FinOps: Gain Visibility into Cloud Consumption

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Finance in the cloud

As cloud use skyrockets, organizations are facing a reckoning: how to maintain visibility and manage cloud costs effectively across a complex hybrid IT estate. We spoke to Harish Grama, Kyndryl’s Global Cloud Practice Leader, about the company’s unique approach to FinOps and the operating model that brings cost control and accountability to what’s become an unpredictable landscape.

Q: As companies expand their use of public cloud as part of a hybrid cloud landscape, what kind of financial management and budgeting challenges arise?

A: Digital transformation and cloud transformation go hand in hand, and hundreds of billions of dollars are being spent on public cloud, according to Gartner. With this level of consumption, enterprises are struggling with wasted cloud spend, partly because they don’t have the right architectures in place or they aren’t consuming it correctly. While the cloud delivers agility and flexibility, it comes with a lot of complexity. While the developers consume services on cloud directly, if the right processes are not in place, it is difficult for Finance or central IT Ops teams to get visibility into who is consuming the services, why, and how long they need them. Are they using the right services in the right manner? Is the budget accounted for? Are there any anomalies in usage and billing? Is there a way to optimize the services, etc.? The services can be confusing across different providers — the competition between hyperscalers results in services that are significantly different in terms of cost. All of this translates into sticker shock as cloud costs continue to grow and become out of control. Other than security, cost containment is the No. 1 priority for organizations as of late.

Q: FinOps is positioned as a solution. How does the practice differ from or improve on traditional IT budgeting and financial management practices?

A: IT consumption has traditionally been heavily influenced by procurement, spend was primarily CapEx, and consumers were bottlenecked by procurement and central IT. Approval was centralized, costs were extremely predictable, and multiyear budgets and plans were the norm.

In the world of cloud, spend is unpredictable and difficult to manage. Users have the choice but little accountability. OpEx is the norm. Out of concern for not being able to manage costs, the business holds back, and the potential innovation of cloud is not fully realized. A new operating model is needed — one that brings together cloud consumption with operations and finance so that cloud spend can be managed with a level of predictability. This is the key principle of FinOps.

Q: What is unique about Kyndryl’s approach to FinOps? How does that translate into better business outcomes?

A: With our ModernOps approach, we integrate the people, process, technology, and assets to deliver a whole value stream to the client — in this case, controlling, managing, governing, and optimizing the use of the cloud, public or private. We also have respect for Operations, born from decades of running business-critical systems. We’re going to help our customers optimize, but we’re going to be pragmatic about it. We don’t break stuff in the effort to save money.

Q: What key steps should IT leaders take to reorient their organization around FinOps practices?

1.    Make sure all the infrastructure data, utilization data, and cost data is used in a business context; otherwise, you can’t get value out of it. Unless you have visibility into what the organization is consuming, you can’t manage it efficiently. Having a comprehensive cost allocation and/or tagging strategy is a fundamental tenant of FinOps.

2.   Be sure to have stakeholder buy-in as well as executive sponsorship.

3.   It’s important to start small and adhere to an agile process. Don’t wait for a Big Bang approach, but rather keep iterating across the dimensions of the organization and the cycles of FinOps.

4.   Create awareness and accountability. Just letting someone know how much they’re spending is a breakthrough.

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