2021 was a record year in venture capital (VC) funding, with $330 billion going to U.S. VC-backed companies alone, numerous IPOs and sky-high valuations. But as the funding rush has subsided, tech layoffs have become all too frequent. In May, job losses went up a staggering 350% from April. June held little reprieve.
When faced with a down market, many companies' knee-jerk reaction is to look for places to trim. Office space, new hires and workplace perks are often first on the chopping block. But companies, especially tech companies that pride themselves on using technology to overcome challenges, can consider creative tech-based solutions to stay afloat during times of economic uncertainty. (Also read: How Digital Transformation Can Bring Resilience During Disruptions.)
Cloud computing costs are expected to account for over half of technology budgets by 2023. So, cloud FinOps might be just the solution to make cuts without hurting people.
What is Cloud FinOps?
Cloud FinOps — short for "cloud financial operations" — is a guiding strategy that allows teams to be thoughtful and informed about where every dollar is going and what function it will serve.
Many organizations adopt cloud functionality for the sake of digital transformation, rather than embracing it as part of a larger, focused strategy for growth and efficiency. However, this approach is no longer tenable when faced with the ongoing economic instability. Moreover, organizations waste millions of dollars on storage, CPU, RAM and poor networking configurations, and siloed internal teams using the cloud without understanding its needs and spending across the rest of the enterprise compounds the overspending problem. (Also read: Destroying Silos With Integrated Data Analytics Platforms.)
That's why every company, from multi-national corporations to startups looking to survive another year, need to invest in systematic, ongoing optimization programs that will guide their cloud usage. Cloud FinOps is that kind of optimization program.
How to Implement Cloud FinOps
The first step to building a concrete FinOps plan is assembling a multidisciplinary group of finance professionals and developers who work together to distinguish necessary and effective tactics for cloud financial efficiency.
Some tactics to include within an effective FinOps roadmap include:
- Re-evaluating AWS regions.
- Consolidating network components wherever possible.
- Rightsizing instances.
- Cleaning up underused resources.
- Deleting idle load balancers (e.g., zeroing in on specific goals and areas for improvement).
- Leveraging commitment plans.
Resource overprovisioning — a standard practice to guarantee business continuity across platforms, enhance performance and stability and pad against usage spikes — also deserves scrutiny.
Taking action on these issues will make it easier for managers to deliver on business-related goals without overspending on cloud functionality. (Also read: How can cloud computing save money?)
What if My Cloud Spend is Already Too High?
Skyrocketing cloud spend is rooted in the ultimate goals of minimizing infrastructure management, increasing efficiency and enabling workflows that are fast, scalable, and more cost-efficient. Ironically, many companies that migrated to the cloud are feeling the strain of compute spend more acutely than ever.
Cloud FinOps allows you to optimize cloud capabilities and rein in rising costs.
Conclusion
Using the cloud isn’t like building a bridge or skyscraper, where excessive spend provides added value. Rather, it’s about squeezing out the cloud for all its juice.
At its best, the cloud should alleviate companies' burdens — not add to the pile. But like the clouds in the sky, the digital cloud is unpredictable and ever-shifting. Without properly understanding the forecast, the cloud’s dynamic nature can quickly yield unforeseen costs and rain down waste on any organization.
On the bright side, the right cloud solutions provide companies with financial and resource savings they can rely on. By combining these solutions with a thorough and comprehensive FinOps plan, businesses can save significantly in the cloud, enabling them to hold onto their most valuable assets: their dedicated and talented employees. (Also read: Smart HR: How AI is Transforming Talent Acquisition.)
