FinOps: An Introduction

Symposium IT has been having numerous conversations lately around Financial Operations (#FinOps) for #cloudcomputing and its benefits. With the ongoing economic uncertainties, it’s important for organisations to focus on managing their cloud expenditure effectively..

The #cloud provides many benefits, including scalability, flexibility, and cost-efficiency, but without proper management, costs can quickly spiral out of control.

What is FinOps?

FinOps, short for Financial Operations, refers to the management and optimization of cloud computing costs. 

FinOps provides a cross-functional approach to managing the financial aspects of cloud computing.

It helps organisations gain visibility into their cloud costs, optimise their cloud spending, and ultimately achieve better financial outcomes.

Why do I need it?

You may need FinOps if you are running a business or organisation that uses cloud services, as it can help you control and optimise your cloud spending.

Without proper cost management, it can be easy for cloud expenses to spiral out of control, especially as more and more services are adopted.

FinOps can help you identify areas where you may be overspending, as well as opportunities for cost savings. Additionally, it can help you to better understand the costs associated with different services, which can inform decisions about which services to use and how to use them most effectively.

The following areas are benefits to implementing FinOps in your organisation:

  1. Increased cost transparency: FinOps provides visibility into cloud costs, enabling organisations to better understand how they are spending their money on cloud resources.
  2. Improved cost control: FinOps enables organisations to set budgets, monitor spending, and identify cost optimisation opportunities, which can help them achieve better financial outcomes.
  3. Better collaboration between IT and finance teams: FinOps encourages collaboration between IT and finance teams, which can lead to better decision-making and more effective cost management.
  4. Optimisation of cloud spending: FinOps provides a framework for optimising cloud spending, enabling organisations to identify wasteful spending and implement strategies for cost reduction.
  5. Alignment of cloud spending with business goals: FinOps enables organisations to align their cloud spending with their business goals, ensuring that they are investing in the resources that provide the most value to the organisation.
  6. Faster time to value: By optimising cloud spending, organisations can achieve faster time to value for their cloud investments.

Who should be interested in FinOps?

Financial Operation (FinOps) is a relatively new field, but it is becoming increasingly important as organisations move more of their operations to the cloud.

FinOps is a cross-functional approach to managing the financial aspects of cloud computing and it is of interest to:

  1. C-level executives: FinOps provides visibility into cloud costs, enabling C-level executives to make more informed decisions about the use of cloud resources.
  2. IT Operations: IT Operations teams need to understand the costs of running their workloads in the cloud and be able to manage those costs effectively.
  3. Finance: Finance teams need to have a clear understanding of the costs associated with cloud computing to ensure that they are accurately accounted for in the organisation’s financial statements.
  4. Developers and application owners: Developers and application owners need to be aware of the costs associated with the resources they use, so they can design and operate their applications in a cost-effective way.
  5. Compliance and audit: Compliance and audit teams need to ensure that the organisation’s cloud usage is compliant with regulations and that the organisation’s cloud costs are properly accounted for.
  6. Cloud cost optimisation experts: Professionals who specialise in cloud cost optimization can help you identify cost optimisation opportunities and implement cost optimization strategies
  7. Procurement: Procurement teams need to understand the costs associated with cloud computing to ensure that they are getting the best value for the organisation’s money.
  8. Business owners: Business owners need to understand the costs associated with cloud computing to ensure that they are getting the best value for the organisation’s money.

How do I start my FinOps journey?

Starting a FinOps journey can seem daunting, but it’s a process that can be broken down into several steps:

  1. Assess your current state: Understand your current cloud usage, costs, and billing methods. This will give you a baseline to measure against later on.
  2. Set goals and objectives: Define what you want to achieve with FinOps, such as cost savings, optimisation of resources, or better visibility into your costs.
  3. Identify cost drivers: Understand what services and resources are driving your costs. This can help you to identify areas where cost savings can be made.
  4. Implement cost management tools: Use cost management tools provided by your cloud provider or third-party tools to track and optimise your costs.
  5. Establish cost governance: Establish policies and procedures for cost management, including the allocation of costs, budgeting, and regular reporting.
  6. Monitor and Audit: Regularly monitor and audit your cloud spend to identify and eliminate unnecessary expenses.
  7. Continuously optimise: Continuously evaluate your costs, usage and processes to identify further optimisation opportunities.
  8. Communication and Education: Communicate the results and the ongoing cost management efforts to the relevant stakeholders and educate them on how to optimise their cloud usage.
  9. Measure and Evaluate: Measure and evaluate the progress and the impact of your FinOps efforts on a regular basis.

