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Tag: FinOps

How to Optimize Data Platforms for Ultimate Efficiency

Data is the lifeblood of modern business. Nearly everything we interact with in our digital lives involves data management in some form. And large companies often deal with many unoptimized data-related operations, such as inefficient queries, un-optimized data workloads or large ungoverned data lakes.

I recently chatted with Capital One Software’s VP & Head of Slingshot Engineering, Salim Syed, on optimizing data operations to maximize efficiency. Below, we’ll consider how data management changes when migrating to the cloud and review some actionable ways technical leaders can direct more efficient DataOps.

Transitioning to Cloud-First Thinking

Arguably, the first and highest hurdle to overcome when optimizing data operations is transitioning from an older, on-premises way of thinking about data management to a newer, cloud-first model, Syed explained, because the two paradigms couldn’t be any more different.

Simply replicating on-premises behaviors could be bad for managing databases in the cloud because it enables unlimited power compared to on-premises computing. “When you go to the cloud, the shackles break,” said Syed. Cloud technologies allow for infinite scalability, but such power comes with a significantly higher degree of responsibility.

Another potential holdover is the organizational structure. Having a centralized team oversee a lot of controls could end up stifling innovation, he said. Yet, federating too many platform teams could have a siloing effect. Therefore, he recommended defining policies and regulations centrally and making them easy to enact with self-service tooling.

Ways to Optimize DataOps For Efficiency

Capital One was an early mover to the cloud. Syed explained that Capital One started its tech transformation journey in 2012 and exited its last data centers in 2020. It’s no surprise that, as a cloud-based digital financial company, they deal with extremely large amounts of data. For example, thousands of analysts rely on financial data and other sources to generate their insights.

Therefore, the company must constantly balance empowerment with operational efficiency for interacting with large quantities of data, Syed said. With this background, he shared some tips they’ve been using to enhance efficiencies within their data-based operations.

Avoid Inefficient Queries

Database queries used to have a minimal impact on resource consumption when you owned your infrastructure. But this all changes in the cloud era. For instance, poorly written, inefficient queries programmed to scan billions of rows could result in unnecessary computing effort and high cloud spending. Therefore, designing queries with smarter ranges can help avoid waste.

Syed shared that, at Capital One, his team has developed a query advisor that can look at prior patterns and give recommendations, such as fixing the range, joining queries or reducing the number of rows. By examining past query patterns and looking at the related metadata, the system can advise better-constructed queries that improve efficiency.

Optimize the Datasets

In addition to optimizing queries, database engineers should keep an eye on optimizing the datasets themselves. Because how you structure your tables and the data model itself is even more critical in the cloud world, said Syed.

Furthermore, the access pattern should be given forethought. Although some scenarios require real-time processing, it can be costly and isn’t always necessary. Therefore, Syed recommended understanding your access pattern for loading data and its associated cost implications.

Have a Data Retention Strategy

Next, it’s easy to let data accumulate over time. But, having a ‘set it and forget it’ policy for data is not a wise strategy for the cloud. Instead of letting petabytes of information accrue and produce excessive storage fees, it’s best to prune your data lakes where possible so they aren’t retained indefinitely, said Syed, and set policies for storage retention and deletion timelines upfront.

Monitor For Inefficiencies

A certain degree of inefficiencies with data operations will be inevitable, acknowledged Syed. For instance, this may be an instance accidentally left running or provisioning large clusters to do basic functions. Nevertheless, there are certain actions engineers can take to remediate inefficiencies as they arise. Part of this is identifying inefficiencies in real-time and correlating them to actionable changes. He encourages leaders to create learning opportunities out of these events and to spread internal knowledge.

Match the Technology to the Use Case At Hand

Lastly, and perhaps most importantly, are you using the right technology for the use case at hand? There are many types of database styles to choose from these days, from relational databases like MySQL or PostgreSQL to non-relational databases like NoSQL or MongoDB. Matching the right data technology to the use case at hand will be an important step toward improving efficiency.

