Companies that make intensive usage of different cloud services can quickly lose an overview of the costs. The FinOps framework helps companies to keep their own cloud expenses under control. In this interview, Stefan Denk, Solution Architect at Swisscom, explains how FinOps works, how to use the framework and the cost savings available.
What difference does FinOps make to cloud cost management?
Stefan Denk: The FinOps goal is to exploit the added value that the cloud offers and use cloud resources more efficiently. It brings together the worlds of finance (Fin) and DevOps (Ops). Our certified FinOps experts analyse the status quo and work with IT, business and finance teams to find optimisation potential.
Is it all about looking for hidden cost optimisation potential?
Increasing the cost efficiency of the cloud is one of the main aims of FinOps. But it’s not the only one. Other goals can include promoting culture change, streamlining cloud use, creating cross-team collaboration or further developing cloud expertise.
So there is not just one way of implementing FinOps?
No, there are many different approaches. The FinOps framework covers 18 disciplines that are prioritised and applied to the company’s requirements.
Why is this framework necessary? Are the same cloud use savings not achievable without FinOps?
It would be very difficult on this scale due to the complex, decentralised cloud infrastructure in larger companies, especially those working in an agile development world and with DevOps. In the past, the local IT infrastructure might have been updated every 3 to 5 years. The requirements and costs were clear and easy to budget. But with intensive cloud usage, costs are much less transparent.
Where does this lack of transparency come from?
Procurement has become decentralised with the shift from waterfall to agile DevOps methods. IT technicians, software architects or employees can simply obtain a virtual machine, set up a database or rent a server for a specific task in the cloud. All of these services are used intensively and are subject to a wide variety of billing methods, licences and SLAs. The high numbers make them difficult to track, creating a structure of diverse cloud resources that lacks transparency.
And that’s where FinOps comes in.
Exactly. Expertise and cooperation from all areas of the company are needed to analyse this complex expansion. The public cloud providers supply all the information required to carry out a detailed analysis. For companies with a high level of cloud usage, however, this data can easily stretch to half a million Excel rows per month, and very few companies can do anything with that. Our FinOps experts can extract the relevant information and usually identify significant optimisation potential.
Where do you tend to see the greatest potential for optimisation?
The wrong billing methods are often set up, thereby missing out on potential discounts. Pay-as-you-go billing is commonly used for permanently used servers, for example. Yet the same resources could work out much cheaper on a different basis; for instance, with fixed reservations of instances over a certain period of time. An analysis can highlight less suited services or poorly performing virtual machines. It is impossible for most companies to keep up with all the latest offers from the cloud providers.
You have supported several FinOps projects already. How much do companies typically save?
So far, FinOps has succeeded in identifying cost optimisations in every company. In most cases, the FinOps commitment resulted in a triple ROI with cost savings of between 10 and 30 percent. The considerable potential for cost savings surprises many of our customers. Reserved instances, of which insufficient advantage is currently taken, definitely offer the biggest potential, with discounts of up to 70% achievable with some providers.
A FinOps optimisation should ensure that the cloud management is transparent and cost efficient. Why is further monitoring required?
The cloud infrastructure is changing constantly, and providers have new offers, services and discount opportunities that need to be continually compared against current cloud usage. In addition, company growth, migrations or restructuring can all impact use of the cloud. A constant cycle of information, optimisation and consolidation is necessary to prevent everything growing out of control again.
Does the company still need external FinOps specialists for this or can it build up capabilities internally?
Both are possible; there is a wide spectrum of cooperation. We provide immediate help with our initial FinOps analysis. These savings usually free up financial resources within the company to implement FinOps in the longer term. The goal of further FinOps cooperation can be to bring the necessary knowledge into the company – with individual employees acting as news aggregators initially, before establishing a dedicated FinOps team. Swisscom can also provide ongoing FinOps as a managed service. We then analyse, optimise and monitor all cloud usage permanently and in regular cycles.
Optimise cloud costs with FinOps
Shocked by excessive cloud infrastructure costs? Then it’s time to create transparency. With FinOps, we analyse your current cloud financial management from a technology, business and financing perspective. We have achieved cloud cost savings in the region of 30% in many of our previous projects.
How can FinOps produce long-term results for a company?
This usually requires a real culture change. Incentives must be created to promote communication between teams across the entire company in order to recognise and exploit the optimisation potential. As an add-on to existing workloads, it takes a lot of commitment. The ideal solution is for ‘evangelists’ on the subject to bring the necessary expertise into the company.
Does Swisscom support this?
Absolutely. Our experts have a lot of experience in uniting the most diverse silos in the company and making stakeholders with different perspectives aware of the urgency of cloud optimisation. If it is possible to build up a common understanding of cloud usage, permanently review existing resources and find untapped optimisation potential, you can achieve cost optimisations in the longer term. However, this change does not happen by itself. All the stakeholders must play their part.
