Cloud computing offers numerous benefits to businesses, including saving on time and costs, increased productivity, and allowing for mobility and collaboration between employees. The traditional way of managing IT costs and other business operations is usually capital intensive and time-consuming. In the traditional model, businesses need to have on-premise infrastructure such as servers. They also have to wait for a long time before the infrastructure is delivered and implemented. The businesses also need to have dedicated personnel to maintain the infrastructure and resolve any issues with the system. With cloud computing, businesses can access the same services from vendors using the Internet, which is more cost-effective and efficient than traditional models.
FinOps or Cloud Financial Management entails incorporating financial accountability in the spending model of cloud computing so as to balance between efficiency or speed, quality of services, and the cost. FinOps allows teams in the business to efficiently manage the costs associated with cloud computing and make better decisions regarding the expenses. In addition, FinOps helps businesses to make the most out of cloud computing by introducing new processes that increase business value. FinOps also provides helpful information that guides in knowing whether to invest and when to invest.
1. Establish a Cost Optimisation Function
Cloud computing can help establish a cost optimisation function for the business, ensuring that the company achieves maximum value at the lowest price or cost. Most cloud computing service providers such as Microsoft Azure, AWS avail businesses with tools for automatically adding or removing resources as required to ensure that the business pays only for those resources that are being utilised. A cost optimisation function focuses on creating and maintaining a culture of cost awareness in the entire organisation. All stakeholders in the organisation are expected to dedicate some specified amount of time to evaluate cost management and optimisation.
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2. Establish a Partnership Between Finance and Technology
The traditional model of financial operations does not support collaboration between various teams in the company, but with cloud computing, the finance and technology departments can easily collaborate and communicate since they can simultaneously access organisational data in real-time from the cloud, and this shortens the various processes such as forecasting, budgeting, procurement, innovation, and approval.
3. Establish Cloud Budgets and Forecasts
Cloud computing service providers such as AWS provide businesses with tools such as AWS cost explorer to make daily or monthly predictions of cloud costs based on historical data. In addition, these tools deploy intelligent algorithms such as trend-based algorithms to simplify and turn forecasting and budgeting into dynamic processes.
4. Implement Cost Awareness in the Organisational Processes
A business can implement a culture of cost awareness by emphasising that all processes incorporate cost awareness. For example, if there is a change in the recruitment process, the recruitment department must create a report detailing the financial impact of this change.
5. Monitor, Report, and Notify on Cost Optimisation
The cloud makes it possible for businesses to monitor the cost and usage of the cloud through specially designed tools that generate reports on this data.
Cloud computing service providers provide tools like QuickSight to generate reports about the usage and the cost of cloud services. Other tools allow the business to receive notifications about changes in price and usage. There are tools to notify the business when cost and usage reach a target. Special tools are made available to companies to manage the costs of cloud services by informing them about waste or resources that are not being used currently to ensure optimum usage and avoid hidden costs.
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6. Chargeback and Showback
Chargeback and Showback are tools used to ensure accountability through charging each department based on the department’s usage of cloud services. These tools help the business control cloud costs, ensure effective use of the cloud, predictability, transparency, and improve the decision-making process.
7. Support Procurement
Traditional procurement methods are quite complex and have lengthy cycles. On the other hand, cloud-based procurement is cost-effective, quick, and does not require much upfront investment. Cloud procurement also offers an option for pay-as-you-use, allowing businesses to stop paying for resources that are no longer needed.
8. Pipeline Prioritisation
Cloud computing utilises various strategies to help businesses partition and create a priority list for resources. For example, a cloud product catalogue can store details about all internally approved cloud services the business can buy and consume along with price information and then create a priority list based on the most pressing services.
Cloud computing is a great option for all businesses in the current times because it provides many benefits, including saving on costs, encouraging collaboration, reducing the time needed to complete various processes, and helping in the decision-making process. Furthermore, since the goal of FinOps is to ensure maximum value for the business at the lowest price possible, using cloud computing services will help achieve this goal rapidly.