How do I generate reports for my cloud costs?

Awesome, how do I generate reports here?

There are several ways to generate reports for your cloud costs, some common methods include:

  1. Cloud Provider’s Built-in Tools: Many cloud providers, such as AWS and Azure, have built-in tools for generating cost reports. These tools can provide detailed information about your costs, including breakdowns by service, usage, and region.
  2. Cost Explorer: AWS Cost Explorer is a tool that allows you to view your costs and usage over time, set custom budgets, and create reports.
  3. Azure Cost Management: Azure Cost Management is a tool that allows you to view your costs by resource, subscription, and service. You can also create custom reports, export data to Excel, and set budgets.
  4. Third-Party Tools: There are several third-party tools available that can help you generate reports for your cloud costs. These tools can provide additional features such as cost forecasting, optimisation recommendations, and multi-cloud support.
  5. Cost Allocation tags: Cost allocation tags can be used to track the costs of individual projects, departments or customers.
  6. Programmatic access: many cloud providers provide APIs that can be used to access your cost data and generate reports programmatically.

How do I present these costs to a non technical audience?

OK, thats great but how do I articulate this to a non technical audience?

Presenting cloud costs to a non-technical audience can be challenging, as the technical jargon and complex data can be difficult to understand for those without a background in technology.

However, there are several strategies that can help make your reports more accessible and understandable:

  1. Use clear and simple language: Avoid technical jargon and use clear and simple language to explain your costs and usage. Agree a taxonomy and common language to use, that all teams understand.
  2. Use visuals: Use charts, graphs, and other visual aids to help convey your data in a more easily understandable format.
  3. Highlight key metrics: Identify the most important metrics and data points, and focus on these in your presentation.
  4. Provide context: Explain how the costs relate to the overall goals and objectives of the organisation.
  5. Show the impact: Highlight the impact of the costs on the organisation, such as the effect on the bottom line or the benefits of the services being used.
  6. Use comparisons: Use comparisons, such as last month or last year costs, to show the changes and trends.
  7. Provide recommendations: Offer recommendations for cost savings or optimisation opportunities.
  8. Be prepared to answer questions: Be prepared to answer any questions that the non-technical audience may have about the costs and usage.

The more you can break down the data and make it easily digestible, the better the audience will be able to understand and act on it.

Ways to save money….

I like the sound of this, how do I save money?

There are several ways to save money on cloud computing costs, as an example the following could be used:

  1. Right-sizing: Make sure you are using the appropriate instance type and size for your workloads. Over-provisioning can lead to unnecessary costs.
  2. Automated Shut down: Automate the shutdown of non-production resources during off-hours to reduce costs.
  3. Reservations and Commitment: Purchase reserved instances or committed use discounts in advance to get a lower hourly rate.
  4. Cost optimisation tools: Use cloud provider’s built-in cost optimisation tools such as AWS cost explorer or Azure cost management.
  5. spot instances: Use spot instances for non-critical workloads that can be interrupted.
  6. optimise storage: optimise storage costs by using the appropriate storage class and size.
  7. Multi-cloud: Use multiple cloud providers to take advantage of cost differences and availability.
  8. Monitor and audit: Regularly monitor and audit your cloud spend to identify and eliminate unnecessary expenses.
  9. Third-Party Tools: Use third-party cost management and optimiation tools for advanced cost reporting and optimisation.

Types of Microsoft enrolments 

OK so, what about Microsoft enrolment types?

Do you know your PAYG from your Azure EA?

