FinOps

Optimizing Spend in the CloudThree Levels of Optimizing Spend in the Cloud — from Aware to Mature to Fluent

Where is your organization on the cloud spend optimization maturity curve? See how to move to the next level of cloud savings.

As organizations migrate to the cloud, they go through stages of maturity in how they leverage cloud platforms — from cloud aware to cloud mature to cloud fluent. For example, companies just starting out with lift-and-shift migrations are cloud aware, while cloud-mature companies are re-architecting for the cloud.

The most cloud-fluent organizations have cost savings techniques that are more advanced, proactive, and align themselves with a functioning FinOps model. They establish a Cloud Center of Excellence (CCoE) to institutionalize optimizations. Cloud usage is also officially tracked as a function of business revenue.

Cloud-aware organizations should gain a better understanding of the three levels — and then consider what levers they can pull to advance their organization’s cloud maturity and fluency.

 

Cloud-aware organizations

These companies engage in lifting-and-shifting applications to the cloud before significantly modernizing them. They still anchor practices and processes in traditional data center thinking.

When it comes to cost savings, they focus on:

  • Reducing the price per compute resources, such as right-sizing server instances to eliminate the overprovisioning that is typical of on-premises resources.
  • Actively negotiate discounted pricing through reserved instances, spot instances, savings plans and enterprise discount programs.

By committing to specific consumption levels, cloud-aware companies obtain sizable cost discounts. These active steps typically optimize costs for companies moving to the cloud for the first time.

However, more cloud-savvy or cloud-native companies take more advanced steps to actively optimize costs.

 

Cloud-mature organizations

These companies are actively demonstrating cloud competence, either by being born in the cloud with cloud-native technologies or by migrating to operate in the cloud before embracing cloud-native technologies to leverage the full cloud potential.

For cost savings, cloud-mature companies may focus on:

  • Re-platforming or re-architecting applications to improve reliability, scalability, innovation and savings, such as leveraging serverless components like Lambda functions and API Gateway for sporadic API workloads.
  • Replace message brokers with SQS, or swap event processing for Lambda functions triggered by specific events.
  • Actively configure autoscaling to match supply with demand.
  • Automated policies that eliminate spend, by deleting or suspending resources that haven’t been used for a while.
  • Employ automation to create just-in-time environments that are only used when needed, such as for testing specific application features.
  • Create budgets per business unit and per stage in the application lifecycle that are enforced automatically. Business units are restricted from exceeding pre-assigned budgets.
  • Use a container-based architecture to reduce spend by maximizing the number of containers running on a single host.

These scenarios offer opportunities to reduce costs because resource utilization is maximized, and the company is paying only for the resources it needs.

However, companies that are cloud fluent can employ FinOps models, closely aligning resource allocation to business needs. Together, these can minimize cloud expenditure through optimized utilization by officially tracking cloud usage as a function of business revenue.

 

Cloud-fluent organizations

These companies have a high level of competence in the cloud. They’ve been operating in the cloud for an extended time and are fully maximizing its potential.

To reduce cloud spend, cloud-fluent companies employ advanced cost-saving methods and proactively adhere to a functional FinOps model. Mapping cloud spend to business value is an effective technique in the FinOps operating model. This allows businesses to track the ROI of cloud expenses and make informed business decisions, such as discontinuing a new product because revenue is declining as the cloud spend drastically increases. Cost visibility dashboards provide the information needed to make these types of business decisions for optimizing both cloud infrastructure costs and overall business value.

As organizations progress on their cloud journey, they have many opportunities for optimizing costs and increasing business value by evolving their architecture, processes and governance to take full advantage of cloud flexibility and scalability.

 

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About the Authors

Itari Ighoroje

Chief Architect

Itari Ighoroje

Itari is a Chief Architect at Rackspace. A long time Racker with over 20 years' experience in Applications and Strategy across various business domains. He is well rounded with experience in delivery, product and sales. Extremely customer obsessed and passionate about problem solving, Itari brings a unique practical approach to addressing customer needs.

Read more about Itari Ighoroje