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Sneak Peek of FinOps Foundation Report 2022

FinOps Foundation Report 2022

SoftwareONE was able to get a sneak peek of the upcoming FinOps Foundation Report 2022. The FinOps Foundation, the independent association for and by FinOps practitioners in cloud financial management, releases its annual State of FinOps Survey to benefit organizations looking to maximize the value of their cloud investment.

The upcoming data in the FinOps Foundation Report 2022 provides a framework for those organizations to better leverage cloud financial management and realize optimal business value from their cloud spending.

What is FinOps?

Depending upon the size and complexity of your organization and cloud environment, your cloud computing expenditures have likely ballooned in the past few years making them nearly unmanageable. Cloud spending is challenging to forecast and budget and complex to optimize return on investment (ROI).

It’s not a unique problem. An engineer I know told me it’s easier for him to spend $10K in the cloud than to buy a $10 mouse. To purchase the mouse, he must first get approval from his boss. Once approved, he’ll go to Amazon, order the mouse, download the receipt, and submit it to his boss, who will send it to finance. If finance approves the purchase, the engineer may receive his reimbursement in his paycheck at some point.

But because speed and agility are some of the critical cloud advantages, often cloud spending is unmonitored or unmanaged. This means that the same engineer can easily spend thousands of dollars in the cloud.

This reflects the case of just one engineer. Multiply that spend for a company with hundreds or even thousands of employees with access to deploy cloud resources, and cloud spending can easily get out of control quickly.

FinOps is the solution.

FinOps, also known as cloud financial management, provides a governing framework for organizations to get peak value from cloud spending. FinOps is not a cost-cutting tool or a frugal financial process to reduce spending.

What Does the Report Reveal About Cloud Financial Management?

The FinOps Foundation Report 2022 is the result of a survey of 1,056 respondents responsible for an estimated $40 billion in cloud spend. Participants answered 65 questions relating to the size of their organization, their cloud use, their annual cloud spend, their FinOps team size, and more. The findings of the Foundation’s research give us an up-to-date snapshot of the industry, spotlighting the top challenges faced, the growth of FinOps teams, the experience level of FinOps managers, and other relevant information.

By examining these metrics and insights, the FinOps Foundation can better provide instruction and materials to assist cloud financial managers in maturing their practices and meeting the challenges they face with proven solutions.

Upon reviewing the findings, I noted the following three key takeaways:

1. Getting Engineers to Act

The number one challenge FinOps managers face for the second straight year is getting engineers to act. The chart below from the findings shows that while someone in the organization may have found a method for increasing cloud spend business value, many engineers simply don’t act upon it. Often, these actions don’t align with the engineer’s KPIs, and they don’t have time to follow through.

FinOps Foundation Report: Top Pain Points

Companies must have executive sponsorship and communication and continuous training and education to address this reluctance by engineers. Organizationally, leveraging showback or chargeback models can help drive accountability as well. The former clearly outlines how much each business unit is spending compared to the entire enterprise.

This offers the organization visibility into usage and insight into the allocation of resources. The latter involves charging back fees to individual units. This process holds teams accountable for their usage. For many, chargebacks inspire more cautious spending.

2. Automation is Increasing

The research findings also indicate an increase in automation to simplify cloud management, increase productivity, and enhance ROI. Today, many organizations review and reconcile their cloud invoices once a month or once a quarter.

However, changes to costs in their cloud environments occur every second. Automation and decision-making in as close to real-time as possible is a clear sign of FinOps maturity.

FinOps Foundation Report: Automation

Using tools like SoftwareONE’s PyraCloud, cloud users and managers can easily automate functionality to uncover cost optimization opportunities, manage and track contracts, and accurately control and forecast future cloud usage. Automated alerts can detect spending anomalies via tagging and quickly advise cloud financial managers of irregularities or overspending in real-time.

3. FinOps Maturity Relies on the Strength of Company Culture

In the chart below taken from the research findings, the level of FinOps maturity (crawl, walk, run) depends on the strength of a company’s culture and how readily each business unit embraces change management and accountability.

FinOps Foundation Report: FinOps Maturity

Creating a culture of accountability is the foundation of effective FinOps management. At SoftwareONE, we have found that creating that culture directly correlates to how quickly and successfully an organization can mature and experience the value of FinOps management.

Working with an experienced partner, a company can effectively undertake FinOps in three essential stages—inform, optimize, and operate.

In phase one, the organization creates a dashboard that enables company units to learn the total of their cloud spend and its costs, bringing together representatives from each team to form a cloud center of excellence (Cloud CoE). Once established, a Cloud CoE can gain insight into the organization’s entire cloud footprint.

In phase two, stakeholders discover how to identify, execute, and measure optimizations. In this phase, the strategy for optimization and how to communicate to the various team members are defined.

In phase three, stakeholders will explore how to jointly achieve their goals by adhering to continuity and structure policies. These phases ensure the entire organization is aware of the initiative, informed of the company’s goals, and can work individually and collectively to reach those objectives.

Bringing it All Together

Is your organization struggling to adopt the FinOps framework? No matter your level of maturity and where you are on your FinOps journey, SoftwareONE can support you in achieving your cloud financial management goals. Over the coming weeks, we will look at more of the findings from this year’s FinOps Foundation State of FinOps annual research.

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Author

Dan Ortman, Author SoftwareONE Blog

Dan Ortman

Microsoft Advisory Services Practice Lead

Publisher Advisory | Microsoft

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