Cloud FinOps: Implementation Challenges and How to Overcome Them

Did you know that 71% of teams financial management in the cloud Do they doubt that they will achieve the expected results in the expected time or that they will? And more: just 29% of Cloud FinOps teams expect to achieve their cloud goals.

This is intriguing as companies move to the cloud to become more productive, respond to market changes, and be flexible—while spending less on cloud infrastructure. 

The paradox is that there is one thing that many cloud-based organizations have learned: cloud costs add up quickly.

Shall we reflect on this? 

Check below for a breakdown of the main challenges and how to overcome them!

What is Cloud FinOps?

Cloud FinOps is an approach whose set of practices aims to manage costs and optimize spending in the cloud. It combines principles from Finance and Operations (Ops) to provide a comprehensive and efficient view of cloud infrastructure costs. 

In practice, Cloud FinOps involves collaboration between finance, operations and development teams, with the aim of maximizing the value of cloud resources, controlling spending and identifying areas for optimization. 

This includes activities such as:

• cost monitoring;
• utilization analysis;
• investment allocation;
• waste identification;
• and implementing strategies to save resources.

Basically, the adoption of Cloud FinOps allows companies to have greater visibility and control over their spending in the cloud, avoiding unpleasant financial surprises. 

In addition, it promotes a culture of shared responsibility among the teams, encouraging financial governance and operational efficiency.

What are the top challenges FinOps teams face — and how do you solve them?

With Cloud FinOps, companies can make data-driven decisions about resource allocation, proper sizing and efficient use of cloud services, resulting in better resource utilization and reduced cloud costs.

O X of the question is to overcome the challenges to reach this state of the art!

Below are some challenges you and your team can deal with when implementing this strategy — along with some tips for how to best deal with them.

1. Cloud waste is already a huge problem

The term “cloud waste” refers to incurring unnecessary cloud costs. The vast majority (88%) of respondents to a survey on the “state of hybrid cloud and FinOps” in September 2021 reported to have discovered in unnecessary cloud computing costs. 

Most cited workloads exceeding agreed capacity as the most significant cost factor. Overprovisioning resources and overpurchasing or underutilizing Reserved Instances are common reasons why FinOps teams incur cloud waste.

→ Solution

When workloads exceed capacity, it's not always a bad thing; it can also be a sign of growth. Therefore, trying to reduce cloud spending by all means — such as disabling autoscaling — can have the detrimental effect of impeding revenue growth.

Instead, implement a cloud cost intelligence platform that lets you monitor cloud spend in real time. 

But don't stop there. 

Make sure the tool can also alert your FinOps team to cost trends to spot overspending movements.

2. Understanding cloud cost is tricky for beginners and more experienced FinOps teams alike

A typical cloud account contains thousands of rows of data that are difficult to digest in spreadsheets. You may not have a clear picture of who, why, and where your cloud budget has been spent. It doesn't end there.

Most SaaS companies are under pressure to roll out new features, optimize the customer experience, and grow revenue, users, and market share. In this movement, startups are particularly vulnerable. 

Cost optimization usually takes a backseat, only mattering when spending on the cloud approaches thousands of reais. 

Overspending is inevitable when cloud cost visibility and tracking is poor.

→ Solution

Consider cloud cost as a first-class metric. 

Within that:

• Prioritize cost optimization best practices along with engineering velocity, monthly recurring revenue (MRR), churn and other SaaS metrics. 
• present to the stakeholders responsible for cloud spending in your organization the impact your actions have on the bottom line. 
• Choose a tool to track, monitor and report costs from the cloud once you have that membership. Also, be sure to select a platform that can break your costs down into unit costs. These are granular insights that different stakeholders like engineers will understand. 
• Keep in mind that it's easier for engineers to understand numbers as cost per feature, per deployment, or per development team rather than cost per customer, which is more relevant to Finance, or gross margins, which investors understand better. 

3. Accurate forecasting is often difficult for many FinOps teams 

Failure to forecast cloud cost can cause over-provisioning, over-buying and paying for unused resources. 

This is often because the FinOps team doesn't have accurate or sufficient cost data to help them allocate enough resources to reduce waste.  

→ Solution

Examine how your applications, workloads and data work. 

You can analyze historical usage data about how you have used local resources in the past. Furthermore, you can use this as a baseline for your test cloud budget. 

Also, monitor how the cloud environment uses the test budget once operational. This information can help you uncover areas where you can cut costs without compromising customer experiences or engineering work. 

4. When teams work in silos, they disconnect

Finance and engineering can be quite disconnected, even when teams implement DevOps—especially without dedicated FinOps teams overseeing cost accountability. 

The finance department is usually responsible for making cloud purchasing decisions, but engineers often use these resources. 

But as engineers focus more on speed, security, and delivering better code, they unwittingly make architectural choices that drive up costs, much to the chagrin of finance.

In fact, getting the engineering going is the biggest hurdle to cloud cost optimization, according to the FinOps Foundation . 

→ Solution

Engage teams in cloud management discussions to raise cost awareness. 

You don't want limited collaboration to get in the way of your cost optimization efforts. So make sure you provide them with information that illustrates their cost impact—and in a language they understand. 

As mentioned earlier, provide engineers with cost per product feature, cost per software test project, or cost per deployment. 

By increasing cost awareness, they can be more proactive, including collaborating with FinOps before implementing engineering decisions. 

As you measure and reveal cost metrics regularly over time, it can motivate engineering to develop more cost-effective solutions. 

5. Dealing with shared cloud resource costs is often difficult

Keeping track of cost indicators in a shared environment can be challenging. This is because it can be difficult to distinguish individual customer metrics from one another. 

Companies with this setup often leave things to chance. 

→ Solution

It may be impossible or very time consuming to determine which tenant has used cloud resources in such an environment. 

Instead, use a modern tool to automate the process and correctly assign the right data to the right tenant. Some cloud cost services don't do this, so you'll need to confirm that your choice provides cost-per-tenant pricing.

6. Adopting a multi-cloud strategy, or hybrid cloud, often obscures cost visibility

According to a recent research by HashiCorp, 72% of respondents use more than one cloud provider (multi-cloud strategy). 

In another search, 62% of executives said they have put together different tools, systems and custom scripts to try to analyze costs in a hybrid cloud model. However, this approach is similar to sharing/multi-tenancy, making it difficult to maintain visibility into the cloud's peak cost.

→ Solution

A multi-cloud approach is often not cost-effective. Instead, adopt a multi-service strategy that engages your FinOps team without blinding them to cost accountability. 

7. Choosing the best FinOps tool and platform is a dilemma

A clunky, inaccurate manual tool is the last thing anyone would want. Unfortunately, most cloud costing tools are just that. Also, you must have perfect tags for them to work properly. 

→ Solution

Instead, embrace the cost intelligence of the modern cloud. Using this approach, you can break through the etiquette barrier and cut and cut cloud beads. 

FinOps teams can also better understand cloud spending by mapping cost information to actual business activities.

→ How about learning more about FinOps? We prepared a Complete eBook on the subject; click on the banner below and download it now!