Whether your cloud spend is USD 5 Million or USD 50 Million a year, a common challenge for FinOps practitioners is getting your engineering teams to take action to control cloud costs (link resides outside ibm.com). To be fair, IT teams face major hurdles in understanding application dependencies and lack visibility into licensing and cloud use, limiting the ability to act with confidence. With 89% of organizations taking a multicloud approach (link resides outside ibm.com), the effort to correlate data and insights across cloud-native tools is just too complicated and time-consuming. To avoid application performance issues and compliance risks, it is just easier for engineering teams to overprovision.

An estimated 32% of cloud spend is wasted by organizations (link resides outside ibm.com), on average. When your cloud spend is upwards of six or seven digits, this cost drains funding that could be redirected toward innovation and other needs. Why is managing cloud spend so difficult? Discounting options for public cloud can be tricky for asset management teams, and hybrid environments make ingestion even more complex. Cross-cloud visibility and accountability is required for IT teams to correlate cloud use with application requirements. How can organizations take actions to optimize cloud resources with confidence?

Enter FinOps, an evolving cloud financial management practice that helps teams centralize the management of their cloud spend and take ownership of cloud usage with common terminology, principals and processes. The FinOps framework has three phases to help organizations create efficient and disciplined efforts toward cloud optimization Inform, Optimize and Operate:

• Inform: Inform is the first phase of the FinOps framework, and it has to do with IT understanding the cloud resources that are deployed and available through improved visibility. This allows them to then allocate associated spend contextualized within the business units that consume cloud to chargeback accordingly. This includes understanding how applications are using cloud resources. For example, from your USD 10,000 monthly cloud bill, what portion is allocated to the applications that support the finance applications versus the external website applications?
• Optimize: Optimize is the next phase of the FinOps framework, and it has a focus on discovering opportunities for savings. Where can your organization right-size resources and benefit from discounts based on current usage? For example, if you’re running a virtual machine (VM) on a particular node and it’s costing you $1 per minute, could you save money by moving that VM to another node that costs only $0.08 per minute? This is a great opportunity to take advantage of pricing and discounting opportunities, but only if you can apply the correct licensing constraints to the equation to find those licensing savings. You wouldn’t want to move to another node and find that your license doesn’t apply and you’re spending four times that of the previous placement.
• Operate: Operate is the final phase of the FinOps framework. Once optimization efforts are in place, automation helps organizations implement policies to continuously adjust cloud resources to control costs while also assuring application performance and license compliance policies allow for governance when executing processes. For example, when not to move to a new node when moving workloads might improve application performance but would cost more due to licensing.

Accountability through reporting and automation based on data and insights are critical elements of a successful FinOps framework implementation. Let’s say you want to take advantage of opportunities like the Microsoft Azure hybrid benefit. How can you know where and when to use an SQL server in a hybrid environment while remaining within your license mobility constraints? How can you get the most out of your investments with cloud providers while assuring application performance and license compliance?

Flexera One with IBM Observability and IBM Turbonomic provide complementary capabilities for FinOps teams to manage and optimize cloud costs and resource investments in complex hybrid environments. The Cloud Cost Optimization component of Flexera One with IBM Observability provides customized views for FinOps stakeholders for cost visibility and reporting. IBM Turbonomic automates resource provisioning and workload placement so applications get exactly what they need to perform, reducing cloud spend and eliminating waste: