FinOps Brings Tech Innovation and Business Outcomes Closer

Image credit: iStockphoto/Christian Horz

When clients engage Michael Ewald from the IT side of an organization, he’s always asking around and wanting to speak with the business sponsor.

“This is where you can get the best results when you work hand in hand with peers in both the technology and business areas,” says Ewald, the director of technology at consultancy Contino.

“If you don’t put in the metrics with your transformation project, then how do you measure success, and how are you going to get the business benefits you’ve signed off on? Most organizations want a Return on Investment multiplier of three times and up to ten.

“But a lot of people aren’t quite aware of how to work backward from the service level agreement to measuring performance and then putting that into engineering speak.”

One of the critical concepts Ewald discusses with clients is the emerging area of FinOps, where organizations implement processes that enable them to manage effectively, control, and demonstrate the value of their cloud spend.

Beyond Cost

FinOps is not just about understanding cost, however. It is a more holistic approach that stretches from the architectural decisions on infrastructure to the impact of an organization’s digital supply chain on its carbon footprint and sustainability outcomes.

Even the language used by the software developers can make a difference. Newer languages such as Rust and Python can reduce cycle times, so over a year or two of longevity, there is a smaller energy footprint from providing the same service to customers.

If Ewald can get the business people involved in the process, he is happy. Even better is when the finance team becomes engaged because while they haven’t traditionally been close to cloud projects, they should be, and the outcomes are likely to be better if they are.

“Hope is not a strategy”

The key to making a success of this, says Ewald, is in shared “observability” across the system to understand how optimizations impact cost, deliveries, and right down to energy use.

“To survive in business, if you don’t have the data at your fingertips, then you are in competition with other organizations, and if you don’t have that observability, then it's at your own peril,” says Ewald.

“If you don’t have this mindset around FinOps and basic observability, you are going to be in competition with a competitor who has a very high degree of accuracy on understanding their costs, and they are able to make very informed and accurate decisions and predict market changes and react to market trends. If you don’t have that, you are going to make decisions which are guesses, and hope is not a strategy.”

For a start, organizations may have moved to the cloud to deliver cost savings, but in reality, many are wasting their spend.

Cloud wastage

According to Flexera’s recent State of the Cloud report and based on interviews with 753 global cloud decision makers and users, 66% said their cloud usage over the last year was higher than they planned for. Respondents estimated their organizations wasted around 32% of their cloud spend, up from 30% last year.

There is also a sustainability angle, says Ewald.

“Observability tells you whether you need to be running services the entire time, and if you don’t, then you can achieve a cost advantage in not paying for services when you don’t need them but also have a positive impact on the environment,” he says.

“It enables you to share the computing cost and achieve economies of scale with multiple people using that cloud provider.”

In one case, re-architecting and moving from on-prem and into a public hyperscaler with serverless technologies saw one organization reduce the equivalent of 60 cars off the road in one year.

In another case, Ewald worked with a coal mining company. While a mining company might not always win plaudits for improved environmental performance, in this case, the FinOps approach delivered a better outcome by maximizing the amount of coal in rail carriages.

This, in turn, meant fewer trains needed to transport the coal, which delivered a saving on the amount of diesel consumed, which was both a financial and environmental dividend.

Still, on a railway theme, Ewald moves to the idea of Digital Twins and their use in observability.

“A train carriage in New South Wales has 3,000 IoT sensors, for example, so having a digital twin around that enables clear understandings of metrics around safety and security,” says Ewald.

“So a lot of organizations are using this to understand and predict the next evolution of their service or product, and having that telemetry is really useful.”

Lachlan Colquhoun is the Australia and New Zealand correspondent for CDOTrends and the NextGenConnectivity editor. He remains fascinated with how businesses reinvent themselves through digital technology to solve existing issues and change their entire business models. You can reach him at [email protected].

Image credit: iStockphoto/Christian Horz