Cloud Financial Management Key Areas

As organizations race to be cloud-ready and cloud-first, digital transformation is a priority. In the last 2 years, this has been further accelerated by the pandemic. In a complex cloud environment, businesses are striving to scale up with high-performing, resilient and secure infrastructure for their applications. However, the downside to this is that operational and infrastructure costs tend to shoot up.

Hence the need arises to have a Cloud Financial Management Framework an integral part of the cost optimization process. This does not mean that costs must be cut down. Rather, it is about developing a cost awareness culture, utilizing resources for efficiency, and bridging the gap between finance and technology teams. This collaborative approach toward cloud financial management is also called FinOps.

FinOps focuses on bringing more accountability to the variable spending by adopting best practices and ditching the idea of procurement teams working in silos. With this, teams can assess real-time data to make intelligent decisions on speed, performance, and availability of resources.

So, what are the key areas organizations should build upon while defining Cloud Financial Management Framework? Let’s take a look:

• Optimizing for Capacity
  Cloud resources in use should be well aligned with workloads. Billing and cost optimization tools should be set up to monitor the current state, trending, forecasts, and goals. This in-depth analysis will help understand if resources are underutilized or over-utilized and how they can be optimized for cost savings.
  Another aspect to consider is instance sizing. Choosing the right instance is crucial for performance as well as considering demand might go up periodically. While evaluating cost for services, here are some factors to consider:
  • Organizational requirements
  • Workload analysis over time periods under different predicted loads
  • Efficient use of managed services
  • Utilizing available open source for eliminating licensing costs
  • Data-based metrics for evaluating resource characteristics
• Procurement of Cloud Provider Services
  Utilizing cloud providers’ programs/reserved instances with intelligent procurement can help you save costs. A reserved instance is holding on to resources for pre-determined periods of time at discounted prices. Terms under which reserved instances are provided might differ between providers but a good forecasting framework should be functional to take advantage of reservations. Some cloud providers also offer cost-saving programs such as AWS Savings Plan which charges you based on a flexible pricing model.
• FinOps for Financial Astuteness
  Cross-functional IT, product, engineering, and finance teams should collaborate for faster product delivery while attaining financial accountability and predictability. Individuals, as per their defined persona, can be assigned different roles and accordingly define their usage. This cultural shift aims to ensure business values drive cloud decisions and ownership is clearly outlined.
• Upping the Cost Awareness Quotient
  Cross-functional teams should be able to delve into granular insights of their usage and predict trends over a period of time. In this manner, they can gain better visibility which drives intelligent decision-making. It is a good business practice to share customized reports with all stake holders aligned on the business value. A good example is CloudGain, which enables you to generate comprehensive reports for AWS and Azure accounts along with saving recommendations.
• Defining Cloud Budgets
  As organizations delve into granular insights of their usage, it enables them to fine tune their budget. Teams with on-demand pricing may be upscaling/downscaling their resources as per their usage, making it a little complex to plan in advance. Implementing a cost aware culture and continuous monitoring over usage can help in defining realistic cloud budgets.
• Governance
  Organizations need to set up their governance policies that take care of informed decision-making through guided permissions and accessibility. Set KPIs should focus on the overall spend, top services, or costs by account or region. Required investigations can be carried out if the governance points towards misuse of resources or cloud spends.

These are some of the key aspects that should be considered while planning an effective cloud financial management framework. Leveraging cloud monitoring tools such as CloudGain can help you delve deeper in AWS/Azure accounts in real time and gain better visibility in spends. It will detect unexpected, underutilized, and unused cloud resources, and then provide remediation suggestions, spending alerts and reports for potential savings.

Learn more about the industry’s tried and tested cost optimization methods to design, deliver, and maintain environments with GS Lab’s Ultimate Guide to Cloud Cost Optimization that is applicable to AWS, Azure and GCP cloud providers.