Q: You recently launched the FinOps Foundation. Can you tell us a bit about the foundation and what does it does?
The FinOps Foundation (F2) is a non-profit organisation focused on codifying and promoting cloud financial management best practices and standards. The mission of the FinOps Foundation is to empower distributed teams running in the cloud to operate at high velocity while optimising the unit economics of cloud deployments.
Through my work at Cloudability, over the past 8 years we learned by working alongside our customers that organisations needed support in empowering distributed teams running in the cloud to operate at high velocity while optimising the unit economics of cloud deployments. It’s something we’ve discussed within the industry at length for a while. Cloud brings with it tons of benefits in helping organisations be more agile and innovative, but it also represents a very different way of thinking and working.
Together with a number of our partners and customers, we formed the foundation as a means of creating a way for the community to come together, share best practices and learnings, and ultimately help each other maximise the business benefits the cloud offers.
Q: What will be the biggest challenges that UK companies will face in managing cloud spend in 2019?
Cloud growth in the UK is increasing significantly as organisations progress their digital transformation initiatives. With more and more workloads in the cloud, spend will undoubtedly increase, and while many organisations have planned for this, many of them still manage cloud as a capital expense. In fact, we recently conducted a survey with 451 Research in the UK and found that 81 per cent of enterprises still treat cloud as a fixed (CapEx) cost rather than a variable (OpEx) expense. They are using traditional financial operating models designed to forecast against fixed-costs rather than one purpose-built to support the variable spend model of cloud
This is the challenge I often see - when organisations haven’t re-thought their operating model in line with the change in in how spend is calculated. With cloud, there are no server or data centre sunk costs. Without the proper management, the result is often an unexpected bill, which can result in many of the more innovative IT projects, designed to help the organisation progress its digital transformation priorities, being postponed or stopped, in favour of just “keeping the lights on.”
This goes against the very purpose and benefit of cloud. In a time of accelerated digital disruption, there is an imperative need for organisations to drive innovation if they are to set themselves up for success in the Fourth Industrial Revolution. Moving to, and operating in, the cloud has a critical role to play.
So for UK organisations in 2019, the key challenge will be learning, not only how to better forecast cloud spend, but also to ensure they are using the cloud effectively – so that the innovative initiatives that will ultimately support business growth are not compromised. That requires a people, process and technology approach.
Q. What piece of advice would you give to companies to get the most from their cloud investments?
There are a number of things organisations can do. For me, the most critical one is to develop a culture of cross-team collaboration between IT, Finance and business leaders. This cooperative approach helps enterprises operate at high velocity whilst improving the unit economics of cloud –making trade-offs between speed, cost and quality.
In the past teams operated in silos. Again, referencing the 451 research, in the UK two-thirds of IT and Finance respondents do not have dotted line reporting or visibility between each other. That needs to change.
Crafting this culture involves creating a partnership between IT and finance and business teams. With a more fluid and agile approach to managing and forecasting spend, it is imperative that these teams have the relationships, processes and structures in place to work together and make informed decisions that drive continual optimisation and support innovation. Whether it be purchasing more cloud at discounted rates, avoiding unnecessary costs or simply having better foresights as to when reserved instances are due to expire, it is only through the collaboration of these teams that organisations can make sure they are getting the most from their cloud investments.
Q: Where do you see the FinOps industry in 5 years' time?
Some forward-thinking enterprises have already started implementing aspects of FinOps under a variety of different names like cloud financial management or IT financial management, so it’s a growing practice. Today, FinOps is very much an emerging practice and emerging market. And while many organisations in the UK have been using the cloud for years now, operating models have remained immature. These high performing enterprises are already seeing the benefit of this approach.
For me, FinOps will become the standard way to approach cloud financial management. An agile way of working fuelled by a community of industry practitioners committed to making sure their organisations are using cloud technology to achieve innovative and effective business outcomes at speed.
This is where I believe the FinOps practice can help. In 5 years’ time, I’d love for this to simply be the way cloud financial management gets done – with organisations embodying an agile and collaborative culture and way of working that is designed to empower today’s business and technology teams to use the cloud as a force for business growth and innovation.
J.R Storment, Co-Founder, Cloudability
Image Credit: MK photograp55 / Shutterstock