2021 has been a banner year for venture capital (VC) funding, with $330 billion going to venture capital-backed US companies alone, numerous IPOs and sky-high valuations. But as the rush for funding subsided, tech layoffs became all too common. In May, job losses increased by 350% compared to April. June got little reprieve.
When faced with a bear market, the knee-jerk reaction of many companies is to look for places to cut. Office space, new hires, and workplace perks are often first on the chopping block. But businesses, especially tech companies that pride themselves on using technology to overcome challenges, can consider creative tech-enabled solutions to stay afloat during times of economic uncertainty. (Also read: How Digital Transformation Can Bring Resilience During Disruption.)
Cloud computing costs are expected to account for more than half of technology budgets by 2023. So Cloud FinOps could be the answer to making cuts without hurting people.
What is Cloud FinOps?
Cloud FinOps – short for “cloud financial operations” – is a guiding strategy that allows teams to be thoughtful and informed about where every dollar goes and what function it will serve.
Many organizations are embracing cloud functionality in the interest of digital transformation, rather than adopting it as part of a broader, targeted strategy for growth and efficiency. However, this approach is no longer tenable in the face of continued economic instability. Additionally, organizations waste millions of dollars on storage, CPU, RAM, and poor network configurations, and siled internal teams using the cloud without understanding its needs and spending in the rest of the business compounds the problem of overspending. (Also read: Break down silos with integrated data analytics platforms.)
That’s why every business, from multinationals to startups looking to survive another year, needs to invest in systematic and ongoing optimization programs that will guide their cloud usage. Cloud FinOps is such an optimization program.
How to implement Cloud FinOps
The first step to developing a concrete FinOps plan is to bring together a multidisciplinary group of finance professionals and developers who work together to distinguish the necessary and effective tactics for cloud financial efficiency.
Here are some tactics to include in an effective FinOps roadmap:
- Re-evaluation of AWS Regions.
- Consolidate network components whenever possible.
- Resizing instances.
- Clean up underutilized resources.
- Delete inactive load balancers (e.g. focus on specific goals and areas for improvement).
- Leverage engagement plans.
Resource over-provisioning – a standard practice for ensuring business continuity across platforms, improving performance and stability, and combating spikes in usage – also deserves close scrutiny.
By taking action on these issues, it will be easier for managers to achieve business-related goals without spending too much money on cloud features. (Also read: How can cloud computing save money?)
What if my cloud spend is already too high?
Skyrocketing cloud spending is rooted in the ultimate goals of minimizing infrastructure management, increasing efficiency, and enabling fast, scalable, and more cost-effective workflows. Ironically, many companies that have migrated to the cloud are feeling the pressure of compute spending more than ever.
Cloud FinOps lets you optimize cloud capabilities and curb rising costs.
Using the cloud is not like building a bridge or a skyscraper, where overspending adds value. It’s more about squeezing the cloud for all its juice.
At best, the cloud should lighten business burdens, not add to them. But like the clouds in the sky, the digital cloud is unpredictable and constantly changing. Without a good understanding of forecasting, the dynamic nature of the cloud can quickly generate unplanned costs and rain waste on any organization.
On the bright side, the right cloud solutions provide businesses with financial and resource savings they can rely on. By combining these solutions with a thorough and comprehensive FinOps plan, companies can save significantly in the cloud, allowing them to retain their most valuable assets: their dedicated and talented employees. (Also read: Smart HR: how AI is transforming talent acquisition.)