Furthermore, Syed recommended right-sizing the compute for the workload as well. For instance, for his team at Capital One, Syed explained that the policy is not to have large-size computing in lower-level environments, as you shouldn’t need to process a lot of data there.

Smart DataOps Aids FinOps Objectives

The above strategies could be adopted to avoid wasted resources. Moreover, these tactics to optimize data processes could also aid FinOps, which seeks to optimize operations to reduce IT expenses. But reviewing data efficiencies should be done often—you have to be vigilant as new workloads are introduced, Syed cautioned.

Image source: joshua-sortino-LqKhnDzSF-8-unsplash.jpg

November 3, 2023
Survey Surfaces Benefits of Applying AI to FinOps

A survey of 200 enterprise IT decision-makers published this week found organizations that have infused artificial intelligence (AI) into financial operations (FinOps) workflows to reduce IT costs are 53% more likely to report cost savings of more than 20%.

Conducted by the market research firm Foundry on behalf of Tangoe, a provider of tools for managing IT and telecommunications expenses, the survey found organizations that embraced FinOps without any AI capabilities averaged less than 10% in cost savings.

The top three drivers for adopting FinOps/cloud cost management programs are the need to increase cloud resource production and performance (70%), reduce budgets (60%) and rising costs (58%), and simpler overall program management (50%), the survey found. Major benefits included productivity savings (46%), cost savings (43%) and reduced security risks (43%). Nearly two-thirds of respondents cited service utilization and right-sizing of services as another reason to embrace FinOps.

FinOps describes a methodology for embedding programmatic controls within DevOps workflows to reduce costs. In the face of increased economic headwinds, IT leaders are looking to reduce cloud computing costs, but it’s turning out to be more challenging than many of them anticipated. Cloud infrastructure is typically provisioned by developers using infrastructure-as-code (IaC) tools with little to no supervision. The reason for this is developers have long argued that waiting for an IT team to provision cloud infrastructure took too long. Developers would be more productive if they just provisioned cloud infrastructure themselves.

However, after ten years of cloud computing, it’s become apparent there are a lot of wasted cloud infrastructure resources. Developers who don’t pay the monthly bills for cloud services tend to view available infrastructure resources as essentially infinite. It’s usually not until someone from the finance department starts raising cost concerns that developers even become aware there might be an issue.

The challenge is that adopting FinOps best practices is not quite as easy as it might seem. In fact, more than half (54%) of survey respondents cited challenges in building the right process and human support systems for FinOps into workflows that have been in place for years.

Chris Ortbals, chief product officer for Tangoe, said the simplest path to FinOps is to rely on a software-as-a-service (SaaS) platform designed from the ground up to leverage AI to help IT teams manage cloud computing and telecommunications expenses both before and after applications are deployed. Each DevOps team will ultimately need to determine how much they will implement metrics to foster more efficient consumption of cloud computing resources. The more aware of those costs DevOps teams are, the more likely that better decisions about what types of workloads should be run where and, just as importantly in the age of the cloud, at what time, given all the pricing options provided.

Developers, of course, tend to jealously guard their prerogatives. Convincing them to give up their ability to provision cloud infrastructure on demand is going to be a challenge, at least until someone makes it plain how much all those cloud instances wind up costing the organization each and every month.

October 19, 2023
Why Multi-Cloud Cost Optimization is Harder Than it Looks

If your business is like most businesses that use the cloud today, you’ve gone multi-cloud. Nine out of 10 large companies have already adopted multiple clouds, and IT analysts expect that even more businesses will embrace multi-cloud architectures over the next several years. Now, the challenge facing those companies is how to optimize spending across multiple clouds. Many will find that, despite common narratives suggesting that cost savings are an inherent benefit of multi-cloud architectures, reducing spending when using multiple clouds can be a lot harder than it looks.

This is, fortunately, a challenge that can be conquered easily enough. Keep reading for tips on updating your cloud cost optimization strategy to support multiple clouds.

Multiple Clouds Don’t Guarantee Reduced Cloud Cost

Before diving into strategies for reducing spending when using multiple clouds, let me dispel a common myth about the relationship between multi-cloud architectures and spending.

