Cloud technologies are critical to every business for scalability, agility, efficiency, and cost savings, but the latter two are not a guarantee. The reality is that 80% of companies struggle to see cost savings with their cloud implementations and 70% of IT and financial decision-makers say it’s hard to account for cloud usage and spend. Yet spend companies will: 86% plan to invest more in Infrastructure-as-a-Service (IaaS), Software-as-a-Service (SaaS), and Unified Communications-as-a- Service (UCaaS) despite the eclipsing challenges of overspending, shadow IT, and cloud waste.
The cloud is a fundamentally different consumption model that requires a fundamentally different cost management strategy – namely, FinOps – to fully deliver business benefits.
FinOps is the new methodology for addressing today’s cloud cost realities. The operational framework standardizes cost optimization for IaaS, SaaS, and UCaaS, empowering stakeholder teams to confidently manage cloud costs and generate ROI without wasting resources or adding unnecessary complexity.
Now for the million-dollar question: how do you activate a sustainable FinOps plan? Determining the right path for your organization ensures success at the onset, and technology is the ultimate consideration. A Cloud Expense Management (CEM) solution is the smartest choice. This guide explains why cloud expense management solutions have become the standard technology platform for controlling costs using a FinOps approach. Plus, you’ll learn four competitive capabilities that act as a force multiplier.
The FinOps Framework provides a high-level overview of what functional activities are needed to run a FinOps practice via its six Domains and capabilities. Accountability and enablement, measurement and realization, cost optimization, planning and forecasting, and tools and accelerators are at the core of these focus areas.
The six FinOps Domains outline the capabilities an organization must perform to effectively practice FinOps. Each Domain defines a different “sphere” or territory of activity or knowledge, including functional activities to be performed as part of that Domain. For example, the first FinOps Domain – Understanding Cloud Usage and Cost – includes the following capabilities: measuring unit costs, managing shared cost, managing anomalies, and forecasting, among others.
Tangoe is a Premier member of the FinOps Foundation, a validation of our cloud expense management excellence for enterprises of all sizes.
The results of an organization implementing the six FinOps Domains are ultimately determined by the solution and technology platform you use – not all platforms are built the same. While a platform with comparatively limited capabilities fails to fully execute on FinOps, the right CEM solution leaves no stone unturned, fully aligning with FinOps to boost savings. While the average FinOps cost savings is 20-30%, Tangoe finds that its CEM solution can save clients up to 40%.
Here’s how an effective CEM solution operationalizes FinOps through the six FinOps Domains.
The first and arguably most important step for operationalizing FinOps involves gathering information that helps you understand how much you’re spending on cloud services and how effectively you’re using those assets.
A CEM solution deeply integrates with IaaS, SaaS, and UCaaS services to uncover current cloud usage and cost, including historical trends, at a level of granularity that sets the stage for Domain 2 — mapping cost to budgets, using historical information to establish benchmarking, investigate any cost overruns, and forecast needs.
FinOps isn’t about one-time cost reductions; the framework establishes a continuous cycle of monitoring, analyzing, and refining cloud usage and spend to ensure continuous ROI, even (and especially) as your requirements shift over time. An effective CEM solution allows you to track and trace exactly where your spending goes in real-time to understand at granular levels who benefits from expenditures and how, who is responsible for expenditures, and how and why spending aligns or misaligns with financials budgets and forecasts.
FinOps is a team sport; no one should be sitting on the bench. This means establishing a decision and accountability structure in which every business line manager has timely access to cost and usage data for real-time decision-making in alignment with financial goals and objectives.
A CEM solution makes everyone in your organization a superhero with right-time, right-person data, viewable in a simple format that makes complex cloud data easy to understand. This brings the level of organizational transparency, accountability, and visibility required for building a FinOps culture of trust and collaboration.
This is where the rubber meets the road. How can you strategically leverage discounts and use economies of scale to change the rate you’re paying and alter what you’re buying to achieve better price performance or higher cloud ROI?
CEM solutions leverage AI and hyper automation to make sure you’re taking advantage of discounts, securing better rates, and paying only for the features you really need.
FinOps isn’t just a practice, it’s an organizational culture. How will your IT and finance teams work synergistically to operationalize FinOps?
A CEM solution satisfies the vast needs of IT and finance across the areas of cost optimization and expense management in one comprehensive system. It’s a central control center that harmonizes events across the entire cloud cost management ecosystem (see image).
1. The Widest Cloud Visibility
Tangoe offers the industry’s most extensive array of pre-built API integrations, fostering a vast ecosystem of partners that facilitate broader data ingestion for a clearer perspective on software and infrastructure services.
2. Smartest AI Platform Powering FinOps
AI automation and patented capabilities expedite cloud financial management workflows to yield quicker insights and faster savings.
3. Broadest Choice and Flexibility in Cloud Cost Management
More than just cost-cutting, you can streamline cloud financial management with one centralized solution serving both IT and finance.
4. Savings that Go beyond the Cloud
When you’re ready to simplify, manage, and optimize more than just your cloud estate, Tangoe seamlessly scales cost optimization for your mobile devices and telecom services, taking your savings further.
This helps explain why Tangoe clients are 62% more likely to report that their cloud deployments delivered benefits to a “great extent,” compared to 41% of others.
The adoption of FinOps is crucial for organizations looking to harness the full potential of cloud technologies while effectively managing costs, and the key to activating a sustainable FinOps plan lies in advanced technologies found in cloud expense management solutions.
With the potential to reduce cloud costs by up to 40%, these platforms have become the preferred choice for organizations seeking to maintain control over their cloud expenditures while achieving sustainable growth. As every cloud estate continues to grow and evolve, organizations that embrace FinOps and leverage CEM solutions will be best positioned to thrive, realizing the true benefits of cloud innovation without the burden of excessive costs.
Ready to put your FinOps plan into action?