FREMONT, CA: As businesses increasingly transition from traditional on-premises hosting to public cloud solutions, cloud usage has surged. Yet, the rise of hybrid and multi-cloud environments has created challenges in maximizing value and controlling cloud expenses, shifting costs from capital expenditures to operational spending. FinOps—a growing discipline and cultural practice in cloud financial management—focuses on optimizing value in these complex cloud setups. With proper understanding, implementing FinOps becomes more manageable. Organizations need to set a clear strategy and avoid common pitfalls to fully realize the benefits and potential of FinOps.
Significant challenges and common mistakes when implementing FinOps are:
Organizations should establish a phased approach over time rather than attempting to incorporate everything from the start. Having the right people, processes, and technology in place is crucial for validating changes and understanding their impact on the consumption model and user experience.
Creating a clear journey path is necessary to identify the present state, determine the future state, and develop a transition plan from the current state to the future state with a clear execution approach. Well-defined design principles must be established and adopted consistently to ensure repeatability across several organizations or business units within the organization. Monitoring key performance indicators (KPIs) is necessary for tracking progress successfully.
Many organizations are already considering FinOps initiatives, although not in the most cost-effective way. Rather than addressing the underlying causes, they implement temporary fixes that lead to continuous problems. These temporary fixes include:
Architecture patterns: Regular modifications to architectural patterns based on new features and native services from hyperscalers may increase complexity without clear success indicators.
Periodic reviews: IT teams meet on a regular basis to resolve performance issues caused by size or overspending, usually in response to complaints from finance departments. However, this reactive strategy reinforces firefighting rather than proactive self-optimization.
External SMEs: Bringing in external subject matter experts for reviews is expensive, and it takes time to train them. This method results in ongoing expenses without long-term improvements.
It is crucial to develop clear KPIs, benchmarks, and processes for real-time insights and measurable results to prevent these errors. Some companies delegate FinOps responsibilities to a centralized team in charge of monitoring spending and selecting cloud services. This method can create silos and prevent visibility into planned changes, resulting in unhappiness and negative consequences for service performance. Federating FinOps activities across the organization promote greater participation and a diversified set of capabilities while also encouraging collaboration and preventing silos.
