Cloud Cost Optimization Advanced Strategies in FinOps

Manish Rathi

Last updated 16/02/2024

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In the wake of the recent global crisis, the concentration on cloud cost management has intensified. Businesses are not just looking to survive but aim to thrive in the new normal, where digital transformation is accelerating at an unprecedented pace. It showcases the huge requirement of FinOps certified professional.

Cloud management across the different cloud providers and services, individuals with distinct pricing models, can be challenging.  As organizations always seek to resolve the challenges, one leading solution which arises is adopting the FinOps framework, such as a strategic approach blending finance, operations and technology, tailored to increase efficiency in cloud spending, this is where FinOps certified practitioner comes in highlight.

Today, we will explore FinOps practitioner and different advanced strategies in FinOps for Cloud Cost Optimization.

What is Cloud Cost Optimization?

Successful FinOps, or cloud financial management, is a collection of business procedures that connect financial accountability to controls over the variable expenditure model of cloud IaaS. The final result is cloud cost optimization. You will find out the in-detailed practices through finops training.

For your business to effectively optimize cloud expenditures, it has to become an expert in two areas:

• Intelligent Procurement of Cloud Services:Low-hanging fruit may be saved using savings plans like AWS Savings Plans and capacity reservations like Amazon Reserved Instances.

• Intelligent Optimization of Cloud Capacity:Sensibly matching your cloud workloads to the best instance and resource configuration with intelligent cloud capacity optimization.

What is FinOps?

FinOps, short for Financial Operations, represents an emerging collection of practices that integrates financial and technical expertise to oversee the expenses associated with cloud computing.

It comprises a set of guidelines, principles, and methods crafted to assist organizations in fine-tuning their cloud expenditures, aligning them with business objectives, and enhancing overall cost-effectiveness. Explore our FinOps certification for more understanding.

The FinOps approach revolves around three fundamental principles:

• Accountability:All contributors to the cloud infrastructure must assume responsibility for the costs they generate, collaborating to optimize spending collectively.

• Collaboration:Teams throughout the organization should collaborate, sharing knowledge, tools, and best practices to streamline costs and enhance efficiency.

• Transparency:The costs tied to cloud infrastructure must be transparent to all stakeholders, enabling them to comprehend the financial impact of their actions and make well-informed decisions.

What is Cloud FinOps?

Businesses can direct cloud cost management challenges with the help of cloud financial optimization, which is the application of cultural and cost management leading practices and economic governance to bring cross-functional stakeholders together to collaborate on decisions that increase the business value, cloud usage and cloud investments.  Through finops certified practitioner you will understand the different approaches of how it works.

Following are the four cloud FinOps approaches on four pillars which help clients control cloud costs:

• Plan cloud cost management strategy:It defines businesses' cost optimization goals to plan and track future cloud costs and consumption.

• Develop cloud FinOps function:Develop the centralized team with representatives from the company, technology, Information Technology operations, and finance and procurement regulations to own the cloud governance, share details, and generate the holistic picture of the business cloud requirements.

• Develop cloud cost management governance and monitoring: Enforce discipline throughout the cloud investment and consumption procedure through governance and tools to measure and report on cloud usage and cost, promote accountability and drive down short and long-term costs.

• Elevate cloud cost and consumption constantly:Use pricing, resource management and modernization strategies periodically to decrease the costs of cloud services.

Top FinOps Strategies to Optimize Cloud Cost Optimization 

• Cultivate the culture of Cost Awareness:

Having a culture where each group and group member have an idea of cloud cost and awareness is a fundamental motivating mindset where teams understand the impact of their cloud usage on the business's finances. Developing show-back mechanisms might be practical in promoting the culture.

• Resource utilization optimization:

The primary cause of inflated cloud costs is underutilized resources. Here, it’s essential to conduct regular audits to analyze and reallocate resources which aren’t fully utilized. Some tools provide insights into resource utilization, which can be invaluable for these assessments.

• Centralized Leadership: 

As ownership is distributed, the central FinOps team plays a significant role in evangelizing best practices and strategies and operating on the shared accountability model. They make sure executive buy-in and oversee rate, commitment and discount optimization.

With the help of centralizing certain aspects, it focuses on streamlining operations, freeing up engineering groups to concentrate on optimizing their environments.

• Ownership empowerment: 

The philosophy of FinOps motivates ownership at every level. Accountability for usage and cost is decentralized, with the engineers empowered to manage the expenses through architecture to ongoing operations.

The attributes and product teams take the reins, making informed decisions around cost-effective architecture and optimization, considering cost as the pivotal efficiency metric from the inception of the software development life cycle (SDLC).

• FinOps best practices for cloud cost governance:

Highlights FinOps best practices for effective cloud cost governance. Discuss governance frameworks, cost allocation strategies and policies that ensure financial accountability and optimization at scale.

• Automating cost-effective practices: 

Automation plays a significant role in managing cost efficiency and automating tasks, which includes shutting down non-critical resources during off-hours, auto-scaling and developing rightsizing recommendations, which can significantly decrease manual overhead and optimize costs.

• Reserved Instances and Savings Plans:

Reserved Instances and Savings Plans are cost savings mechanisms cloud service providers such as AWS provide. These mechanisms allow users to save costs by committing to the specified amount of usage over a long period.  

Even the most advanced companies find developing a wise purchasing strategy difficult. Large businesses cannot optimize the usage of Reserved Instances and Savings Plans because they do not have visibility into their coverage and use based on optimum conditions. You may use these discounts and promises on an instance-by-instance basis, but automation is necessary at any size.

Densify has perfected the art of efficient cloud purchasing to guarantee that clients receive the most return on their investment. Densify considers variables like term duration, payment alternatives, and use history while automating the highly complicated process of cloud procurement based on optimum usage patterns.

• Create a Cost-Aware Culture:

Last but not least, without the support of all stakeholders, no cloud optimization project can succeed. Our most prosperous clients have established Cloud Operating Models and standardized cloud best practices by creating Cloud Centers of Excellence or FinOps practices.

By providing highly differentiated information that promotes transparency, Densify helps firms expedite these cultural shifts by increasing cost awareness across functional and business line boundaries. These reports can assist in revealing harmful spending trends and concealed waste.

Decision makers can then sponsor enterprise-wide initiatives using show back or chargeback to prioritize cost optimization for all stakeholders and reward staff who proactively continue to rightsize.

• Subsequent Actions for Cloud Optimization

Consider how your company presently uses the cloud for operations. Is the Cloud Operating Model well-established in your company? Has your Cloud Center of Excellence or FinOps organization been formally established?

Cloud cost optimization doesn't have to be complicated. Still, it does need a systematic strategy that creates healthy rightsizing practices and consistently uses analytics to generate insights and action to reduce your cloud bill, and Densify shines in that area. Once you enrol for FinOps certification you will understand the above practices effectively.

Conclusion: 

In conclusion, as businesses navigate the intricate landscape of cloud cost management, adopting the FinOps framework emerges as a strategic imperative. FinOps, blending finance, operations, and technology, propels organizations towards efficient cloud spending. You can enroll for a FinOps course to get to know the core factors.

Cloud cost optimization, the crux of FinOps, demands adeptness in intelligent procurement and optimization of cloud capacity. By cultivating a culture of cost awareness, optimizing resource utilization, centralizing leadership, and empowering ownership, businesses can foster a FinOps mindset throughout their cloud journey.

Automation, Reserved Instances, and Savings Plans are essential tools in pursuing cost-effective practices. As companies embrace FinOps best practices and instill a cost-aware culture, they not only optimize cloud expenditures but set the stage for sustainable success in the era of transformative cloud computing.

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