Data centers to cloud: A strategic shift with FinOps

Harnessing Financial Operations for Smarter Cloud Transitions

Technology is transforming every organization and business, driving them to surpass economic development. Many enterprises are continuously adopting and shifting workloads to the public cloud, expecting numerous benefits such as flexibility, scalability, agility, and cost savings. However, with the myriad of options available for cloud adoption, there is also a risk of uncontrolled expenditure. It is quite common for enterprises to express that they are not receiving the benefits they anticipated from the shift from data centers to the cloud. The following section of this article delves into those key challenges in detail.

When an organization decides to move to the cloud, it starts with migration planning. Often, gaps in migration planning, inadequate assessments, lack of cloud-ready staff, complex designs, failed migrations, rework, and app or tool dependencies extend migration timelines beyond expectations. Businesses pay for their existing on-premises infrastructure while incurring new expenses for cloud migration, leading to a migration bubble. Additionally, migrating only a portion of the infrastructure while leaving other components on-premises prevents businesses from enjoying the full benefits.

Our practical experience shows that merely migrating workloads from on-premises or co-located data centers to the cloud is not enough. Regardless of the chosen hyperscaler, issues arise when clients overlook cloud best practices, leading to challenges in cloud governance and cost management. It is evident that many enterprises are still approaching cloud adoption with a data center mentality and are hesitant to embrace essential cloud features like autoscaling, on-demand provisioning, and self-service, which have the potential to drive significant innovation.

The shift from data centers to the cloud has also disrupted traditional procurement processes by empowering developers with greater purchasing authority. It enables engineers to spend company funds with just a click of a button or a line of code, bypassing the lengthy conventional procurement procedures including purchase requisitions, calling tenders, vendor scouting, and purchase orders.

Due to these challenges, monthly bills from hyperscalers can spiral out of control, extending the payback period for investments and negating the benefits of cloud transition. Therefore, it is crucial to develop a comprehensive migration strategy with operational governance controls to avoid potential pitfalls and adhere to cost optimization goals, commonly referred to as FinOps. This approach helps free up budgetary funds and accelerates the shift to the cloud. Enterprises must ensure their personnel are cloud-ready and have strong procedures to analyze expenditures and identify key cost drivers. Assessing available cloud resources is also advisable for optimization.

The primary goal of every organization is to lower technological costs, and the cloud is no exception. As companies continue to invest more in the public cloud, recurring cloud run costs will increase. This trend underscores the growing importance of FinOps as a recognized financial management discipline.