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FinOps: Cost management in the cloud requires a new mindset

Cloud computing moves costs from CapEx to OpEx, which provides a better overview and the only expenses incurred are for the resources you use. An increasing share of technology budgets goes to cloud, with growth of up to 25% annually. However, the dynamic settlement requires strict management and the right approach to budgets and expenditure.

​You have to think differently when it comes to economics and costs in the cloud. Because, where the cloud is an excellent catalyst for innovation due to its flexibility, it is not necessarily cheaper - if you are not aware of how to control costs and the use of resources.

Visualize the expenses

In the cloud, the cost of resource consumption can easily be visualized and broken down into individual activities. Several tools, such as the tagging feature of Azure's Cost Management dashboard, make it very clear what you spend on each application. Other tools like APPTIO can automate data collection and make recommendations based on intelligent optimization that can reduce annual cloud costs by over 20%. Azure Budget makes it possible to allocate a fixed amount of money to each application and set alarms if the limits are exceeded. These features provide a good starting point for a dialogue about whether your IT budget is being used appropriately.

You build it, you own it, you pay for it

Because each expense can be linked to individual activities, the costs become palpable for both the business and IT. This also means that decisions concerning cost and price will naturally reside with the business, which at the same time delivers the necessary budget. This makes it easier to assess whether the application is worth the expense. It will also be easier to optimize resource consumption and predict future needs so that the focus can be shifted from operation to innovation. This approach adds more freedom to develop and launch the things that make sense, but it also requires greater accountability and tight control of how the applications are built and what resources are used.

Optimize the applications to cloud

Due to the flexible settlement in the cloud, the people who work with the infrastructure also have to pay attention to the expenses. It is extremely important that the designs of the applications are suitable for the cloud if the expenses are not to run wild. For example, if you use auto-scaling for a PaaS-SQL application where you pay for each transaction, you can quickly shatter a business case if it makes too many calls per activation.

In other words, it is about making choices carefully and, among other things, making sure that when the sun goes down, you switch off services you only use during the day. Conversely, if you commit yourself to a fixed amount of resources several years into the future, you can save up to 70%. Here, discussions with an experienced partner can be an indispensable aid in choosing the right solution and negotiating the optimal price.

Do you want to know more about FinOps?

Contact Jesper Bagh, Director, Cloud Innovation Services, NNIT, jbc@nnit.com

 

 

Jesper Bagh+45 3079 5968jbc@nnit.com ​​Head of Cloud Service Developmenthttps://www.linkedin.com/in/jesperbagh/Jesper Bagh