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6 FinOps Trends and Predictions for 2023

6 FinOps Trends and Predictions for 2023

Ghassan Zalaf
Ghassan Zalaf

NCS NEXT FinOps Lead

6 FinOps Trends and Predictions for 2023

The words ‘cloud cost optimisation’ may be enough to make any CFO and CIO’s heart skip a beat in a world where every organisation is using cloud, or in most cases, multiple clouds. Cloud promises to be more agile, accelerate scalability, improve productivity and achieve business goals, however, in reality it also presents many challenges, one of the most prominent of which is financial management and governance. To avoid experiencing bill shock and maximise your investment in cloud, it’s important to understand new trends in cloud consumption.
 
This blog presents our top 6 trends and predictions for FinOps in 2023 and explains why this framework is a must-have for enterprises that want to avoid unnecessary cloud sprawl.
 
1. FinOps to top cloud initiatives list again, for the 7th year running
 
The cloud has become a vital tool in many industries as companies continue to pursue digital transformation in an effort to improve reliability, modernise environments and support new work models.
 
Short for financial operations, FinOps is an operating framework designed to accelerate business value and drive financial accountability by increasing organisation’s ability to understand cloud costs and make smarter, result-based decisions. Far from being a buzzword, the fundamental premise behind FinOps is to help enterprises make the most optimal investment decision by bringing technology, finance and business together and embrace more economically efficient cloud models. 
 
As economic uncertainty continues to build and organisational cloud wastage exceeds 30%, cloud cost optimisation will present a quick win scenario to organisations who are looking to reduce costs, fund other critical initiatives such as security, and increase profitability.
2. Increased outsourcing of FinOps
 
Although FinOps is now practiced in every major industry and continues to proliferate across the world, there are still some challenges to overcome in the collective journey. One of them is scarcity of FinOps practitioners in most regions including Asia Pacific. According to the State of FinOps Report 2022, approximately 45% of FinOps practitioners reported earnings above $140,000. While this suggests that FinOps is a well-paid field, there are still challenges that organisations must deal with. For example, training someone internally incurs a cost and smaller organisations may find it difficult to justify hiring a dedicated FinOps practitioner. On the other hand, the role may only require several hours per week, so the business may not require a full-time position.
 
Alternatively, larger organisations can also find it difficult to hire multiple sources who can handle the complexity of the business model. Therefore, outsourcing the practice not only accelerates your FinOps journey as service providers have prior expertise and experience, but can also introduce high-quality talent at a lesser cost of hiring someone on a full-time basis.
 
3. Optimisation moving earlier in migration projects
 
Cloud migration strategies entail planning of how organisations can move their applications and data to cloud. However, migrations are delayed more often than not due to resourcing limitations, architectural challenges or the inability of legacy applications to operate on cloud-based infrastructure. 
 
Current industry-standard migration models and strategies include optimisation after workloads have been migrated, testing has been completed and production workloads are live. However, we recommend introducing governance and optimisation frameworks earlier in the process to help improve cost, performance and reduce waste, allowing your organisation to realise cost savings sooner.
4. Increased cloud cost accountability
 
Cloud wastage is becoming a critical issue for many organisations as cloud costs continue to rise. Organisations self-estimate as much as 32% of cloud consumption is wasted, with real wastage amounts likely to be higher. This can be attributed to a lack of accountability associated with cloud spend across different levels within an organisation, particularly in technical teams.
 
One of the main benefits of FinOps is that it helps create a common language by breaking down functional barriers between teams from executive level to middle management. In turn, we predict cost optimisation will become a more widely used KPI in performance bonuses as a consequence of increasing accountability and consciousness of cloud spend.
 
5. Technical upskilling of FinOps practitioners
 
Although one of the goals of FinOps is to bring together different teams within an organisation, one of the main challenges is to obtain FinOps buy-in from technical team members. For instance, understanding cost and utilization from a technical point of view helps organisations make sound decisions. This makes it difficult to identify modernisation and architectural change opportunities. Our prediction is that in 2023 there will be opportunities for FinOps practitioners to upskill technically to be able to better communicate with technical team members and provide more actionable and insightful recommendations to operational teams.
6. Sustainability linked to FinOps more widely
 
Organisations across industries are rapidly adopting the cloud to accelerate time to market, deliver new functionality and improve user experience. However, many are still concerned about the environmental impact of their use of the cloud. As new sustainability requirements are being introduced, cloud service providers are responding by increasing their carbon-neutral corporate goals to support these ‘green’ initiatives. The largest cloud service providers have committed to cut their carbon emissions through initiatives such as ‘re-100’ which aim to achieve 100% renewable energy by publicising their annual progress reports.
 
By utilising a FinOps framework, you’re able to reduce cloud by utilising industry best practices, increase cost avoidance and ultimately reducing your cloud footprint, which in turn reduces your carbon footprint. You could also reinvest savings from your FinOps activities towards other sustainable initiatives such as working towards a net zero emissions goal for your organisation.
 
Recap – Why FinOps?
 
FinOps entails six core principles that are designed to assist enterprises manage their cloud spend. These include:
 
  1. Team collaboration
  2. Everyone takes ownership of cloud usage
  3. A centralised team drives FinOps
  4. Accessible data and timely cost and usage reporting
  5. Business value of cloud drives decisions
  6. Taking advantage of the variance cost model of cloud
Does your organisation need FinOps?
 
Many organisations are not aware of the potential optimisation opportunity in their cloud environments. FinOps helps to identify these opportunities quickly, improve visibility into your cloud consumption and prevent unexpected increases in cost or usage using anomaly detection and increased visibility of consumption. 
 
If you wish to know more about how your organisation can benefit from FinOps or would like to discuss further, feel free to contact our FinOps Lead, Ghassan Zalaf, at finops@arq.group
 
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People & Purpose

Governance and compliance in the cloud – a mutual capability

Governance and compliance in the cloud – a mutual capability

Steve Mccormick

Steve Mccormick

Chief Architect
ARQ Group

Governance and compliance in the cloud – a mutual capability

In this blog we’ll explain the evolution of public cloud and why governance and compliance are crucial to your organisation’s cloud system.

The promise of public cloud was resilience, agility and business transformation – a tempting trinity. Everyone tried a little, often quietly and in isolation. Then there was a sudden explosion of public cloud use commercially as it was quick, easy and required no commitments. However, this led to many unexpected challenges when organisations established their public cloud environment.

Who would have thought that in less than 10 years that tempting promise had created a new type of technology debt…

The lack of education and awareness on public cloud left many organisations at the time with cloud sprawl, due to the absence of governance and strategy. In addition, the agility and democratisation of technology consumption led to weakened security postures, duplication of capability and the spawning of multiple points of truth as anyone could spin up a capability. Business transformation at its worst became a constant stream of directional changes and failures – fast or otherwise fail.

None of these challenges are industry, organisational size, or organisational model specific. They apply to cloud native businesses, just as they do 100-year-old traditional global service industries. Regardless of where a business came from or how it got to the cloud, the adoption of cloud governance and compliance is a mutual capability that must be sustainable.

But what is cloud governance and compliance?

Cloud governance is a set of rules and polices which guide how end users make use of cloud services. These policies enhance data security, minimize security risks, control costs and enable the smooth operation of cloud systems. Cloud governance is essential for all organizations with cloud systems, as it provides the scaffolding and frameworks to enable scale and derive ongoing success. Cloud governance also encompasses the activities of continuously monitoring and auditing the rules, policies and processes that control a business consumption of cloud resources. Governance should be part of the way you do cloud, not inspected into cloud.

So, what is cloud compliance if monitoring and auditing is already covered? Cloud compliance is ensuring that operation and use of data and applications in the cloud are guided by applicable laws, industry standards and regulations. Before organizations move data and applications into the cloud, they should consider what standards, laws and regulations need to be complied with. Cloud compliance can look very different in each industry, so we recommend all organizations allow sufficient time when setting up their cloud system to avoid costly mistakes for non-compliance.

There are a few key things to keep in mind when it comes to cloud governance and compliance:

  1. Make sure you have a clear understanding of the regulations that apply to your data.
  2. Put together a governance plan that outlines how you will ensure compliance with these regulations, as you build, not as an afterthought.
  3. Automate the governance of your cloud environment regularly to ensure that it remains compliant.
  4. Have a process in place for responding to any compliance issues that may arise and you have tested those processes.

By following these tips, you can make sure that your transition to the cloud is a smooth and compliant one.

In this blog, we will talk to four areas we feel are critical to the sustainable capability of cloud governance and compliance:

Financial Operations (FinOps):

FinOps is an evolving cloud financial management discipline. At its core is a cultural practice that spans cross functional teams in engineering, finance, product development and the business. It is a way for everyone to get maximum business value through team collaboration, ownership for spend in a predicable controlled manner.

