Technology leaders need a cloud architecture that will meet performance requirements, achieve faster time to market, and quickly scale up or down as the business demands. It’s common for cloud bills to run over budget in the process. Fortunately, it’s also easily preventable with the following guidelines for  avoiding surprise cloud bills and keeping track of cloud costs.

The price you really pay

When a company receives its first bills from a public cloud provider, they typically experience sticker shock. To start, the bills are often well above budget. On top of that, Cloud services bills are cloud-friendly, but not necessarily business-friendly. Usually, these bills are categorized according to public cloud vendor services and not to the service they provide for the business. They contain multiple sections, thousands of lines and many types of charges.

This makes it a challenge to associate each charge with its purpose, allocate costs to end users or properly calculate the return on investment. This has led many companies to put a “just-in-case” cushion in their budget to pay for unexpected cloud bill expenses. Further complicating matters, there are four major unpredictable variables that usually impact planning for cloud project costs:

• Compute – virtual server instances
• Storage – amount that is provisioned in gigabytes
• Networking – inbound and outbound data transfer traffic
• Databases – building, deploying, and managing

These are the kinds of challenges that have led many CIOs to wonder what they can do to better understand and optimize cloud costs.

Making it work

From a business standpoint, enterprise technology leaders should go for the reserved capacity (instance) or committed use options whenever they can. These options are both cheaper and more predictable. They can also work on policies and procedures to ensure there are no untagged resources in the system. This will enable these leaders to see exactly what each application or workload is costing. Organizations can also establish a FinOps discipline where everyone takes ownership of their respective cloud usage. Moreover, they can adopt third-party cloud cost optimization tools to support these policies, procedures and disciplines and help solve the most complex problems associated with the cloud.

Also known as cloud financial management or cloud optimization tools, the best-of-breed software in this category features:

• Visibility and reporting to track costs across business units, applications, teams and other custom views
  
• Easy-to-implement savings recommendations which allow organizations to easily reduce cloud spend by up to 20-40%
  
• Forecasting and budgeting insights to improve planning and reduce wastage
  
• Anomaly detection in real-time using AI/ML-powered algorithms to react to unplanned spikes
  
• Ability to allocate costs and track chargeback/showback cloud costs based on end user or team consumption for improved accountability
  
• Container cost insights that allow you to obtain big picture details of cost by pod, namespace, etc., to guide your future optimization decisions

Proactively monitoring, managing and optimizing costs with such cloud cost optimization software allows organizations to better plan and forecast for growth in the cloud.

Maximizing cloud investments

The right cloud cost optimization software makes cloud bills clearer and more predictable. These tools provide insight and intelligence to substantially reduce cloud costs which will allow enterprises to fully take advantage of public cloud services. Many organizations have easily realized savings of 20% or more on their cloud spending just by using cloud optimization software and following best practices.

Cloud cost optimization isn’t a one-time action. It’s part of a journey in which you constantly focus and re-focus on optimizing the value of your enterprise’s cloud investment. Take the first step in your own journey toward maximizing your cloud investments and request a demo of Snow Cloud Cost.

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Two-sided benefits to FinOps

Most people who know FinOps probably think maximizing cloud investments with FinOps equals reducing cloud costs. They may not realize, however, that FinOps implementation is a clever way to make money, too. Cloud spend can drive more revenue, grow a customer base, enable more product development and speed feature releases. FinOps is about removing roadblocks from these functions and empowering your engineering teams to deliver better results more frequently.

The culture of FinOps

As Al points out in the video, FinOps is a major departure from the datacenter and server management of past IT teams. According to the FinOps Foundation, of which Al is a certified member, FinOps is primarily a cultural practice. Finance and business leadership teams share a common language and processes to support the benefits of cloud without overspending. The cross-functional teams understand the vast value of cloud and the organization’s budget rationale. Together, they make informed trade-offs between agility, cost and quality. 

Principles of FinOps

The FinOps Foundation has outlined six primary principles to guide FinOps activities:

1. Teams need to collaborate
2. Everyone takes ownership for their cloud usage
3. A centralized team drives FinOps
4. Reports should be accessible and timely
5. The cloud’s business value drives decisions
6. Take advantage of the variable cost model of the cloud

State of FinOps in 2022

Undoubtedly, FinOps Foundation principles are important for FinOps teams to follow. However, research also shows there is no single path to success. The road to FinOps is a journey in which no two experiences are the same. The FinOps Foundation’s State of FinOps 2022 survey offers an in-depth look at the diversity of FinOps teams and their progress. They divide their respondents across maturity stages of pre-crawl, crawl, walk and run. Unfortunately, those who are crawling far outnumber those who are running.

The value of FinOps/ITAM collaborations

As FinOps teams try to maximize cloud investments with FinOps in a cost-effective manner, IT asset managers work in parallel toward the same goal. Together, they manage the entirety of an organization’s technology assets. In recent years, the shift of cloud application purchasing decisions from IT to individual business units has made this effort much more challenging for IT asset managers. This shift limits IT asset visibility for these managers. The resulting blind spots can mean overpayments, compliance failures and security risks. 

Maximizing cloud investments with FinOps and Snow Cloud Cost

FinOps and ITAM often address similar issues. Yet, as Snow EVP of Cloud Management Jay Litkey explains, there’s a significant financial information gap between FinOps and ITAM. Certainly, bridging this gap would streamline processes and provide visibility, cost savings, and governance to multicloud environments. 

To address this need and assist organizations with cloud cost optimization, Snow Software recently entered a strategic partnership with Anodot. Together, we announced the creation of Snow Cloud Cost. Snow Cloud Cost delivers full visibility into cloud consumption. As a result, teams can optimize usage, accurately forecast and budget costs, drive more informed decision-making and right-size their cloud services. 

At Snow, we believe data and insights around an organization’s complete technology stack — also known as Technology Intelligence — enable better decision-making, fuel more innovation, and increase collaboration while reducing risk. These insights are critical for FinOps and ITAM teams alike and we’re excited about what it will do for growing organizations. 

Have you seen our previous CIO Perspective posts on how to start an ITAM practice, technology visibility and how to free up funds for innovation? Also look out for our next installment on Snow Atlas, our next-generation platform for Technology Intelligence. 

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