Outsourcing FinOps: How it can drive greater cost-savings
Aimee Manning | OCT 19, 2023
With cloud spend increasing by 35% year-on-year, impacting the business margins of just about every modern organization, it comes as no surprise that FinOps – a discipline focused on optimizing cloud costs while ensuring the efficient use of cloud resources – is fast becoming a priority for CFOs, CIOs and CTOs alike.
The problem is, wanting to reduce cloud spend and actually having the tools to do it are two entirely different things.
After all, many organizations lack the resources and visibility that are needed in order to create financial accountability across the different departments involved.
The question is, with the rising cost of cloud computing now increasingly unsustainable, how can you keep your spend to a minimum given these challenges?
The short answer is by outsourcing your FinOps practices. In other words, working with a FinOps partner.
Here’s what you need to know.
The increasing need for companies to adopt a FinOps partner
With companies continuing to adopt digital transformation models and invest heavily in emerging technologies such as generative AI, it’s little surprise that cloud costs are spiraling out of control.
And that’s before you factor in any annual price hikes from the cloud providers – AWS recently raised the price of its on-demand compute instances by an average of 23%, and just last year, Google Cloud introduced significant price increases across a number of its core services.
As we’ve already mentioned though, with the average organization’s cloud spend increasing by 35% each year, these escalating costs simply aren’t sustainable. Especially when you consider that many of these companies are already spending upwards of $3.8million on their cloud infrastructure.
Having a solution in place to reduce this cost without compromising this infrastructure is therefore key.
In fact, by combining financial management principles with cloud engineering, you can eliminate much of the 32% of cloud spend that typically goes to waste in the average organization.
Here’s the thing though – Cloud FinOps is not only resource-intensive, but also incredibly complex. When handled manually, that is. Then there’s the fact that even with a dedicated FinOps team in place, it’s near impossible to identify every single cost-saving opportunity that exists across each of your cloud services and products.
This is where an automated FinOps solution comes in.
The benefits of outsourcing FinOps
According to a study from Cloudcheckr, 100% of organizations using a managed service provider (MSP) for their cloud operations were found to benefit from the relationship. While this in itself should convince you to outsource your FinOps – or at least to consider it – if it doesn’t, hopefully the following advantages will.
Greater cost savings
With a focus on optimizing cloud costs, FinOps software solutions are designed to help companies identify areas of overspending – something that was identified as a top priority amongst CFOs in our 2024 cloud spend report.
Even for companies that have the resources to manage this internally, it’s worth noting that without automation, it’s virtually impossible to uncover every single cost-saving opportunity.
Why is that?
- Most organizations have complex and distributed cloud environments, and lack the necessary visibility to track and analyze costs across various accounts, regions and services
- Cloud service providers tend to offer complex billing models, making it difficult to understand the nuances of pricing tiers, data transfer fees and storage costs, which often require expertise and constant monitoring to avoid cloud spend wastage
- Adapting to constant changes within the cloud architecture is incredibly time-consuming for in-house teams and makes it almost impossible to effectively optimize all costs
Fortunately, this doesn’t need to be an issue with a FinOps platform such as Vertice.
By leveraging automation to analyze your usage patterns and spend across your cloud infrastructure, Vertice specifically enables you to:
- Adjust your resource allocation based on your actual usage
- Prepare budgets and cash flow models with greater predictability and visibility
- Achieve financial accountability across the business by aligning cloud costs to specific teams and projects
Ultimately, a platform of this kind can identify the full breadth of cost-saving opportunities, saving you as much as 25% on your annual cloud spend.
When it comes to controlling cloud costs, lack of visibility is one of the biggest hurdles for many finance leaders.
Because with such heavy reliance on tech teams to demonstrate cloud efficiency, it’s often incredibly difficult for CFOs to get a complete understanding of how their budget is being accounted for and why cloud spending is increasing so significantly each year.
And the data backs this up, with as many as 55% of finance leaders citing that there is a lack of transparency from technical colleagues on how the cloud budget is being spent.
FinOps tools can help bridge this gap by providing finance leaders with unparalleled visibility into their cloud usage, enabling them to more accurately track and monitor their spending.
With the ability to continuously monitor and analyze cloud usage, a cloud cost optimization platform can identify all opportunities for optimization – something that simply isn’t possible when handled manually by internal FinOps teams.
This includes proactively recommending adjustments, for instance right-sizing resources, utilizing reserved instances (RIs) and implementing auto-scaling policies.
A good tool will also show you the savings estimates alongside the recommendations, which usually require minimal engineering effort, saving your team valuable time.
Ultimately, this ongoing optimization will ensure that your business is consistently maximizing cost-efficiency.
Increased financial accountability
In many organizations, there is often a great deal of friction between finance and tech teams when it comes to managing cloud spending.
Although cloud cost optimization is, to some extent, a priority for CFOs, CIOs and CTOs, the challenge is that each department lead has conflicting priorities. While a finance leader, for example, is responsible for managing the cost of cloud utilization and ensuring the budget is being spent wisely, tech leaders are often tasked with leveraging technology to develop a market-leading solution and achieve competitive advantage.
It therefore comes as little surprise that the number one relationship issue reported by more than half of all finance leaders is a lack of transparency from technical staff on what is being spent on cloud.
In contrast, 41% of technology leaders expressed their frustration that non-technical staff don’t have the right knowledge or expertise to understand cloud investments, making it clear that there is often a challenge around balancing innovation and cost.
With Cloud FinOps, this no longer has to be an issue. By providing all stakeholders with a unified and simplified view of both cloud spend and usage, friction can be reduced, collaboration can be increased and organizations can establish financial accountability among all stakeholders.
Take control of your cloud operations with Vertice
When it comes to getting a handle on your cloud costs, you ultimately have three options.
- You can neglect cloud optimization altogether and waste around a third of your cloud budget
- You can train a FinOps team in-house which can come with its limitations
- You can maximize your savings potential by partnering with a cloud FinOps solution
Which is where Vertice comes in.
As a Cloud Cost Optimization platform, we will continuously monitor and analyze your cloud infrastructure, using our proprietary suite of more than 75 optimization tests to generate a number of cost-saving recommendations – all of which either require minimal engineering effort or can be implemented on your behalf.
In addition to this, we will alert you to anomalous increases in spending, manage your discount commitments and provide you with much-needed visibility, giving you the insights you need to more accurately forecast spend.
See for yourself how Vertice discovered $1.1 million in AWS savings potential for one company, or alternatively learn more about the benefits of partnering with a Cloud Cost Optimization provider.