Reducing Cloud Waste with a FinOps Approach

In the background of technological advancement and fierce competition, many organizations have opted for cloud computing solutions that offer them great levels of scalability, flexibility, and efficiency. However, undertaking cloud migration does not come easy, and one of the problems organizations tend to face, especially after migrating to the cloud, is cloud waste—resources that are paid for but not effectively used. This creates unnecessary expenditures and hinders operational effectiveness. The FinOps approach enables businesses to formulate strategies to manage cloud costs, eliminating waste. This blog will discuss about how implementing a FinOps model in an organization’s processes can assist in in controlling the menace of wastage on the cloud without control over money and resources, leading to further financial problems. 

Understanding Cloud Waste 

What is Cloud Waste? 

Cloud waste is primarily excessive spending on cloud services due to their underutilization. Some typical causes of cloud waste include:  

• Unused Instances: Instances that are not harnessed by applications or workloads but continue to be charged.  

• Excessive Resources: Unused capacity within the resources that have been allocated.  

• Unused but Billed Resources: Resources such as storage space or virtual machine instances that are not actively in use by any applications or workloads but are still being charged to the client’s bill. 

Why Does Cloud Waste Occur? 

Several factors lead to cloud waste:  

• Lack of visibility: Most organizations lack proper metrics to track their clouds, which results in unused resources.

• Complex billing structures: Cloud services' complex delivery and matrix of pricing models help cloud users mask true costs. 

• Rapid scaling: While cloud solutions have a swift expansion rate, their usefulness tends to outstrip their accorded resources. 

Fig 1: Cloud Waste

The Role of FinOps in Reducing Cloud Waste 

What is FinOps? 

Financial operations, abbreviated FinOps, is a teamwork-based cloud cost management discussion. Its objective is to blend economic responsibility with the agility of DevOps in deciding smartly about team cloud expenses. 

Fig 2: Role of FinOps in Reducing Cloud Waste

Key Principles of FinOps 

1. Collaboration: Foster collaboration among the finance, operations, and engineering teams to achieve both financial and technical goals. 

2. Visibility: Ensure that cloud costs and usages are visible to support decision-making based on facts.   

3. Optimization: Assess and re-allocate resources constantly to avoid incurring losses. 

Key Benefits of FinOps to Curb Cloud Waste

1. Setting up a Cloud Financial Management Framework
   Using a FinOps framework in an organization has many benefits, the primary one being the ability to control and plan overall cloud spending. This means budgeting, forecasting, and spending analysis activities appropriately.

2. Enhancing Clarity
   Provisions allowing real-time cloud consumption and expense monitoring can spot wastages within organizational practices. Dashboards and reports present information to the teams concerning utilising the different resources, enabling the teams to know when to scale up or down and how to allocate resources.

3. Providing Incentives for People’s Responsibility
   FinOps helps to divide responsibility among different teams by ensuring that cloud costs are sufficiently gated. Teams tend to overspend on resources when they appreciate the cost ramifications of their actions.

4. Earmarking Funds in Cost Centers
   Cost allocation models can eliminate cloud costs across teams, projects, or departments. In addition to knowing who is accruing costs, they also help address how to minimize expenditures on these resources.

5. Employment of Automation and Other Tools
   FinOps adopts automation tools when cloud resources need to be managed. This may entail incorporating auto-scaling, turning off non-essential resources at off-hours, and overspending alerts with pre-determined spending limits. 

Fig 3: Key Benefits of FinOps

Best Practices for Implementing FinOps 

1. Define Goals First

It is imperative that every organisation specifies goals before every FinOps implementation effort. Whether the goal is to decrease the number of cloud services by a given figure or increase their effectiveness in usage, setting quantifiable aims helps focus energy. 

2. Develop a Positive Cost-Conscious Culture

It is important to encourage the organization to adopt a cost-conscious approach to the cloud and its usage. Regular trainings and workshops are crucial in enlightening the teams on managing costs. 

3. Deploy Solution for Cost Management on a Cloud

Introducing such solutions contributes to the increased control and monitoring of cloud costs. Such tools usually offer recommendations on how to use the services, which helps subscribers eliminate unnecessary costs by billing them only for needed services. 

4. Conduct Regular Review Cycles

Still, it is often neglected that every cloud architecture is subject to constant development and changes, where the need for resources may arise or subside suddenly. Those trends might prove loathsome to many organisations, as frequent monitoring of usage and spending alerts organisations to idle cloud waste on time and before it's beyond help. 

5. Opine the Evolution as a Process

The world of cloud technology is ever-changing. Change in trends, tools as well as techniques in cloud cost optimisation management practices encourages growth in their FinOps policy.