Technology

Closing the Cloud Value Gap with Finops

During the COVID-19 pandemic, cloud adoption of Oracle Flexcube expanded across sectors as organizations were compelled to swiftly alter their companies and workplace structures. To correctly manage and control their cloud spending, organizations must shift from a capital expenditures (CAPEX) model to a more scalable and elastic operating costs (OPEX) one. FinOps in the Cloud offers a solution.

Despite the fact that many of our customers are moving to the cloud, many are not receiving the advantages they had hoped for. On average, just one in every three businesses has reported getting the intended value from cloud computing. This attitude is echoed in industry cloud studies, which highlight cost reductions as the main incentive for organizations going to the cloud—although few actually accomplish them.

Suppose the C-suite cannot clearly identify the business rationale and realized value. In that case, this value gap will restrain their appetite for future IT investment in the path to the clouds. Cloud FinOps helps close the value gap by using a disciplined strategy to control cloud service costs and realizing the intended benefit. FinOps also can illustrate the benefit of an organization’s cloud investment, regardless of where it is on its path to the cloud. Cloud cost management will be crucial in every business if we accept the assumption that all organizations will eventually go to the cloud.

What causes the cloud value gap?

Many organizations have difficulty determining why they aren’t reaping the advantages of cloud computing. Several critical areas have a substantial influence on their capacity to maximize their value, as we have observed in our experience with various companies, including:

  • Not optimizing when you are forced to lift and shift: Certain situations do call for a lift and shift strategy. You may have to quickly escape a data center. Alternatively, you may be moving a core application and want to swiftly move the rest of your applications into the exact hosting location. Unnecessary infrastructure optimization might result in huge overages for your cloud services, regardless of your rationale.
  • Lack of cloud-native service consumption: Due to concerns about portability and lock-in, we are aware that cloud-native has its share of hurdles and apprehensions. However, we also notice that organizations that fail to make use of the tremendous cost optimization potential of some services and features lose out on significant opportunities.
  • Lack of cloud optimization capabilities: Expertise is required in the areas of cloud administration and optimization as well as economics. Traditional accounting abilities and a comprehensive understanding of cloud services like Oracle Flexcube universal banking and hyper-scale commercial frameworks are needed for these positions. To begin with, assembling a team of cloud and accounting experts is a difficult task in and of itself. For those organizations that have successfully grown these skills, we believe it is worthwhile to invest in them.
  • Limited visibility and accountability: To achieve unparalleled agility and speed, cloud and DevOps-enabled deployments must be designed appropriately. Cost management is made more difficult by the fact that the advantages to the company are outweighed by the costs. A lack of spend accountability and real-time cloud spending monitoring may lead to unexpectedly large cloud bills at the end of the month for organizations that don’t have these features incorporated into their operational models.
  • Reviewing individual supplier costs in isolation: For the majority of companies, a multi-hybrid cloud is a given. In order to better optimize and reduce costs across their whole cloud estate, they must overcome the difficulties of doing so while also attempting to normalize and aggregate their data in order to achieve this goal.

How can FinOps close the value gap?

Cloud FinOps is more than simply a new operating model; it necessitates a shift in company culture, including closer collaboration across the DevOps, Finance, and Business teams. FinOps helps organizations narrow the cloud value gap by enabling iterative, data-driven control of cloud expenditure and concurrently boosting the cost-effectiveness and profitability realized from a cloud environment.

It is possible to maximize cloud value by integrating business, financial, and architectural activities into a continuous loop. FinOps, in my opinion, is capable of slashing cloud costs by 20-30 percent and offering a slew of additional advantages, including:

  • Manage and governance: Governance mechanisms are established and executed to monitor and control cloud expenditure, including monitoring and reporting on optimization proposals and the advantages realized.
  • Architecture re-imagination: seeing the opportunity Optimizing the cloud infrastructure by taking advantage of possibilities like managed services reduces the requirement for constant management from your DevOps staff.
  • Insights in real-time: Cloud cost reporting may be improved from monthly to hourly in order to offer a daily “spotlight” on your cloud expenditures for everyone in the organization.
  • Preventing future expenses by taking proactive measures: By being able to see where your money is going in real-time, you’ll be able to keep tabs on your spending and avoid unpleasant surprises at month’s end.
  • Make teams accountable for their expenses by allowing them to take control of such costs. Your cloud teams are empowered to manage their own cloud consumption against their budget thanks to federated responsibility for cloud usage and pricing.

These four core functions should be used to drive success, managed by a central FinOps team:

  • Forecast, plan and allocate: The long-term financial security of your IT department depends on having a firm grasp on your consumption estimates. Knowing exactly how much energy is being used in real-time may help your organization’s decision-makers better plan and allocate resources. When IT managers have accurate estimates, they can better target their future cloud expenditures to the areas of the company where they will have the most effect. Chargeback mechanisms must be in place in mature FinOps procedures so cloud expenses may be paid to the relevant business units.
  • Cloud expenditures must be tracked meticulously. The ability to see and track expenses in real-time improves the way people operate and the way they utilize the cloud. For DevOps teams, real-time monitoring is known as the ‘Prius effect’ since it enables them to see immediately how their activities impact the total cloud cost. Rather than waiting until the end of the month to examine consumption spikes and try to change the behavior, this approach guarantees that cost concerns are embedded into teams’ day-to-day operations. Showback provides cloud leaders with the information they need to make informed decisions about their company’s overall worth and the allocation of future resources.
  • Optimize and purchase: Continuous cloud optimization initiatives are essential to keep your cloud estate small and running effectively. Cloud computing costs must be taken into consideration by DevOps teams when designing, developing, and deploying new applications. Cloud optimization strategies range from use optimization (e.g., rightsizing), price optimization (e.g., buying commitments), and architectural optimization (e.g., rightsizing) (e.g., containers, serverless computing, improved hardware).
  • Evolve and reimagine: One way to save costs is to use the proper services for your architecture. Using managed services to lower IT infrastructure running costs is one approach for optimization. As a result, you can free up your IT resources to concentrate on more critical business issues. When you use serverless architecture and managed services, such as GCP Cloud Functions or AWS Lambda, you just have to pay for the amount of time that the function is running, and this lowers your ongoing administration burden.

Conclusion:

However, although current FinOps thinking just touches the surface of what is potentially achievable with the Oracle Flexcube 14.x, the concept is already altering the way organizations manage their cloud infrastructure—from fixing difficulties in real-time to reining in expenditure that does not provide proven business value.

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