FinOps: what, when, and why

Vikrant Bhongle, from the Technology Assessment Service (TAS) – a part of Capgemini Technology, Innovation & Ventures (TIV) – connected with Dapo Adekola, Vice President and Chief Technology Innovation Officer (CTIO) for Cloud, on the very topical subject of FinOps specifically focused on cloud. Read the interview to know more-

Why is FinOps an important consideration as a part of any cloud transformation journey?

Dapo: “Public cloud adoption is typically a feature of a wider digital transformation activity. There are many reasons that drive digital transformation journeys across the clients we work with.

One prevalent factor is the improvement of customer experience and engagement. Another is the acceleration of value via improved agility to drive faster, high-frequency “go to market” for products and services. And lastly is cost optimization, typically focused on reduction of the total cost of IT operations, cost of change (or both).

Simply put, for us FinOps is about how we make the financial aspects of cloud work for clients, leveraging a combination of commercial, financial, and technical decisions, operational processes, and tooling to achieve the financial benefits of business transformations.

Without a clear focus on FinOps, organizations adopting public cloud may fail to achieve the desired digital transformation objectives due to cost escalation and business case-erosion, proving why cloud economics are so crucial.”

So, when do you need to start thinking about FinOps?

Dapo: “This is an interesting one. Many organizations choose cloud first, then only think about FinOps once they’re well and truly in the cloud. Actually, it should start right from the beginnings of your business case. Whether you’re doing a big datacenter exit, or working on a transformation out of your on-premises systems, or going net new deploying new native applications in the cloud, FinOps should be considered from the get go.”

You mentioned FinOps is key – and without it, digital transformation objectives may fail – but how do organizations discover this?

Dapo: “Much like everything else, ‘It depends.’

We find that organizations born in the cloud, with no extensive legacy, typically grow adept at aligning their commercial and technical constructs, as well as tracking their costs in the cloud due to their organic adoption of it. However, it is different for a vast majority of large enterprises, which have existing datacenters and on-premises-hosted applications. They tend to have different expectations and comparison points on the existing costs of on-premises infrastructure, both from capital investment and operational cost perspectives. As such, they are more likely to be blindsided by a rapid escalation of costs due to their assumptions post cloud adoption. Surprising bills and linear cost growth are two key symptoms here.”

What do we think are the root causes of this cost escalation?

Dapo: “This is also sometimes referred to as the concept of ‘cloud waste.’ I like this term as it essentially means just that; ‘waste.’ A few typical areas to find this are in persistent and under-utilized non-production environments, unoptimized analytic systems, and orphaned servers, to name just a few. In essence, you could see FinOps as the ongoing prevention and remediation of cloud waste.”

How can you remediate when things to go wrong regarding cloud costs?

Dapo: “A very good question!

There are quite a few preventative and remedial interventions for cloud waste. It starts with a robust and realistic business case for cloud if transforming from on-premises systems. It is not a one-time procurement-led activity – although it is sometimes mistaken for this. It involves educating and upskilling your cloud ecosystem, including developers, engineering teams, architects, and IT finance teams alike on the various commercial constructs, features, and tools available from each cloud hyperscaler in use.

These include saving plans, ‘reserved instances’ or ‘committed use,’ ‘on demand,’ autoscaling models, as well as tools such as CloudWatch, Explorer, Budgets, Cost and Usage Reports from AWS, Azure Cost Management and GCP’s Cost Management and Billing Reports. There are also myriad third-party tools available providing additional cost management functionality, such as Aptio, CloudCheckr, ParkMyCLoud, Densify, etc.

Tactical interventions for organizations wishing to immediately optimize include environment consolidation, rightsizing to remove excessive overhead, scheduling, and changing commercial models as initial measures. Further measures can also result in material saving, but do require more technical considerations and interventions.

In summary, I find the most impactful approach is to operationalize all of the above. At Capgemini, we spend a lot of our time ensuring that cloud waste can be continuously and proactively avoided as part of system design, deployment, and operations rather than as a remediation activity.”

So, who needs to take responsibility for FinOps and cloud waste avoidance?

Dapo: “Everyone in the entire cloud ecosystem!

It is the joint responsibility of the whole cloud ecosystem including developers, engineering teams, architects, and IT finance teams alike. Our approach is usually to insert a capability that that empowers the digital teams to self-serve but in a manner that avoids cloud waste while supporting high-frequency delivery and agility. We typically start by enabling a Cloud Center of Excellence to start the initiative; however, we then look to empower the entire ecosystem, leveraging training, operationalized processes, and gamification to ensure success.”

Has Capgemini had much experience of doing this for clients?

Dapo: “We have led this for multiple clients at scale typically focused on tactical achievement of immediate cost reductions as well providing a FinOps structure for ongoing cost waste avoidance. As an example, we worked with a large public-sector organization in the UK were able to implement some of the processes I’ve spoken about, resulting in a savings of about 35% of their typical cloud costs.”

Any final points as we close?

Dapo: “I would say that organizations really need to think of FinOps as being critical to the planning and execution of their cloud adoption journey, and to integrate it as a core component.”

To find out more about Capgemini’s cloud cost optimization assessment, click here.

Author

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Dapo Adekola
Vice President, Chief Technology & Innovation Officer Cloud

Author

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Vikrant Bhongle
Consultant – Cloud & Edge Computing