Contrary to popular belief, using multiple clouds doesn’t guarantee that your business will spend less overall in the cloud, or even make it very easy to do so. Although advocates of multi-cloud strategies often promote the idea that using multiple clouds makes it simpler to find the most cost-effective cloud services because you have a larger menu of offerings to choose from, the reality is that cost-saving is not a common outcome of going multi-cloud.

Sure, in theory, having multiple clouds does give you more opportunities to reduce costs. But in actuality, migrating workloads between clouds typically takes significant time and effort. Given that most mainstream cloud services–like VM hosting and object storage–have been commoditized to the point that there are rarely major pricing differences between them, few businesses are actually going to migrate workloads back and forth between clouds on a frequent basis in order to save a few dollars.

To Reduce Multi-Cloud Spending, Focus on Cloud Provider Relationships, not Workloads

That said, adopting a multi-cloud strategy does place you in a position to reduce overall spending–but it’s not because you can migrate workloads between clouds. It’s because you can leverage relationships with multiple cloud providers to negotiate pricing reductions.

If your teams are actively using multiple clouds, you have a strong ability to negotiate enterprise pricing deals with the providers of each of those clouds. Each provider that you work with will be eager to earn as much of your business as possible, and if they know that your company is already also using a competitor’s platform, they’ll probably be more forthcoming with discounts in exchange for a commitment on your part to run more of your workloads on their cloud.

How to Keep Multi-Cloud Cost-Efficient – but Also Flexible

The caveat is that if you want to retain the flexibility that a multi-cloud architecture nominally provides, it’s important not to over-commit to any single cloud provider. If you do, you may find yourself locked into one cloud for certain workloads due to pricing discounts that you’ve negotiated for those workloads with that cloud provider.

An effective approach for finding the right balance between pricing discounts and flexibility is to decide which percentage of your overall cloud spending you want to avoid tying to a particular cloud. For example, you might decide that it makes sense to commit 30% of your spending to one cloud provider and 30% to another in exchange for pricing discounts that negotiate with each provider. But the remaining 40% of your cloud spending won’t be linked to enterprise agreements with cloud providers, so you’ll be free to spend it in whichever cloud you like.

Maintain Workload Portability to Minimize Multi-Cloud Spending

As you work to optimize multi-cloud spending, strive to adopt portable workload technologies, like containers in place of ones that are harder to migrate between clouds, like VMs.

This is important not just because portable technologies help to maximize the flexibility of your multi-cloud strategy, but also because they give you more leverage when negotiating with cloud providers. The providers realize that some types of workloads are harder to migrate than others, and they’re less likely to offer serious pricing discounts if they know it’s going to be very difficult for you to move your workloads to a competitor.

But if you can say, “70% of what we deploy runs in Kubernetes and can migrate from your managed Kubernetes environment to your competitor’s offering next week,” you’re in a much stronger negotiating position.

Conclusion

In short, don’t assume that simply adopting a multi-cloud architecture will yield enormous cost savings just because you can easily move workloads from one cloud to another to take advantage of pricing differences. In most cases, you can’t.

What you can do, however, is leverage your relationships with competing cloud providers to negotiate discounted enterprise pricing agreements. And the more portable your workloads are, the better able you’ll be to obtain serious cost savings while simultaneously enjoying the flexibility and agility that multi-cloud architectures stand to offer.

August 18, 2023
Complete Guide to AWS Savings Plans
AWS Savings Plans are a flexible and cost-effective way to save on your Amazon Web Services (AWS) usage. These plans allow you to commit to a specific amount of compute capacity over a one- or three-year term in exchange for a significant discount on your AWS usage. Savings plans can help you reduce your AWS bill by up to 72%, depending on the type of plan and your level of commitment.

Why Do You Need AWS Savings Plans?

With the growing reliance on cloud infrastructure in modern IT, it is crucial for organizations to optimize cloud computing costs without compromising on performance or scalability. AWS Savings Plans address this need by providing a flexible and cost-effective solution that allows you to commit to a certain level of usage at a discounted rate.