Predictability is a key element of a successful cloud environment which involves more than reporting on spend or allocating costs. FinOps has a heavy focus on continual improvement, accurate forecasting and empowering teams to make the right investment decisions. Sometimes that decision is to reduce spend, other times its to increase investment but in both cases FinOps allows for a data driven decision.

Through focusing on FinOps when establishing your cloud environment, you can ensure your organization is spending each dollar in the most effective manner and avoid cloud sprawl and associated sticker shock. The approach should be iterative, starting small and growing in scale and scope as the complexity of cloud adoption warrants a more mature capability.

FinOps is a supporting capability within the framework of cloud governance and compliance ideally a centralised capability its key role in governance and compliance is the timely and accurate provision of data points for the organisation.

Security Operations (SecOps):

Another important aspect of cloud compliance is SecOps. SecOps involves the planning, implementation, and monitoring of security measures to protect data and systems. This drives the focus on reducing the time attackers have access to resources by detecting, responding to, and helping to recover from active attacks. This ability to rapidly respond and recover can reduce the ROI for attackers and hence the risk of attack as each time they are detected and evicted the cost to attack goes up. SecOps is most effective when organisation accept that it is a “when” not “if” world that we all operate in.

A common misconception is that security operations is management of technical platforms. SecOps is highly technical, but crucially it’s a discipline that needs to be instilled in people. Commodity attacks are generally fully automated, in the main can be addressed by tooling and are often there to disguise the actions of the live human attack operators. This is where a focus on empowerment of all people in your teams, using tooling to simplify their days and allow their skill, insight and resourcefulness to get ahead of the human attackers.

To bring this into the context of governance and compliance, SecOps with its ever-changing external challenges is a key driver for the iteration of policies, standards, controls and ways of work that help evolve cloud environment use. Whilst more active in the front line of operations SecOps is also a key provider of data points to the wider teams. Collaboration across teams is the only way to maintain a high security posture – the “lone wolf” security approach does not work.  

DevOps:

DevOps means different things to different people and organisations. A major cloud providers definition is “the combination of cultural philosophies, practices, and tools that increases an organization’s ability to deliver applications and services at high velocity: evolving and improving products at a faster pace than organizations using traditional software development and infrastructure management processes.”

Speed is not the only advantage of adoption of DevOps. In the context of governance and compliance the real benefit, if implemented well, is the increased rigour and quality that results from the adoption of these practices. Infrastructure as code, CI/CD and automated testing are just three of the guardrails that a DevOps culture uses to support embedded governance and compliance.

This is where the sustainability of cloud governance and compliance really hits the road. If the policies and standards can only be enforced and monitored manually then the cloud paradigm of agility and dynamism is lost. Try this over multiple public clouds and the problem will grow exponentially and become a blocker.

Dealing with this challenge means adopting DevOps holistically in a structured programmatic manner with comprehensive monitoring, testing, feedback mechanisms and programmatic remediation. This is not the place for a handful of scripts built by the latest developer, this is where a cohesive integrated tooling capability leads to success.

Evergreening:

One of the key approaches used by the major cloud vendors is to iterate the development of their service offers in line with demands and requests of the customer base. By regularly updating and enhancing their offerings, or by providing new features that keep users coming back, cloud providers can keep their customers happy and prolong the life of their products or services.

This can create a challenge for businesses consuming cloud services. The pace of innovation and service evolution from cloud vendors is hard to keep up with. This is especially true when organisation have taken their first steps of cloud adoption and are used to a slower pace of change measured more in years than in weeks.

You could choose to ignore the innovation but this comes at a cost – often missing out on operational improvements, feature and function enhancements and significant cost savings. AWS has 8 different types of S3 storage that have evolved from the original standard S3 first released. Selecting and moving to the right tier can shift the price point from $0.023 per GB to $0.00099 per GB. Operation of NAT capability became simpler with the introduction of managed NAT services, just as the introduction of Amazon EKS removed the complexity of management of Kubernetes clusters.

Evergreening your cloud environment and keeping pace with the innovation is a smart strategy for businesses that want to get the most out of their investment in the cloud.

In this short post we’ve highlighted that the agility and flexibility of cloud creates its strength and its challenges. All cloud environments have a shared responsibility model, and in all cases governance and compliance sit with the consumer. Cloud governance and cloud compliance are critical aspects of the transition to the cloud, its ongoing adoption and value.  By putting in place a cloud governance framework and compliance program, you can ensure that your organisations cloud system is safe, secure, and compliant.

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