He is fascinated by the daily growing innovation potential of Cloud and the resulting opportunities for companies. As an IT engineer, he can draw on several years of experience in large software implementation projects.

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