A Clear Path to Value: Overcoming the Challenges of Your FinOps Journey

Cloud adoption has accelerated in recent years, with businesses increasingly switching from traditional on-premise hosting to public cloud solutions. However, the rise of hybrid and multi-cloud patterns has created challenges in optimizing value and controlling cloud spending, ultimately turning capital expenses into operational expenses.

According to a Gartner report, cloud operating costs are expected to surpass traditional IT spending by 2025, reflecting ongoing changes in spending patterns. FinOps is an evolving cloud financial management discipline and cultural practice aimed at maximizing business value across hybrid and multi-cloud. environment. However, adopting FinOps can be difficult without a thorough understanding. To maximize the benefits of FinOps and realize its potential, organizations must establish a clear path and avoid common mistakes.

Enhanced Capabilities to Drive Growth

FinOps is closely intertwined with DevOps and can bring fundamental change to many organizations. This requires a revised approach to cost and value management, and requires organizations to move beyond their comfort zones and embrace continuous innovation. Achieving this requires development teams, product owners, finance and commercial departments to come together to rethink and reimagine how they collaborate and operate. This collaborative effort is essential to fostering a culture of innovation and driving meaningful change throughout the organization.

FinOps allows organizations to manage average compute costs per hour, reduce licensing costs, reduce total cost of ownership, and track idle instances to control costs and improve consistency. It also drives improved results and performance through improved visibility and planning, including comparing forecasts and actual spending, ensuring architecture aligns with business and technology goals, and increasing automation.

These improvements enable faster decision making, faster demand forecasting, and a more efficient “go” or “no go” decision process for business cases. FinOps also helps align business and IT goals, creating an environment where corporate goals are interconnected and business cases with clear, quantifiable benefits are developed. These adjustments enhance both existing and new capabilities to support strategic growth and innovation.

Challenges and common mistakes faced when adopting FinOps

Organizations should develop a phased approach over time rather than trying to implement everything from scratch. Having the right people, processes, and technology in place is essential to validating changes and understanding their impact on consumption models and usability.

It is important to lay out a clear journey path by defining the current state, establishing the future state, and devising a transition plan from the current state to the future state with a clear implementation strategy. To ensure repeatability across different organizations or business units within an organization, it is important to establish well-defined design principles and ensure consistency of adoption. Monitoring key performance indicators (KPIs) is essential to effectively track progress.

Many organizations today are already considering a FinOps approach, even though it may not be the most cost-effective approach. Instead of addressing the root cause, you apply temporary fixes that cause ongoing problems. These temporary fixes include:

• Regular review: The IT team is called in regularly to address performance issues caused by scaling or overspending, and often responds to complaints from the finance team. However, this reactive approach sustains firefighting efforts rather than proactive self-optimization.
• architecture patterns: Regularly updating architectural patterns based on new features and underlying services of a hyperscaler can introduce unintended complexity without clear metrics for success.
• External SME: Bringing in external subject matter experts for reviews incurs significant costs and requires effort to get the experts up to speed. This approach results in ongoing costs without sustainable improvement.

To avoid these pitfalls, it’s important to establish well-defined KPIs, benchmarking, and processes for real-time insights and measurable results.

Some organizations assign FinOps responsibilities to a centralized team to monitor spending and select cloud services. This approach creates silos and hinders visibility into planned changes, which can lead to frustration and downstream impacts on service delivery. Integrating FinOps activities across the organization ensures broader participation and diverse skills, fostering collaboration and avoiding silos.

Next steps in your FinOps journey

No matter where you are in your cloud journey, it’s never too late to adopt best practices to make your cloud consumption more predictable. IBM Consulting® can help you adopt the right architectural pattern for your unique journey with Apptio and your products.

Connect your investments to clear business value to deliver actionable insights Personalize your cloud journey and learn about best practices