Understanding Cloud FinOps

Industries increase their transition to the cloud, and effective cloud expense management becomes vital for sustaining financial health and operational efficiency. This is where Cloud Financial Operations, or Cloud FinOps, plays an essential role. Cloud FinOps integrates systems, best practices, and a cultural approach that helps organizations control cloud spending and optimize the value of their cloud investments on any hyper-scalers they use (AWS, Azure, GCP, etc.).

1. Understand and Forecast Cloud Costs: Gain visibility into cloud spending, track usage, and predict future costs.
2. Optimize Cloud Usage: Identify unused resources, right-size instances, and choose cost-effective services
3. Collaborate Across Teams: Create a culture of collaboration in which engineering, finance, and business teams work together to manage cloud spending.

Core Principles of Cloud FinOps

1. Visibility and Transparency: Gaining clear visibility into cloud expenditures is the cornerstone of Cloud FinOps. Utilizing tools and practices like tagging, cost allocation, and detailed billing allows teams to track spending and pinpoint areas for optimization.
2. Accountability: Responsibility for cloud expenses should be shared throughout the organization. Teams should be accountable for their own cloud spending, motivating them to optimize usage and minimize waste.
3. Automation: Cost management processes are automated, ensuring efficiency and accuracy. This involves implementing automated instance scheduling, scaling policies, and continuous cost monitoring.
4. Optimization: Ongoing enhancement of resource usage and cost efficiency is crucial. Regularly assessing and adjusting instance sizes, utilizing reserved instances, and making use of spot instances are effective strategies for cutting costs.
5. Cultural Change: Adopting Cloud FinOps necessitates a cultural transformation within the organization. This includes dismantling silos between finance, engineering, and business teams to promote collaboration and shared responsibility.

How to Implement FinOps on Cloud?

• Establish a FinOps Team: Create a cross-functional team comprising members from finance, engineering, and business units. This team will be responsible for driving FinOps best practices and governing costs by ensuring alignment across the organization.
• Define Key Metrics and KPIs: Identify and track metrics that reflect cloud cost efficiency and operational performance. Common KPIs include cost per customer, cost per unit of product, and overall cloud spend against budget.
• Define & Implement guard rails/Cloud Custodian (Open Source) Policies:
  • EBS: Garbage Collect Unattached Volumes
  • ELB: Delete Unused Elastic Load Balancers
  • RDS: Delete Unused Databases with No Connections
  • EIP: Garbage Collect Unattached Elastic Ips
  • EC2: restrict Resource size for testing environments to micro, medium, and large. 2x4x large instances at Account Level

Adopt FinOps Tools: Utilize FinOps tools and platforms that provide insights into cloud spending, automate cost management processes, and facilitate collaboration. These tools and platforms include AWS Cost Explorer, Azure Cost Management, and third-party solutions like PRISM, CloudHealth, among others.

PRISM FINOPS WITH AI TO OPTIMIZE CLOUD SPENDING:

Presidio’s PRISM (Proactive Recapture into Savings Management) is a proven cost optimization managed service that provides real savings for the life of the agreement. PRISM allows you to focus on what you do best while taking full advantage of everything the cloud has to offer, without the risk of overpaying for instances.

1. 1. Presidio RapidCur provides direct access to actionable near real-time cloud spend insights.
   2. Presidio Driven Tagging streamlines spend allocation to specific business units and workloads.
   3. Anomaly Detection Alerts rapidly identify usage spikes to avoid excess consumption.
   4. Presidio DeepSight AI Cost Forecasting predicts spending based on current consumption patterns.
   5. Budget Tracking and Alerting compares current expenditures to established budgets and promptly signals any deviations.

Refer: https://www.presidio.com/solutions/cloud-cost-optimization/

Cloud Health

The service offering gathers and consolidates all customers’ cloud environment data onto a single platform, enabling them to efficiently optimize and govern their cloud environment. The service offering does this by gathering data and metadata related to the customer’s cloud-based service use.

• • 1. Get visibility into a rich set of data for managing your multi-cloud environment. Analyze your infrastructure by dynamic business groups and access custom reporting.
    2. Improve resource utilization and realize cost savings with tailored recommendations. You can achieve continuous optimization by implementing governance policies and automating actions to implement changes in your cloud environment.
    3. Grow your cloud expertise with a proven framework to progress through your cloud management maturity journey.

• Implement Tagging and Cost Allocation: Develop a tagging strategy to allocate costs accurately across teams and projects. This enables detailed cost tracking and accountability.
• Regular Review and Optimization: Conduct regular reviews of cloud usage and spending. Identify opportunities for optimization, such as rightsizing instances, eliminating unused resources, and selecting more cost-effective services.
• Educate and Train Teams: Provide training and resources to educate teams about FinOps practices and the importance of cost management. Foster a culture of continuous improvement and accountability.

Benefits of Cloud FinOps

• Cost Savings: By optimizing cloud usage and eliminating waste, organizations can significantly reduce their cloud spending.
• Improved Financial Accountability: With better visibility and accountability, teams are more likely to manage their budgets effectively and avoid unexpected costs.
• Operational Efficiency: Automation and continuous optimization lead to more efficient use of cloud resources, improving overall operational performance.
• Strategic Decision-Making: Accurate cost forecasting and detailed insights enable better strategic planning and decision-making.

Conclusion

If an organization wants to get the most out of its cloud investments, cloud finops is crucial. Businesses may cut costs significantly, increase financial accountability, and boost operational effectiveness by promoting cooperation, enhancing visibility, and consistently optimizing cloud usage. A culture of accountability and continuous development is what drives long-term success in the cloud, and this is what it means to embrace cloud finops. It’s not just about controlling expenses.

Sathishkumar Marimuthu

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