Cloud Cost Optimization: 3 Tips From FinOps Leaders

In an era of unprecedented disruption, businesses are turning to technology to improve their ability to create the stability needed for long-term planning while also improving their ability to respond to unforeseen challenges and emerging demand. Public cloud services provide unprecedented agility, making them a natural fit for businesses embarking on digital transformation campaigns. While adoption rates are on the rise, there is still a need to prioritize efficient spending through cost optimization.

Cloud FinOps is a holistic discipline that helps businesses navigate the implementation of cloud solutions through by combining insights from engineering, finance, technology, and business to guide data-driven spending decisions. For companies looking to ensure a streamlined migration, the following tips from FinOps leaders can be utilized at any stage in their cloud journey to help save on cloud costs.

1. Differentiate between ‘Lift’ and ‘Shift’

The “lift and shift” model for apps and databases is typically expensive over the long run. While the upfront costs may be avoided when moving to the cloud, it is important to remember that these on-premises hardware costs are typically amortized for three years. It may seem like the monthly operational expenditure charge saves money on those lift and shift apps, but after three years, cloud infrastructure resources can actually cost much more than a legacy hardware solution.

This is because lift and shift apps are unable to fully leverage the flexibility of cloud architecture, resulting in resources sitting idle for extended periods. Costs add up quickly when all the environments needed to support the application pipeline are factored in. By automating resource provisioning and tear down, it is possible to take full advantage of the programmability of cloud infrastructure and achieve significant savings.

Transforming an enterprise’s application to a cloud-native design may be a heavy lift, but the payoff is not only seen in increased cost savings, but also in scalability and flexibility for the business. Rearchitecting legacy apps to a distributed microservices architecture facilitates rapid deployments and results in faster time to market for innovation. While re-designing applications for the cloud, adding FinOps principals to non-functional requirements like performance and security will also greatly reduce costs. For example, rearchitecting data workloads can lead to significant cloud storage savings, which can be as much as 10 times higher than on-premises storage.

2. Develop a FinOps-based cloud governance model

Effective cloud cost management isn’t just about optimizing expenditures. A robust FinOps governance model provides transparency, deployment controls and audit mechanisms to eliminate surprises in monthly cloud bills.

Organizational mapping of cloud resources to business units is the foundation for visibility and control. Accountability through cost chargebacks to the line of business re-establishes the financial governance that is often lost in the shift to an OpEx model. Doing this also makes standard financial levers such as budgeting, forecasting and cost/benefit analysis available to business leaders. Even shared costs such as Jira licenses or application gateways can be split across lines of business to avoid unplanned black-box infrastructure costs.

While some want to avoid standardizing legacy approval processes out of a fear that it may slow development velocity, governance rules are necessary. A modern approach for this issue is to provide engineers access to pre-approved self-service portals so that they are able to independently deploy resources in a compliant manner without the overhead of manual processing of service tickets.

3. Replace outdated standard operating procedures (SOP)

Updating continuous integration and continuous deployment (CI/CD) processes to include infrastructure as code and automated environment build-out leveraging cloud application programming interfaces (API) also eliminates inefficiencies caused by idle or overprovisioned resources. Automating the spin-up and tear-down of test environments once the testing is complete or at the end of the day should become an SOP.

Still, all the automation in the world will not be of any help if someone needs to shut down an environment and their request goes unaddressed for 24 hours. Artificial queues created by ticket-based systems not only create barriers to development flow but also result in charges for unused resources. This is a common problem with large enterprises and businesses in the regulatory domain that have created precise but inflexible processes that are not designed to take advantage of an ephemeral infrastructure.

This is by no means a comprehensive list of the steps that enterprises can take to reduce cloud costs, and the right approach will differ depending on the industry and the exact needs of each company. When implementing cost optimization measures, some choices, such as rightsizing infrastructure, are straightforward, while others are more challenging. This highlights the importance of embarking on a cloud transformation with a team of dedicated experts that know the sector well.