The complete guide to cloud financial management
Aimee Manning | SEP 28, 2023
5 min read
With the average company now spending $3.8 million per annum on cloud computing – a figure that’s increasing by 35% year-over-year – it’s fast becoming one of the largest operating expenses within the modern organization.
But while there’s no denying that cloud spending is a necessary outlay, for many, the bill is substantially more than it needs to be. In many cases, at least $1 million more.
This is because approximately one-third of cloud spending goes entirely to waste.
The good news is that it can be prevented.
At least with the right Cloud financial management strategy, that is.
But what is FinOps? What are the benefits? And how can you get started?
Here’s everything you need to know.
Understanding Cloud Financial Operations
By definition, Cloud FinOps, also known as Cloud Financial Operations, is a practice that focuses on aligning cloud costs with business objectives and improving overall financial management in the cloud.
It specifically combines financial management principles with cloud engineering and operations to provide companies with a better understanding of their cloud spending patterns, while enabling them to make more informed decisions on how to allocate and manage their costs.
This involves ensuring that cloud spending is optimized, wasteful expenditure is minimized and that resources are allocated effectively to meet business needs.
By encouraging financial accountability across teams, Cloud Financial Operations ultimately helps to create a cultural shift that brings technology, finance and business teams together to accelerate business outcomes.
Similar to MarketingOps or RevOps (Revenue Operations), FinOps is starting to emerge as a hybrid function in an organization and typically sits at the intersection of finance, IT and operations teams. The cross-functional element of FinOps is a testament to the complexity of cloud spend management for a business.
How do cloud financial operations differ from cloud cost optimization?
Cloud financial operations and cloud cost optimization may be related concepts, but they’re not the same thing.
While the latter is focused almost entirely on reducing cloud expenses and achieving cost savings, FinOps incorporates broader financial management principles, processes and collaboration to optimize cloud spending, drive financial accountability and align with business goals.
Benefits of adopting Cloud Financial Operations
So, what are the core benefits of implementing a Cloud financial operations strategy?
Cost optimization
By enabling you to identify and eliminate wasteful spending, rightsize resources and leverage more cost-effective cloud pricing models, it can drive significant cost savings and improved cost efficiency.
Financial accountability
Effective Cloud financial management can also help to foster a culture of financial accountability across all the different teams involved in cloud operations.
By creating awareness and understanding of the financial implications of cloud services, stakeholders within these different teams – particularly those in DevOps – will be more conscious of their resource consumption and the impact their decisions and actions have on overall costs.
Improved budget management
By implementing Cloud financial operations practices, your organization stands to gain better visibility and control over your budget. As an example, you can set and enforce budget limits, track actual cloud spending against your budget, and receive real-time cost insights – along with alerts when there are anomalies in your usage and spend.
Not only can this enable proactive budget management, but it also helps avoid cost overruns and unexpected expenses.
Stronger business alignment
With a focus on aligning cloud costs with business objectives and priorities, it can also enable your organization to measure the value and ROI of your cloud services and make data-driven decisions based on both cost and performance metrics.
Data-driven decision making
Cloud financial management ultimately relies on data and analytics to drive decision-making. With real-time visibility into your cloud costs, resource utilization and performance metrics, you can make data-driven decisions regarding resource allocation and optimization strategies.
Scalability and agility
This practice enables organizations to scale their cloud operations efficiently and cost-effectively. By optimizing costs and improving resource utilization, you can allocate resources more effectively and respond quickly to changes in workload demands. This agility helps your organization adapt to business needs while keeping costs in check.
Streamline your FinOps process with a Cloud Cost Optimization platform
While an effective Cloud FinOps strategy can drive substantial cost-savings, improved collaboration and greater financial accountability, it can also require a huge amount of time and resources that many organizations simply don’t have.
And even those that do often miss out on opportunities to improve efficiency and minimize wastage, given the complexities of the cloud and the vast number of products and services being utilized.
By partnering with a cloud cost optimization solution such as the Vertice platform, this no longer has to be the case. Our recommendation engine continuously identifies savings opportunities across all AWS products, providing you with a list of detailed recommendations with quantifiable savings estimates.
Best of all, these recommendations require minimal engineering effort, with some even automatically implemented on your behalf, saving you even more time.
See for yourself how Vertice discovered $1.1 million in cloud savings potential for one company, or alternatively learn more about our platform.
