Why Very Large Enterprises Need a Different Approach to FinOps
- By Willy Sennott and Janel Jensen, Vega Cloud
- June 26, 2023
You can find plenty of advice these days about optimizing cloud spending, a discipline known as FinOps. If you google the topic, you'll discover articles that suggest practices like rightsizing your workloads and shutting down unnecessary cloud resources.
Actions like those will help to reduce cloud spending in many cases. The problem with that advice is that it's designed for the typical organization, and the FinOps best practices that work for an ordinary company might not work for your company—especially if your company is very large and therefore faces different FinOps pain points to those of smaller organizations.
To prove the point, allow me to discuss the cloud spending challenges faced by very large enterprises—those with thousands of employees and very complex IT estates. As I'll explain, very large enterprises have unique FinOps needs, and the strategies that effectively reduce cloud spending for smaller companies aren't always the best place to start for larger organizations.
The unique FinOps challenges of large enterprises
The main reason why very large enterprises face unique cloud cost management challenges is simple: Their size makes them sprawling, complex organizations. As a result, there's more information to sift through, more moving parts to manage and more stakeholders to engage with when forming and implementing a cloud cost optimization strategy.
After all, a small or medium-sized organization might use just one public cloud platform. But a very large enterprise likely uses multiple clouds. Because each cloud has different pricing models and types of services, monitoring costs uniformly and consistently becomes more challenging when dealing with a multicloud organization.
Likewise, understanding the needs of the various stakeholders inside a very large organization can be challenging because the organizations are broken into disparate teams that may not engage with each other routinely. Developers might talk to finance people when they all work for a smaller company based in the same office. But when your development team is located on a different continent from your finance experts, it's harder to ensure that everyone is on the same page and understands each other's needs regarding cloud cost management.
That's especially true, by the way, at enterprises that have a history of acquisitions. Acquisitions not only tend to increase the number of different teams inside a company (at least until teams are consolidated, a process that can take years) but also create disparate corporate cultures. As a result, you might have one subset of employees within a large enterprise who understand FinOps because it was a priority at the organization they worked for before being acquired by the enterprise. In contrast, other employees have much less familiarity with FinOps concepts.
How to control cloud costs at large companies
Given the size and complexity of large organizations, small-scale cost optimization measures – like choosing different VM instance types or moving data to a lower-cost object storage tier – aren't a good starting point for FinOps at these enterprises. Those measures may work for smaller companies, and they can help enterprises to reduce spending even further once they've conquered their bigger-ticket cloud cost inefficiencies. But they shouldn't be the focus of enterprise FinOps for organizations just beginning to implement a cloud cost management strategy.
Instead, large enterprises should start by identifying cloud cost savings opportunities that will deliver significant, across-the-board cost reductions quickly. Negotiating enterprise pricing discounts with cloud service providers is a great way to do this – although it typically won't work for smaller companies, which don't consume cloud services at sufficiently large volumes to have negotiating power with cloud providers.
Large companies should also invest in educating their workforce about FinOps. Again, there's likely wide variation within an enterprise when it comes to familiarity with cloud spending challenges and cost savings strategies, so educating teams about the cost implications of changes they make to cloud environments can go far in building a culture that prioritizes cost optimization.
Deploying solutions to monitor costs is critical, too. At large companies with complex IT estates and cloud architectures, it can be challenging to get systematic data about what's running where to identify cost savings opportunities. Enterprises must do the hard work of implementing solutions for tracking costs on an ongoing basis. When they achieve that, they can identify and act on cost inefficiencies early before they lead to the loss of hundreds of large sums of money.
Finally, the most critical component of effective cloud cost management is creating a strategy for engaging all stakeholders—development and IT teams, finance teams, executives and beyond—on an ongoing basis to manage cloud costs. Each team—and, in some cases, each member of a given team—has different requirements from the cloud and spending priorities.
The only way to ensure that everyone across a sprawling enterprise gets what they need from the cloud most cost-effectively is for leaders responsible for cloud cost management to establish ongoing communication channels with stakeholders of all types.
Conclusion: Making FinOps work for everyone
To be clear, I don't mean to suggest that smaller organizations don't have FinOps challenges or that only very large companies should bother to invest in cloud cost management. Virtually every organization has opportunities to spend less on the cloud, and every company should act on those opportunities no matter its size or overall IT budget.
But the fact is that very large companies face special cloud cost management challenges that simply don't apply to, or are not as severe for, smaller businesses. Those challenges—and solutions to them—are sometimes absent from standard conversations about FinOps, which don't always factor in the scale or complexity of the largest companies. But very large organizations need to think beyond basic FinOps practices if they want to get the very most from cloud cost optimization.
Willy Sennott, executive vice president of FinOps and Janel Jensen, director of FinOps at Vega Cloud, wrote this article.
The views and opinions expressed in this article are those of the author and do not necessarily reflect those of CDOTrends. Image credit: iStockphoto/Gearstd