With AWS Savings Plans, by committing to a specific amount of compute capacity over a set time period, you can save up to 72% on your AWS usage. This can result in significant cost savings for your organization, freeing up resources to invest in other business-critical initiatives.

Another benefit of AWS Savings Plans is the flexibility they offer. Unlike Reserved Instances, which require you to specify instance type, operating system and region, Savings Plans are more flexible and can be applied across different instance types, regions and operating systems. This flexibility makes it easier for you to optimize your cloud computing costs while still meeting your business needs.

Difference Between AWS Savings Plans and Reserved Instances

AWS Savings Plans and Reserved Instances are both designed to help you save on your AWS usage, but they offer different levels of flexibility and cost savings.

Reserved Instances require you to commit to a specific instance type, operating system and region for a one- or three-year term in exchange for a discount on your AWS usage. While this can result in significant cost savings, it also limits your ability to optimize your cloud computing costs based on changing business needs.

AWS Savings Plans offer a more flexible solution that allows you to commit to a certain level of usage across different instance types, regions and operating systems. Additionally, in most scenarios, Savings Plans can provide a higher level of cost savings compared to Reserved Instances.

Types of AWS Savings Plans

There are two types of AWS Savings Plans: Compute Savings Plans and EC2 Instance Savings Plans.

Compute Savings Plans

Compute Savings Plans are the most flexible type of Savings Plans, providing a significant discount on your AWS usage across any instance type, region or operating system. This flexibility makes it easy for you to optimize your cloud computing costs based on your changing business needs.

Compute Savings Plans offer a discount of up to 66% compared to on-demand pricing, depending on the level of commitment you make. They can be used across all AWS services that are powered by Amazon EC2 instances, including Amazon EMR, AWS Lambda and Amazon ECS.

EC2 Instance Savings Plans

EC2 Instance Savings Plans are a more specific type of Savings Plan, offering a discount on your AWS usage for a specific instance type within a region. These plans provide a higher level of cost savings compared to Compute Savings Plans, with discounts of up to 72%.

EC2 Instance Savings Plans are ideal for organizations that have a predictable workload and require specific instance types within a region. However, they offer less flexibility than Compute Savings Plans, as they cannot be applied across different instance types, regions or operating systems.

AWS Savings Plans Pricing Models

AWS Savings Plans offer three different payment options to suit your organization’s budget and commitment level: All Upfront, Partial Upfront and No Upfront.

All Upfront

With the All Upfront payment option, you pay for the entire term of your Savings Plan upfront, resulting in the highest discount compared to on-demand pricing. This option is ideal for organizations that have the budget available to make a significant upfront payment in exchange for maximum cost savings.

Partial Upfront

The Partial Upfront payment option allows you to pay a portion of your Savings Plan upfront and the remaining balance on a monthly basis. This option provides a balance between upfront commitment and ongoing flexibility, with a lower discount compared to the All Upfront option.

No Upfront

With the No Upfront payment option, you pay for your Savings Plan on a monthly basis, with no upfront payment required. This option provides the lowest discount compared to on-demand pricing but offers the greatest flexibility for organizations with limited budgets or uncertain future usage requirements.

How to Monitor and Manage AWS Savings Plans

Monitoring and managing your AWS Savings Plans, as part of your overall cloud operations strategy, is critical to ensuring that you are optimizing your cloud computing costs and maximizing your savings. AWS provides several tools and services to help you monitor and manage your Savings Plans effectively:
- AWS Cost Explorer: A powerful tool that allows you to analyze your Savings Plans usage and costs, helping you identify opportunities to optimize your cloud computing costs. With Cost Explorer, you can view your Savings Plans coverage, utilization and savings, as well as forecast your future usage and costs.
- AWS Budgets: This service allows you to set custom cost and usage budgets for your organization, helping you track your Savings Plans usage and ensure that you are staying within your budget.
- Savings Plans Recommendations: This feature analyzes your past usage and recommends the optimal Savings Plans for your organization. It can help you make informed decisions about which Savings Plans to purchase and how much commitment to make.
Conclusion

AWS Savings Plans are an excellent solution for organizations looking to optimize their cloud computing costs and save on their AWS usage. With their flexibility, cost savings and easy monitoring and management options, AWS Savings Plans are a valuable tool for any organization using AWS services.

