New research is exposing what the most successful FinOps programs have in common, helping IT and financial leaders pinpoint which technologies and approaches generate the highest savings on their cloud service costs. Here’s the bottom line:
Partner with a provider for FinOps tools and you’ll save 20% on average.
Apply AI to your FinOps platform and you’ll save greater than 20% on average.
Do neither of the above and you’ll save less than 10% on average.
Download the complete CIO.com research report.
The research study was conducted by Foundry and surveyed IT and financial leaders across many industries, who have already implemented a FinOps model to help them tackle the challenges of cloud sprawl. The research focuses on the best practices for maximizing ROI on cloud infrastructure services (IaaS) and cloud software applications (SaaS) including Unified Communications as a Services (UCaaS). Key takeaways provide valuable insights for CIOs and CFOs seeking to optimize their cloud innovation.
Lessons Learned from Early Adopters of the FinOps Model
To achieve a positive return on investment (ROI) on the cloud, companies must gain complete visibility into service utilization and align cloud resources with business needs. This is why the FinOps framework for cloud cost management is rising in popularity. It puts forward a methodology for cloud hygiene, cleaning up cloud waste – reducing unused and underutilized resources.
But while FinOps is well recognized, how companies are successfully implementing and tooling the model is far less established. The study pulls this critical information out of the shadows, exposing how to get the best payout on a FinOps practice.
Cloud Sprawl Creates Challenges in Management, Study Shows How FinOps Helps
Rising cloud technology adoption has brought numerous benefits, but it has also introduced challenges related to cost control, security, and expertise in financial management. Cloud adoption can be accompanied by a lack of visibility into service utilization, limited accountability for service costs, and a new need for new governance over increasing SaaS and IaaS expenditures. Cloud sprawl exacerbates these issues. The Foundry study reveals that FinOps models can address these challenges effectively.
Top 3 Benefits of Implementing a FinOps Model
- Productivity savings
- Cost savings
- Reduced security risk
FinOps ROI: 3 Ways to Get the Highest Payout on Your Cloud Spend Management Practice
The survey zeroes in on the business leaders achieving at least a 20% savings from their FinOps program to better understand what they have in common and tease out their best practices. Data identifies three key factors for maximizing FinOps ROI: the implementation approach, the use of AI, and comprehensive optimization programs covering both IaaS and SaaS.
1. The Right Implementation Approach can Double Your FinOps Savings
Organizations can choose to build and implement FinOps programs internally or partner with external providers for software and services. Results show that outsourcing some or all of these programs can significantly impact cost savings, with companies using third-party services reporting an average cost savings of 20%, compared to less than 10% for in-house solutions. Data also shows partners are also key in controlling runaway costs and helping clients gain productivity in cloud financial management.
These findings are congruent with Forrester’s advice. While DIY tooling is on the rise, Forrester analysts “vehemently dissuade” FinOps practitioners from a DIY approach due to the complexity and investments required from in-house resources. Learn more about why DIY can jeopardize the ROI of a FinOps practice.
2. AI Takes FinOps Savings Even Higher
Artificial intelligence (AI) plays a crucial role in optimizing cloud costs. Companies that leverage AI with their FinOps programs are 53% more likely to achieve cost savings of greater than 20%. AI is particularly valuable for analyzing complex cloud environments and crunching mountains of data to intelligently recommend cost-efficient configurations and sources of savings. Explore the role AI plays in FinOps and learn how it can hyper-automate your practice.
3. SaaS Offers More Cost Reduction
Maximizing ROI involves optimizing both IaaS and SaaS costs. While most respondents apply cost optimization efforts to both, the survey highlights that SaaS offers more significant cost reduction opportunities. FinOps programs 20% or more on their cloud software costs, versus less than 10% on their cloud infrastructure costs. This shows you where to start. FinOps practitioners should focus first on scrutinizing high-volume applications, working reallocate unused and underused licenses to achieve savings but also reduce any redundant applications, consolidating SaaS services save money.
Get the four best practices for managing SaaS spending, and don’t miss the ultimate guide to SaaS management.
How Adopters are Choosing FinOps Solutions and Service Providers
When a service provider can double the amount of savings a FinOps program can achieve, choosing the right partner is critical. The full study reveals all the criteria business leaders use when selecting their FinOps technology platform and services. Download the complete research report.
In conclusion, as cloud adoption grows, so does the adoption of the FinOps methodology. But as IT and financial leaders design their approach, they should make careful considerations in how they implement and tool their FinOps programs. Outside partnerships, AI technologies, and SaaS optimization are best practices for activating a FinOps model in ways that achieve the highest savings payouts.
Don’t miss this infographic summarizing key takeaways from the FinOps research study.