FinOps: Financial optimization of clouds and a true lever for modernizing IT systems.

Financial management of clouds, known as FinOps, has become a central issue for Chief Information Officers (CIOs) in the current context of accelerated digital transformation. Companies are massively migrating their IT resources to the cloud, which offers numerous advantages in terms of agility, innovation, and scalability, but also raises new challenges in cost management and resource optimization. Beyond mere cost reduction, FinOps plays a central role in supporting and optimizing IT systems modernization strategies. Here’s an explanation.

Essential cost optimization

Cloud migration has increased complexity in managing expenses. Usage-based pricing models often lead to unexpected costs if resources are not managed effectively. This is where cloud financial management, or FinOps, comes into play. FinOps aims to optimize cloud expenses by adopting a proactive and rigorous approach to resource and cost management. By relying on proven principles and tools, FinOps allows CIOs to align their cloud spending with strategic objectives while maximizing the value of their investments.

The benefits of FinOps

1. Complete visibility into expenses: One of the primary benefits of FinOps is the transparency it provides on costs. By using FinOps tools and practices, CIOs can gain an accurate overview of cloud expenditures, identify overconsumption, and adjust resources accordingly. According to Flexera, companies waste an average of 32% of their cloud spending (The State of FinOps) (CloudZero).
2. Cost allocation by business unit: FinOps enables granular distribution of costs by service or project, thereby facilitating accountability among different teams. Each business unit can understand and control its consumption, encouraging more judicious use of resources.
3. Negotiating better rates: By better understanding their usage profile and leveraging their negotiating power, CIOs can secure better rates from their cloud providers.

According to Gartner, 70% of companies that adopt FinOps manage to reduce their cloud spending by 10% to 20%. According to IDC, companies that adopt a FinOps approach can reduce their cloud spending by 30% to 50%.

Support for modernization strategy

Cost optimization is only part of the equation! A well-designed and implemented FinOps strategy is a lever for IT systems modernization:

1. Aligning expenses with strategic priorities: By gaining a better understanding of costs, CIOs can align cloud investments with the company’s strategic goals. This allows for prioritizing projects that add the most value while optimizing available resources.misant les ressources disponibles.
2. Encouraging innovation: By reducing unnecessary costs and freeing up resources, FinOps allows for more budget allocation towards innovation. Teams can test new technologies, develop prototypes, and experiment with new ideas without fearing budget overruns.
3. Adaptability and agility: FinOps fosters a culture of agility by allowing for rapid adjustments of resources based on needs. This flexibility is essential for quickly adapting to market changes and new opportunities.

FinOps solutions

Managing expenses and optimizing performance in a multicloud environment is complex. With multiple cloud providers and disparate infrastructures, visibility and cost control become major challenges for CIOs. Here are some FinOps solutions for multicloud environments:

• Cloudability : Provides complete visibility into cloud expenses, resource optimization, and rate negotiation capabilities for multicloud environments.
• Turbonomic : Automates cloud resource allocation and optimizes application performance in multicloud environments.
• RightScale : Offers FinOps features for cost management, resource optimization, and cloud governance.
• Flexera One : Comprehensive cloud management suite with FinOps features for cost visibility, resource optimization, and governance.

Major cloud providers also offer their own native FinOps solutions:

• AWS Cost Management : Offers granular visibility into AWS cloud expenses, resource optimization tools, and advanced reporting capabilities.
• Azure Cost Management : Provides features similar to AWS Cost Management, with visibility and control over Azure cloud expenses.
• GCP Billing : Provides an overview of GCP cloud expenses, with analysis and reporting tools to identify areas for optimization.

Financial management of clouds through a FinOps approach goes beyond mere cost reduction. It is a strategic pillar for IT systems modernization, providing enhanced visibility, supporting innovation, and aligning expenses with company priorities. For CIOs, adopting FinOps is an investment in optimized and strategic cloud resource management, while supporting successful digital transformation.

Sources for further reading:

• The state of FinOps – Report 2024
• https://www.cloudzero.com/blog/finops-statistics
• 8 FinOps Best Practices for 2024