Microsoft offers several different enrolment options for customers to purchase and manage their cloud services, including:

  1. #Microsoft #Azure Pay-As-You-Go: This is the most basic enrolment option, where customers pay for the services they use on a pay-as-you-go basis. This option is ideal for customers with variable or unpredictable usage patterns.
  2. Azure EA (Enterprise Agreement): This is a volume licensing program that allows customers to purchase Azure services at a discounted rate, typically with a minimum commitment of £250,000. This option is ideal for customers with predictable usage patterns and high consumption.
  3. Azure CSP (Cloud Solution Provider): This program allows customers to purchase Azure services through a partner, such as a managed service provider (MSP) or a reseller. The partner can provide additional services such as support, migration, and customisation.
  4. Azure Dev/Test: This enrolment option is designed for customers that use Azure for development and testing purposes. It offers a discounted rate for usage and the ability to easily spin up and tear down resources.
  5. Azure Government: This enrolment option is designed for customers that require services that meet U.S. government compliance standards. It offers additional security and compliance features, and it is only available to U.S. government agencies and their partners.
  6. Azure Germany: This enrolment option is designed for customers that require services that meet German compliance standards. It offers additional security and compliance features and it is only available to customers with a German billing address.
  7. Azure China: This enrolment option is designed for customers that require services that meet Chinese compliance standards. It offers additional security and compliance features and it is only available to customers with a Chinese billing address.

What is the AWS equivalent?

Fair enough for Azure how about AWS?

Amazon Web Services (#aws ) offers a very similar offer regarding enrolment options for customers up to and including:

  1. AWS Free Tier: This is a free, entry-level option that provides limited access to AWS services for up to 12 months after account creation.
  2. On-Demand: This option allows organizations to pay only for the computing resources they consume, without any upfront commitments.
  3. Savings Plans: This is a flexible pricing model that offers savings of up to 72% on the cost of using compute services. It requires a commitment to a specific usage level for a one or three-year term.
  4. Reserved Instances: This option allows organizations to make an upfront payment for a discounted rate on AWS services for a one or three-year term. This is ideal for organizations with predictable usage levels.
  5. Spot Instances: This option provides access to unused AWS compute capacity at a discounted rate, making it a cost-effective option for applications with flexible start and end times.
  6. Dedicated Hosts: This option provides dedicated physical servers for organisations that require additional control and visibility over their computing environment.
  7. AWS EDP (Enterprise Discount Program): The AWS Enterprise Discount Program (EDP) is a purchasing program that offers large organisations a discount on AWS services. EDP provides volume-based discounts on eligible services that are calculated based on the customer’s aggregate usage of those services.

Hold on, AWS Savings Plan and EDP?

The AWS Enterprise Discount Program (EDP) and Savings Plans are two different options for organisations looking to optimise their cloud spending on AWS services.

The EDP is a purchasing program that offers large organisations a discount on AWS services based on their aggregate usage. To be eligible, organisations must commit to a minimum annual spend and sign a contract with AWS. The EDP provides a negotiated discount on a broad set of services and is ideal for organisations with significant and sustained usage of AWS services.

Savings Plans, on the other hand, offer a flexible pricing model that provides savings of up to 72% on the cost of using compute services. With Savings Plans, organisations make a commitment to a specific usage level for a one or three-year term, and in exchange, receive a discounted rate on their usage of compute services. Savings Plans are ideal for organisations with variable usage patterns or that use AWS compute services heavily and want to save money on their cloud spending.

Both EDP and Savings Plans can be effective ways to optimise cloud spending on AWS services, but they are designed for different use cases. Organisations with significant and sustained usage of AWS services may benefit more from the EDP, while organisations with variable usage patterns may find Savings Plans to be a better fit. It’s important for organisations to assess their usage patterns and needs to determine which option is best for them.

How about M365 cost savings?

#Microsoft 365 (#M365) is a subscription-based service that offers a range of productivity and communication tools, such as Office apps, Exchange, SharePoint, and Skype for Business. Here are a few ways to save costs when using M365:

  1. optimise user licensing: Ensure that you have the right number and type of licenses for your users. For example, if some users only need access to email and calendar, consider purchasing a “Business Basic” license instead of a full “Business Premium” license.
  2. Use shared mailboxes: Consider using shared mailboxes to reduce the number of licenses required. Shared mailboxes can be used by multiple users without requiring a separate license.
  3. Take advantage of free services: Take advantage of the free services that are included with M365, such as #onedrive for Business and #teams, to reduce costs.
  4. Use Power Automate: Use Power Automate, a workflow automation tool, to automate repetitive tasks, such as data entry and email processing, to reduce labor costs.
  5. Use Power Apps: Use Power Apps, a low-code platform, to create custom business applications to replace expensive third-party solutions.
  6. Use Power BI: Use Power BI, a data visualisation tool, to create interactive reports and dashboards that help decision-makers make better decisions.
  7. Leverage existing licenses: Leverage existing licenses, such as Windows and #windows Server, to receive additional discounts on M365 subscriptions.
  8. Take advantage of discounts: Take advantage of discounts that are available for non-profit organisations, educational institutions, and governments.
  9. Establish budgets and alerts: Establish budgets and alerts to stay informed about your spending and take corrective action if necessary
  10. Review and evaluate: Continuously evaluate your usage and costs, and make adjustments as needed.

