Maximising cloud value: The FinOps approach

In today's era of digital transformation, cloud computing stands as a pivotal technology driving innovation, efficiency, and agility across industries. However, managing cloud costs can be challenging. Enter FinOps, a methodology that combines Finance and DevOps  to navigate the complexities of cloud cost management or financial engineering. In this article, we delve into the key components of FinOps and explain why companies moving to the cloud should consider adopting it. 

Understanding FinOps:

FinOps represents a paradigm shift in how organisations manage their cloud costs. In an ever evolving economic climate, businesses are more aware of the financial implications of their operations than ever before. While the cloud has many advantages, such as flexibility, scalability, and agility, there can be unforeseen costs. It is, therefore, necessary to optimise cloud spending to achieve maximum value. FinOps involves people, processes, and tools that promote collaboration and transparency across finance, IT, and business teams. By adopting FinOps principles, organisations gain granular visibility into cloud spending, enabling them to identify inefficiencies, allocate resources effectively, and continuously optimise their cloud services.

Key benefits of FinOps:

Cost optimisation:

FinOps empowers organisations to optimise their cloud spending by identifying cost inefficiencies and implementing targeted cost-saving measures. By rightsizing instances, leveraging reserved capacity, and optimising resource utilisation, organisations can achieve significant cost reductions without compromising performance.

Resource allocation:

With FinOps, organisations gain insights into cloud usage patterns, enabling them to allocate resources more effectively. By aligning cloud spending with business priorities, organisations can ensure that resources are allocated where they are needed most, maximising ROI and business impact.

Financial governance:

FinOps establishes robust financial controls and governance mechanisms to ensure compliance with internal policies and external regulations. By enforcing accountability and transparency in cloud spending, organisations can mitigate financial risks and enhance governance practices.

Collaboration and accountability:

FinOps fosters collaboration between finance, IT, and business teams, promoting shared responsibility for cost management. By breaking down silos and fostering cross-functional collaboration, organisations can make better-informed decisions that align with both financial and business objectives.

Maximising value:

FinOps is not a one-time initiative but rather an ongoing process of optimization and improvement. By continuously monitoring cloud spending, identifying optimization opportunities, and refining cost management practices, organisations can drive continuous improvement and maximise the value of their cloud investments.

Why companies undertaking cloud transformation across the Middle East should consider adopting FinOps:

As companies embark on their cloud journey, embracing FinOps emerges as a strategic imperative for maximising the value of cloud investments. By adopting FinOps practices and considering the broader organisational considerations involved, companies can navigate the complexities of cloud cost management with confidence, driving innovation, and growth in alignment with their strategic objectives.

While the benefits of FinOps are compelling, organisations should consider several factors when embarking on FinOps adoption:

• Organisational Culture: FinOps requires a cultural shift towards financial accountability and collaboration.
• Skills and expertise: Effective FinOps implementation requires a combination of financial, technical, operational and analytical skills.
• Tools and technologies: Choosing the right tools and technologies is crucial for successful FinOps implementation. Organisations should invest in cloud cost management tools that provide comprehensive visibility, automation, and optimization capabilities to support their FinOps practices.
• Governance and compliance: Establishing robust financial governance and compliance mechanisms is essential for effective FinOps implementation.
• Executive sponsorship: Executive sponsorship and leadership support are critical for driving successful FinOps adoption.

Here is how we can help 

• PwC’s Cloud CFO (Cloud Consumption and Financial Optimization) solution provides the new tools, processes, controls, and expertise needed to complete the task, assisting organisations in managing and optimising their IT spend on public cloud. Specifically, we can assist you drive consumption and financial optimisation with the following offerings, depending on where you are in your cloud journey:
  
• Cloud Total Cost of Ownership (TCO). We specialise in guiding businesses through the initial phases of transitioning to cloud services, providing comprehensive cost assessments and comparisons between different cloud providers and on-premise setups. We have the expertise to create an effective strategy and implementation plan for seamlessly migrating workloads and applications to the cloud with the least amount of operational disruption due to our experience in past cloud migration projects.
  
• Cloud Optimiser. For single-cloud and multi-cloud environments, we perform optimisation analysis to identify opportunities for cost reduction that enable businesses to benefit financially from our Cloud CFO services. We offer a streamlined, prioritised roadmap with recommendations across four dimensions of managing public cloud spend.
  
• Cloud Efficiency Office (CEO). By establishing a Cloud Governance Center of Excellence to share best practices and implement procedures to reduce inefficiencies, we assist in the establishment of a cloud financial governance framework to optimise costs. We develop dashboards and deploy tools to measure and optimise cloud costs, assisting businesses in achieving a mature cloud posture that positions them for future growth.
  
• Our proprietary Cloud Efficiency Scorecard is used throughout the delivery of each of these services. The Cloud Efficiency Score will be measured by the scorecard, which will help organisations to identify the specific improvements they must make to improve their level of maturity and effectiveness in cloud resource and cost management. This scorecard will help keep a strong focus on these four dimensions of process and controls, cloud architecture, people and organisation, and enabling tools. An organisation will remain sub-optimal in its use of the public cloud until it has successfully met the operational characteristics identified across the four dimensions.

Conclusion:

Middle East organisations embarking on cloud adoption often encounter unique challenges stemming from regulatory compliance, data sovereignty concerns, and preferential inclination towards on-premises setup. However, the implementation of FinOps has proven instrumental in navigating these hurdles, enabling better cost management, optimization, and governance within their cloud environments.  By embracing FinOps principles and considering the broad considerations involved, organisations can navigate the complexities of cloud cost management with confidence, driving innovation, and growth in alignment with the Saudi Vision 2030.