3 FinOps Challenges for Optimizing the Cloud

A recent State of FinOps Report 2021 investigated the state of cloud financial management and revealed the top challenge faced by FinOps teams: convincing engineers to make cost optimization changes within their organizations 

The survey respondents in the report consisted of 804 practitioners who ranked the most common challenges they face related to cloud cost management. Check out the full breakdown below:  

  • Getting engineers to take action (39%) 
  • Dealing with shared costs (33%) 
  • Accurate forecasting (26%) 
  • Reducing waste or unused resources (24%) 
  • Full allocation of costs (23%) 
  • Aligning finance of tech teams (22%) 
  • Container costs (11%) 
  • Non-IaaS costs like SaaS (7%) 
  • Other (7%) 

 

As shown, the top three challenges faced by FinOps teams can be mitigated with  more accurate cloud usage/waste reporting and cost forecasting. However, the reality is that not all companies  deal with cloud cost optimization the same way because they  use different tools.  

According to the same FinOps report, 46% of respondents use cloud native tooling as their primary technology for managing cloud costs, 43% use a third party platform, and 11% use home-grown tools or spreadsheets. 

Even among the popular choices like AWS Cost Explorer, Azure Cost Management, and GCP Cost Tools, there are notable differences in the way in which they approach optimizing the cloud. Furthermore,  they often miss the mark  with cloud cost forecasting.  

The State of FinOps Report 2021 stated that many of the FinOps practitioners included in the report actually rely on spreadsheets –  or manual methods– to forecast cloud budgets. 

The exact breakdown of what tools they use to forecast cloud costs is shown below:   

  • Native tools: 26.67% 
  • 3rd party vendor platforms: 24.39% 
  • Spreadsheet: 32.42% 
  • Open source tooling: 0.91% 
  • Home grown solution or BI (Business intelligence): 15.61% 

 

Forecasting properly is highly dependent on how accurately the data is being reported for cloud usage and cloud waste. (Read more about some of the challenges on the road toward cloud cost optimization).  

The solutions to these challenges  really come down to obtaining the right visibility, empowering teams to take cost accountability, and taking SaaS costs into consideration:  

Importance of full visibility  

Visualizing your cost data is key to a cloud cost optimization strategy. The right cloud cost management tool can automatically group different service chargers so that you can make informed decisions about cutting costs.  

An even better tool can provide the exact recommendations you need and let you take action immediately so that you can  save on your next cloud bill. 

Empowering your teams to establish granular accountability 

It’s important to note that  cloud cost management tools  do not replace your internal decision making process. These tools, however, can help tremendously in enabling your team to take action by providing them with the most relevant insights and recommendations. 

Usually the teams involved in making infrastructure procurements and adding cloud services are the DevOps and engineering teams.  

Other business units may also want transparency and visibility into cloud usage and cloud spend. Therefore, the cloud cost management tool should have the capability to easily download and share customized reports, based on role or permissions. Teams can work more easily to track progress while balancing business objectives and saving on cloud costs. 

Taking SaaS costs into consideration 

SaaS (Software as a Service) is one of the most popular cloud options for businesses with limited inhouse IT resources. SaaS doesn’t require the installation nor the management of physical equipment on the part of the user and can provide instant scalability. The downside is that it’s easy to overspend with SaaS subscriptions on top of IaaS deployments;  

SaaS costs can also become rather volatile. Consider early terminations, upgrades/downgrades, and renewals, which can contribute to changing costs. Therefore, automating subscription management has become more popular, eliminating the need to manually renew and terminate unused SaaS subscriptions. 

Read more about SaaS optimization in our blog. 

The FinOp way 

FinOps success relies on the stakeholder teams being able to use precise analytics to drive recommended cost optimizations. Considering there are many cloud cost management tools out there, these teams must do their due diligence on the different tools out if they are to use them to drive cost savings.  

Which tool is right for your organization? 

Contact us over at Grumatic to get started on a 14-day trial to learn how a cloud cost optimization can empower your FinOps efforts.  

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