“Companies often put FinOps teams in place to address cost and unsatisfactory cloud ROI issues after they arise,” says Jensen, but you need to have those teams in place up front, before making new investments. “Failure to collaborate and hold cross-functional teams accountable for expected returns means costs can spiral out of control.”
“Keeping cloud costs solely in IT is a recipe for out-of-control spending because the business reaps the benefits while IT shoulders the expenses, and the blame, when they go over budget,” Jensen adds. “The best arrangement is to have a full chargeback of cloud costs to the business unit or group requesting those resources.”
How you organize FinOps teams can greatly affect cloud operating costs, says the Europe-based CIO. “Whether agile should include FinOps or not is a matter of debate,” he says. He learned from experience that you can’t let every agile team choose its own cloud providers, select its own services, and place its own orders. “If you go all the way and implement FinOps in an environment where you have platforms used by more than one team, you lose economies of scale. This creates a lot of missed opportunities, and is one of the debating points with agile: without end-to-end oversight on certain aspects, how can you reach economies of scale? You also sacrifice the opportunity to standardize on optimization, operations, security management and so on,” he adds.
With this in mind, he and his team consolidated all platform operations, including financials, used by more than one team. So they created an XaaS team, called the Anything as a Service team that owns cloud operations best practices, overall account management, and the financials. The XaaS team still lets individual groups do their own thing, although it does give them the option to have XaaS manage the service. “But if the service or vendor they want to use is used by other groups, then there’s no choice,” he says. Ultimately, the platform team owns the financials as well as platform operations, such as patching, security and optimization. The requesting team works only at the application layer. “That’s the compromise we’ve built to respond to the conundrum between DevSecFinOps versus economies of scale,” he says.
Finally, watch out for resistance within teams when it comes to optimizing cost efficiencies. “There’s often a defensive view toward being efficient with our infrastructure spending,” McKee says, and that attitude can quickly spread across the organization. The solution lies in making those teams understand they’re getting involved in innovation, not just a cost-cutting exercise.
Get personal with your vendors
Typically, only companies with multi-year commitments and savings plans get the personal attention of hyperscalers, says Jensen. Having such commitments in place increases cost effectiveness because personalized feedback on proper resource configurations and new web services can improve application performance and reduce costs. “FinOps teams should meet monthly to discuss recommendations from their hyperscalers,” he says.
Open and transparent communication with vendors is essential. It’s important to remember these organizations are run by people, so building relationships at the right levels in each organization is key, as well as holding regular meetings with sufficient and transparent data from both sides to ensure mutual benefits with no resentments. McMasters, for instance, keeps up with each cloud vendor’s roadmap, and looks for opportunities to collaborate. As an example, Microsoft wanted to make inroads with municipalities for its virtual desktop infrastructure, so it was able to work out a win-win arrangement to provide those services. “Know what’s the bigger win for them and what’s on their roadmap,” he advises. “Are there products or things on their roadmap that benefit both parties? In this case they were looking for opportunities to prove themselves.”
He also reviews the overall health and direction of the city’s cloud service providers, which is particularly important for smaller providers and startups. “We look for transparency,” he says. “Providers that are very transparent tend to have a solid roadmap and we work best with them.”
And when reviewing contracts for renewal, McMasters recommends hiring an analyst firm to help review changes to licensing and other cost factors. “Having a third party helps you level the playing field,” he says.
The technical aspects of cloud computing are the easier part when it comes to cost optimization—and the part many CIOs feel most comfortable—but cultivating relationships with vendors and especially internal constituents, is the ultimate key to success.
“To me, the biggest part of cloud optimization is understanding your own organization,” McMasters says. “It’s easy to misstep and overcompensate, especially on the tech side.” Optimizing cloud spend requires getting the most from the technology and building strong partnerships with your vendors. “The best relationships we have aren’t with the tech providers, however, but with our other executives,” he adds. Only when that’s in place can you anticipate needs and provision accordingly.
Establishing cloud governance and FinOps teams is also critical to get the information CIOs need to ensure cloud operational costs continue to align with business imperatives. Those teams should measure the efficiency of cloud spend, optimize costs, analyze spend, and issue reports to leadership, says Vunvulea. CIOs should then use that information to measure cloud value relative to business operations. “Understand how business KPIs map back to the cloud, and how cloud value should be measured from the business point of view,” he says.
To achieve that, FinOps teams should leverage available toolkits for cost analysis and optimization, conduct annual clean ups to eliminate unnecessary cloud resources, and monitor progress, says the European CIO.
“Discover where you’re currently spending to make sure you can explain all line items, improve spending where immediate action can be taken, and monitor for continued improvement,” says McKee. And make sure your teams see cloud cost optimization as a way to innovate, not just a cost-cutting exercise.