What next?

Once you have selected the appropriate enrolment option for your organisation, the next step would be to start using the services and begin monitoring your usage and costs.

Here are some actions you can take:

  1. optimise your resources: optimise your resources to ensure that you’re only paying for what you need and that you’re using the services efficiently.
  2. Monitor your usage: Use the various tools and services provided by Azure or AWS to monitor your usage and costs in real-time.
  3. Use automation: Set up automated processes to manage your resources, such as auto-scaling and auto-shutdown, to ensure that you’re only paying for what you need.
  4. Take advantage of reserved instances: Consider using reserved instances to reduce costs if you have consistent usage patterns.
  5. Establish budgets and alerts: Establish budgets and alerts to stay informed about your spending and take corrective action if necessary.
  6. Review your bills: Review your bills regularly and compare them to your usage and expectations.
  7. Utilise cost management tools: AWS and Azure both offer cost management tools that can help you identify cost optimization opportunities, and track your spending over time.
  8. Review and evaluate: Continuously evaluate your usage and costs, and make adjustments as needed.
  9. Create a cost culture: Encourage all employees to think about cost optimization when they’re working with cloud resources.
  10. Work with an expert: Work with a cloud cost optimization expert to review your usage and costs, and to help you identify and implement cost optimization strategies.

If you’re looking to optimise your cloud spending and improve your financial management of cloud services, don’t hesitate to contact Symposium IT to learn more about their Smart Cloud Health Check for Azure and M365 service.

With a free 21-day, no-obligation service that provides in-depth recommendations, you can benefit from their expertise in FinOps and get actionable insights to reduce costs and improve efficiency.

Take action today and reach out to Symposium IT to see how they can help your organisation succeed in the cloud.

First and foremost, cloud computing provides cost savings. By utilizing cloud services, businesses can avoid the capital expenses of purchasing and maintaining physical hardware and software. Instead, they pay for what they use on a subscription or pay-per-use basis, making it a cost-effective solution. Additionally, cloud computing allows businesses to scale their resources up or down quickly as per their requirements, which can save costs associated with purchasing excess hardware or not having enough to handle sudden spikes in demand.

Scalability is another significant advantage of cloud computing. Organizations can scale their resources up or down according to their needs, and the cloud provider can handle the additional computing resources required. This enables businesses to handle sudden spikes in demand without having to worry about additional resources. Cloud providers are also capable of managing resources efficiently, which means organizations can access additional resources in times of high demand, ensuring that they always have the resources they need to succeed.

Cloud computing also offers flexibility in terms of accessing resources from anywhere and at any time. With cloud computing, individuals can access their files and applications from any device connected to the internet, enabling them to work from anywhere, at any time. This feature has become particularly important with the rise of remote workforces due to the COVID-19 pandemic, making cloud computing an essential tool for businesses that require remote access to resources.

Security is a critical aspect of cloud computing. With traditional on-premise solutions, businesses are responsible for ensuring the security of their data and infrastructure. In contrast, cloud computing providers offer a range of security measures, including encryption, firewalls, and intrusion detection systems, to ensure the safety and integrity of their users’ data. Additionally, cloud providers perform regular security audits to ensure that their systems are up to date and that they are protecting their users’ data from cyber threats.

In conclusion, cloud computing is an essential technology that offers many benefits to businesses and individuals alike. Its cost-saving, scalability, flexibility, and security features have made it an attractive solution for organizations of all sizes. Cloud computing has become an integral part of modern technology, and its significance is only set to grow in the future. As the world continues to shift towards remote workforces and digital transformation, cloud computing will continue to be a valuable tool for businesses looking to succeed in the digital age.

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