The jump from cloud FinOps to On-Demand consumption FinOps is underway, it’s time to embrace the evolution and unlock greater business value.
Cloud FinOps was built around utilizing the public cloud to manage financial investments and has become a standardized part of today’s technology landscape. However, FinOps cloud cost management is no longer enough – it’s time to evolve. To do so, it’s worth considering what cloud FinOps is currently defined as to better highlight our solution.
The FinOps Foundation, a project to advance the community who practices FinOps, defines cloud FinOps in their Framework as: “an operational framework and cultural practice which maximizes the business value of cloud, enables timely data-driven decision making, and creates financial accountability through collaboration between engineering, finance, and business teams.”1
However, with the growth of on-demand technologies like SaaS and Gen AI, FinOps needs to go further. And with this evolution in business and technology comes a new focus on operating expenses (OpEx), particularly in how these technologies affect cost. Companies need to evaluate the value of OpEx spend, while FinOps need to underline the benefits.
To put it simply it’s time to ask: What’s the cost of a click?
It is undeniable that cloud FinOps has proved its worth both quantitatively and qualitatively in terms of cutting the fat out of technology investments. It’s driven elevated business value and has become a staple discipline across organizations.
Still, there are a number of limitations that contemporary FinOps practices have run into. These primarily circle around common themes such as isolation and lack of strategic input. And with companies seeking to manage their OpEx spend, ensuring that FinOps and on-demand technology integration continues can become complicated by a lack of visibility among FinOps teams.
Let’s examine these challenges in more detail.
Isolated FinOps Teams
There’s no denying FinOps teams do a great job in their areas of influence, however, those areas are often too limited. This is especially true when executive sponsorship wanes and other priorities take precedence. The focus on cloud FinOps seems to return only when a negative cost incident occurs, and this only further isolates these teams.
Low demand management influence
Even the most successful cloud FinOps capabilities are limited in their influence in demand management. Specifically, in how FinOps teams influence acquiring new technologies and resources to support the growth of the discipline. Sure, they can highlight cost implications and even help shape cost-effective solutions, however, they can rarely influence demand management directly – especially as part of a wider, end-to-end system.
Limited strategic reach
FinOps teams usually report to a technology leader who isn’t likely sitting in the C-Suite. Naturally, this limits the influence on strategic decision-making that FinOps has. This is a compounding problem, as other areas of the business group beyond the IT organization are driven by C-Suite priorities and bridging that gap is hard – if not impossible – in a large enterprise.
Isolated from other initiatives
To add to this gap, initiatives from senior leadership most often do not happen in concert with FinOps teams. The consequence can impact how architectural principles are re-designed, or result in frugal investments made in architecture that should support FinOps. It translates into a lack of FinOps integration with the wider business. The result? Unplanned or unexpected complexity later.
Singularly focused on cloud and public cloud services
In the current market, there is an ever-increasing variety of consumption-based technologies in use. FinOps teams who are only using public cloud are limiting the potential value they can generate. This in turn results in the web challenges we’ve described. It’s precisely the place where traditional cloud FinOps stumbles, and where exactly is that leading us?
While the FinOps Foundation is widening their scope to include SaaS and AI, within the overall FinOps community, these concepts are still in their infancy. This is true both in terms of implementation but also integrating them into current FinOps practices.
However, we believe this is a vital moment to start the shift towards acquiring new technologies and re-defining goals. This is reinforced by the fact that there is an increasing amount of tooling available to not only identify, but also to introduced automated optimization of various FinOps processes. And with the continued adoption of machine learning and AI (which is already rolling out as AI for FinOps) – this will only accelerate.
Welcoming the new era of FinOps:
From the very beginning, the rise of Cloud Consumption On-Demand in FinOps must consider all consumption-based technologies and business strategies. This includes everything from SaaS, Gen AI, AI infrastructure, and other cloud FinOps services. In turn, these technologies must be introduced to encompass the entire business value chain.
To do this, FinOps teams need to be challenging traditional capital expenditure (CapEx) governance systems. In a world where a growing number of technologies are purchased under OpEx scenarios, this can be complex. In other words, FinOps teams must not only prove long-term financial benefits but provide a solid short-term business case that tangibly shows how Cloud Consumption On-Demand technologies create cost savings and better efficiency.
It also means re-defining how FinOps is perceived. From their current periphery, FinOps teams must harness on-demand technologies to demonstrate their value with faster and automated solutions, reduced expenses, and elevated data-led decision making. This will help showcase the strategic value FinOps teams are creating.
Additionally, FinOps teams need to underline that the challenges they face are business problems. It is not a question of managing IT systems or technologies. This is a matter of delivering better business value thanks to the benefits of on-demand technologies, such as accurate budgeting and elevated forecasting results.
FinOps teams can also deepen collaboration across business units with on-demand technologies, For example, providing more flexible scalability that best fit the immediate business need. This can help keep various disciplines, like finance and engineering, connected and transparent in terms of financial accountability via integrated tools and platforms with accurate, real-time data sharing.
Transforming company culture
While harnessing on-demand technologies and more modern FinOps practices are vital, it is education that will really make an impact. FinOps teams have the opportunity to transform a company’s culture by pushing for stronger education around on-demand technologies and their potential. Such a step is not only desirable but business critical.
These cultural practices that on-demand FinOps can create will help spark greater levels of integration across business lines. This translates into the reduction of silos across the organization. Ideally, the new FinOps will fully integrate with demand architecture, purchasing, on-demand technology, reporting, analysis, finance forecasting, and more.
It’s time to evolve the FinOps framework
This new world of FinOps will play a far more active role. Powered by on-demand technologies, the discipline can escape the limitations that reliance on public cloud has introduced and in turn, generate greater value. Most importantly, it gives FinOps teams deserved recognition as fundamental players in modern business practices.
Do you know the cost of a click?
With Cloud Consumption On-Demand, we can help diagnose the potential of FinOps has in store for companies, while supporting them with action plans to help them make it a reality.
It’s time to welcome in the new era of cloud FinOps…
… It’s time to know the cost of a click.
Reference: 1. FinOps Foundation Framework
