Cloud computing has changed the way companies develop and distribute digital services. It provides flexibility, fast deployment and access to technology that was previously available only to the largest companies. However, now many CFOs are confronted by a new dilemma: Despite the money invested into the cloud, the costs associated with the cloud have only continued to increase.
The main issue is not the use of the cloud itself, rather lack of financial governance.
Visibility is Key to Cost Control
One cannot control something he cannot see. In a lot of organizations, the process of provisioning cloud resources is spread over several teams, making it difficult to pinpoint which resources generate costs and whether they still generate value.
If there is an understanding of the cloud spendings, finance and technical management will manage to detect unused resources, duplicate resources and workloads that no longer support their expenses. Otherwise, cost-saving efforts will have a reactive nature and may disrupt the flow of business processes.
Finance and Technology Should Work with Each Other
There is a perception that it is only IT that is responsible for the management of cloud costs. However, effective management of these expenses is a task requiring cooperation of finance, technology, procurement departments and top management. This is where FinOps – the practice of combining financial responsibility with cloud operations – has proved to be extremely useful.
Instead of cutting costs, the goal of FinOps is to ensure that companies make sound investments into the cloud and reap the benefits. This approach emphasizes the importance of financial management instead of cost cutting.
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Focus on Value instead of Cost Saving
It is important to understand that the effort made to reduce cloud cost should not interfere with innovation and the way customers feel about the services. A service that seems expensive may actually bring revenues or be a part of a major function of the business. The right question is not “What is the cost of the service?” but rather “What benefit does the service supply?
”CFOs who view the matter this way will better understand how to invest money.
