Financial operations: a new managed service potential?
For the past decade, developers have been given free rein to consume cloud resources. Still, as more organizations encounter economic headwinds, a larger percentage are embracing financial operations (FinOps) to rein in those costs. Mixed results from this are creating an opportunity for managed service providers (MSPs).
FinOps, at its core, is about taking a more disciplined approach to managing cloud costs that involves much higher levels of collaboration between senior IT and finance leaders.
FinOps adoption rate
A survey of 500 executives, engineers, and developers at companies with over 5,000 employees in the US, Canada, United Kingdom, and Australia regions was conducted by Wakefield Research on behalf of CloudBolt Software, a provider of a platform for managing distributed computing environments. The survey finds that 98 percent of respondents work for organizations with a formal FinOps team (82 percent) or are actively considering adding one (16 percent). More than half of existing FinOps teams (54 percent) were formed 12 months ago or less, the survey finds.
The trouble is that only one in 500 respondents claimed to achieve any material value from FinOps. Over three-quarters of respondents (76 percent) said they must wait two to three years to see real FinOps-driven results.
A total of 45 percent also question FinOps’ efficacy in the real world. Specifically, 15 percent flag FinOps as being “theoretically easy but harder in practice,” with another 13 percent regarding it as “much ado about nothing.” Another 10 percent said it is “nothing more than a suggested framework,” while 7 percent label FinOps as “a necessary evil.”
FinOps – the silver bullet?
Despite some skepticism, 89 percent also described FinOps as the silver bullet for reining in the complexity of cloud cost management, with 68 percent noting that FinOps is among their organization’s most strategic priorities for 2023. The average size of a FinOps team is now 4.1 people, with the “Director-level” being the senior-most leader on the team 53 percent of the time, the survey notes.
A total of 71 percent noted that achieving this year’s IT goals without a FinOps practice would pose a significant challenge, with 74 percent reporting that FinOps is now on a par with ITOps, DevOps, SecOps, and other IT disciplines.
In addition, 71 percent of respondents said funding for FinOps initiatives increased in 2023, with 58 percent reporting key performance indicators (KPIs) and metrics to the C-Suite or Board of Directors.
Organizations can lean on MSPs for managed FinOps
Clearly, when it comes to FinOps, organizations are conflicted. In the face of economic headwinds, there is naturally a lot more interest in reining in IT costs. However, after not exercising much control, it’s clear that organizations will need the expertise that most MSPs already have. The need for managed FinOps services is fairly apparent.
For years, developers have been provisioning cloud infrastructure resources with little to no oversight. Unfortunately, developers are prone to leaving the proverbial lights on by, for example, leaving application development environments running over the weekend or simply forgetting that a virtual machine has been left to run for weeks, sometimes months.
Developers could be better at alerting IT leaders when there might be a spike in consumption due to, for example, a data-intensive workload being constructed. No finance team likes to be surprised by a monthly bill for a cloud service that is twice as much as the previous month.
These issues have led more organizations to at least conceptually embrace FinOps. The issue is that many have forgotten core cost control fundamentals and now need to rely on MSPs to learn all over again.
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