The widespread adoption of the public cloud, while it certainly has noteworthy advantages, can lead to unforeseen costs for IT organizations. This is true even for those businesses operating on hybrid multicloud operations that leverage public cloud and private data centers. Keeping track of costs is increasingly complex and more critical than ever.
This is giving rise to FinOps.
The FinOps Foundation Technical Advisory Council defines this as an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.
FinOps framework. Source FinOps Foundation.
Global Market Estimates projects that the global cloud FinOps market value will grow from USD $832.2 million in 2023 to $2,750.5 million by 2028. These figures demonstrate not only the obvious expansion of FinOps practices across the industry but also the perceived importance of FinOps by individual organizations and key decision-makers.
After organizations rapidly spun up their use of public cloud resources to meet the challenges presented by the COVID-19 pandemic, many were surprised at how expensive it became over time, according to Charlie Boyden, product marketing manager at Nutanix.
“Public cloud was sort of marketed as this magic bullet, but these days we’re hearing from IT professional that the public cloud is actually very expensive,” Boyden said.
“If you’re paying on demand, your costs can quickly skyrocket. Especially when there’s not enough governance on individual teams for the resources they’re using when they’re provisioning them.”
He said there’s a growing need for cost management tools and processes for managing IT resources. Not just for public cloud services but across all IT operations, including hybrid multicloud systems that combine a company’s owned or co-located data centers with a variety of public cloud services.
As IT operations grows more complex, it can become more difficult to align and coordinate between teams who manage systems and those who provide access to those systems, Boyden said.
“FinOps isn't just about finding cost savings across your clouds,” Boyden said. “It serves as the foundation for nurturing a culture of accountability across the entire organization, paving the way for sustained, long-term success.”
He said Nutanix FinOps-as-a-Service combines professional services with multicloud cost management solution called Nutanix Cloud Manager Cost Governance (formerly known as Beam). This combination provides IT teams with cloud spend insights, optimization opportunities and tools for fostering a long-term FinOps culture in their business.
The Black Box of Unforeseen Costs
Turning on a new cloud service account can be like diving into a black box of unforeseen costs, according to Mayank Gupta, director of product marketing at Nutanix. He said cloud services can be complex with many moving parts.
“They don’t always communicate clearly what they charge their users for or when,” Gupta said.
He spoke from his own experience of spinning up a public cloud computing instance to run a large language model solution. It required setting up multiple other services, including a network gateway.
“The interesting part was once I was done with the product, I shut down my instance, but kept getting bills for three months,” Gupta said.
“Apparently my network gateway was on, and I had to dig five times to find that particular instance so that I could shut it off. Now I’m giving you a very simple example of how somebody who is technically savvy, who just ran one single service on a public cloud, paid for it for three months without realizing that this black box had 10 different knobs which could potentially charge you.”
This raises the question of how much a large company with many workers, potentially hundreds of developers, might be overspending from many individuals simply turning on cloud services and running business applications.
The 5th Annual Nutanix Enterprise Cloud Index, which surveyed 1,450 IT decision-makers from around the world, showed that 85% of respondents consider cloud cost control to be a significant challenge.
Racking up runaway costs could spell doom for any business.
“It can be cost implications, there could be security implications, there could be so many implications, which is what keeps the CIOs awake at night,” said Gupta.
Hybrid Multicloud as a Growing Infrastructure Solution
Despite the potential cost implications of operating in the cloud, more IT leaders are turning to hybrid multicloud operations and are eager to find ways to manage the mixing of infrastructure. Findings from the ECI report indicate that 33% of respondents are using a mix of private and public cloud elements today and that 38% plan to use a hybrid multicloud deployment within one to three years.
“We are starting to find that customers don’t really want to step back from public cloud, but want to control workloads they have in the public cloud or in multiple public clouds,” said Boyden.
As The Forecast reported, IT professionals are eager to have tools for managing mixed infrastructure. These tools include open source or low-code tools to manage IT resources, but Gupta said this is moving beyond scaling up or down resources.
“IT teams want to see what’s coming, what’s around corners and what’s trending so they can adapt how they use resources in order to fit budgets or shaft cost strategies,” said Gupta.
He said Nutanix has built capabilities in its hybrid multicloud management software that enable FinOps, empowering teams to understand resource costs in real-time. It also learns and automatically alerts IT teams or can adjust to pre-set instructions.
As more companies rely on hybrid multicloud IT systems, Gupta said whole teams will need to work together and follow a cloud-smart strategy.
“The cloud is very important, but how do we go about being judicious about what workloads need to be in the cloud [and] what workloads could be in a different environment?,” he said, describing the cloud-smart mindset.
These different environments can include a data center, cloud or data systems at the edge.
“Cost governance is the right solution to this challenge,” he said. “It must be continuous and strategic without losing sight of current and future costs.”
FinOps Becoming Fundamental
The growing need for cost management in the hybrid multicloud is creating a situation in which FinOps is a necessary role in IT teams everywhere, explained Boyden.
“Running things in multiple places not only creates a financial challenge but also just an organizational and governance challenge,” he explained. “You’re logging into multiple different interfaces to see what the spend is in each environment and you’re trying to manually reconcile those, probably in an Excel spreadsheet or some kind of in-house solution that you’ve built.
This isn’t optimal.
“So that’s where FinOps, FinOps-as-a-service, and NCM cost governance come into play,” Boyden said.
FinOps as an internal, standalone process in an IT team is all about implementing and enforcing cost governance using only the resources available within the organization itself. The right FinOps and FinOps-as-a-service solutions centralize the management functionality and dashboard accessibility to one unified console so that operators can monitor important information through a single pane of glass. Having visible benchmarks and spending metrics is beneficial for both the sake of monitoring and managing costs as well as for taking the first steps toward starting a conversation about how to improve cost efficiency in the first place.
The capabilities of a cost governance platform, like NCM, that centralizes and unifies FinOps can make the difference between succeeding or failing to rein in costs, said Gupta.
“That’s the thesis behind cost governance,” he said. “Bring everything in one place so you can see where your dollars are being spent. Then once you see it, you can run analysis on it.”
This is the new path to making workload placement decisions that are cloud-smart and that ensure the organization is only ever spending what it needs to spend. Gupta said implementing FinOps and cost governance will be harnessing the advantages of the hybrid multicloud while also keeping enterprise spending in check.
Editor’s note: Test drive Nutanix's Cost Governance solution.
Ken Kaplan is Editor in Chief for The Forecast by Nutanix. Find him on X @kenekaplan.
Michael Brenner contributed to this story. He is a keynote speaker, author, and CEO of Marketing Insider Group. Michael has written hundreds of articles on sites such as Forbes, Entrepreneur Magazine, and The Guardian, and he speaks at dozens of leadership conferences each year covering topics such as marketing, leadership, technology, and business strategy.
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