When the pandemic hit in early 2020, the world was already on a fast-track to cloud transformation. Things hyper-accelerated from there, as businesses scrambled to support newly remote workers and customer-centric digital business models. Caution, as they say, was temporarily thrown to the wind.If this sounds like any organization you know or work with, you may find the rest of this post of particular interest.
Coming to terms with the cloud cost paradox
While the benefits of this rapid shift were undeniable, there was an unexpected consequence many didn’t see coming. Rather than an avalanche of savings, many found themselves struggling to understand, manage or control their costs. For many, up to 30% of spend is wasted due to misused, misaligned, and misconfigured services.According to Krishnaprasath (KP) Hari, Hitachi Vantara’s VP, Digital Modernization, this is known as the cloud cost paradox. The basic premise being, while swapping physical infrastructure for XaaS delivers on fostering innovation, agility, and growth, the actual cost can be surprising.According to KP, it is usually a combination of miscalculating needs and a failure to establish controls to make efficient decisions. “Companies are suddenly seeing an almost insurmountable amount of data needed to reconcile costs which can be across multiple providers,” Hari says. “With unique charges for every second, billing can literally be millions of lines long.”
Another challenge: what used to be a procurement and finance-driven CapEx process quickly evolved to OpEx, involving an entirely different group of decision makers. “Cloud removes finance from the buying process and hands the credit card to cloud engineers,” says J. R. Storment, executive director of the FinOps Foundation. The results can cause problems.
Putting cloud costs into business balance with FinOps
It isn’t too late to change the dynamic, but it requires a proactive effort. FinOps provides a framework, combining “financial, technical and business functions to create a cost-conscious culture for cost optimization,” KP says. Benefits extend well beyond cost, including optimizing for quality, reliability, and risk.And because it requires collaboration among a previously disconnected mix of developers, engineers, and their operational, financial and business counterparts, FinOps helps everyone understand their own impact on spend. While this represents a great start, to be truly successful, FinOps requires cultural change, too.According to the recently released study by The FinOps Foundation, the State of FinOps 2022, engaging engineers in the process remains a challenge. While businesses are making progress, it says “the decentralized nature of cloud at scale makes cost optimization difficult to orchestrate.”
Watch the HBR webinar that puts FinOps into focus
Learning more about FinOps is the first step to taking back control of cloud spend. Our recent webinar, Balancing Cloud Costs and Business Goals with FinOps, featuring Hari, and experts from Harvard Business Review (HBR) Analytic Services, is a great starting point.Organizations that successfully adopt FinOps will find the benefits extend well beyond managing costs, including enhanced quality of cloud consumption while driving business performance. Hitachi Vantara also works directly with many customers to implement FinOps principles as part of Hitachi Application Reliability Center (HARC) services.
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