To unlock the full potential of AWS Savings Plans, it’s crucial to understand the different types of plans, their pricing models and how to effectively monitor and manage your usage. By doing so, you can maximize your savings and ensure that your organization is getting the most out of its investment in AWS.
July 21, 2023
FinOps Gaining Ground, But Progress is Slow

A CloudBolt Software survey found that while the majority (98%) of respondents worked for organizations with a formal FinOps team (82%) or are actively considering adding one (16%), realizing value from FinOps is slow. More than half of existing FinOps teams (54%) were formed just 12 months ago or less, the survey also found.

The trouble is, only one in of 500 respondents claimed to achieve any material value from FinOps to date. More than three-quarters of respondents (76%) said they will have to wait two to three years to see real FinOps-driven results.

The survey polled 500 executives, engineers and developers at companies with over 5,000 employees in the U.S., Canada, United Kingdom and Australia. It was conducted by Wakefield Research on behalf of CloudBolt Software, a provider of a platform for managing distributed computing environments.

A total of 45% of respondents also questioned FinOps efficacy in the real world. Specifically, 15% flagged FinOps as being “theoretically easy but harder in practice,” with another 13% regarding it as “much ado about nothing.” Another 10% said it is “nothing more than a suggested framework,” while 7% labeled FinOps as “a necessary evil.”

Nevertheless, a full 89% also described FinOps as the silver bullet for reining in the complexity of cloud cost management, with 68% 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% of the time, the survey noted.

A total of 71% noted that achieving this year’s IT goals without a FinOps practice would pose a significant challenge, with 74% reporting that FinOps is now on par with ITOps, DevOps, SecOps and other IT disciplines.

In addition, 71% of respondents said funding for FinOps initiatives increased in 2023, with 58% reporting key performance indicators (KPIs) and metrics to the C-suite or board of directors.

CloudBolt Software CTO Kyle Campos said it’s clear that when it comes to reining in costs, large enterprises are struggling to effectively manage IT across multiple silos. In many cases, organizations were investing heavily in IT before and during the COVID-19 pandemic to drive digital business transformation initiatives without many cost controls being put in place, he added.

Now that organizations are encountering economic headwinds, many chief financial officers are now asking IT leaders to be a lot more efficient, noted Campos.

Developers, in particular, have for years 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 a weekend or simply forgetting that a virtual machine has been left to run for weeks—sometimes even months.

Developers are also not especially good at alerting IT leaders of possible spikes 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.

The one thing that is certain is that time is of the essence. FinOps, at its core, may not necessarily be a new idea, but IT organizations that fail to practice it may soon find themselves being held more accountable than any time in recent memory.

July 5, 2023
FinOps Foundation’s FOCUS Aims to Standardize Cloud Billing

Cloud spending is on the rise. As organizations shift more applications to the cloud, there is a growing need to optimize workloads and reduce spending when possible. But a lack of visibility into complex cloud bills often impedes these goals. This is compounded by a lack of data standardization across the multi-cloud landscape, with cloud vendors producing lengthy billing reports in various formats. With things so decentralized, FinOps practitioners often struggle to make sense of it all.

FinOps Open Cost & Usage Specification (FOCUS) is set to change this status quo. FOCUS, an initiative sponsored by the FinOps Foundation, a Linux Foundation technical project, aims to create a standard, vendor-neutral specification for cloud cost, usage and billing data. A common schema for cloud billing should help unify cost data across cloud vendors and greatly aid FinOps objectives in areas like allocation, chargeback, budgeting and forecasting.

I recently met with Udam Dewaraja, FOCUS lead at FinOps Foundation, to understand the context that led to creating the specification. Below, we’ll dive a little deeper into FOCUS, examining the details of the proposed specification and considering what benefits it will bring to cloud consumers and cloud service providers (CSPs).

Why the Cloud Needs a Common Billing Schema

The complexities of today’s cloud services can often create headaches around cloud billing. For instance, AWS alone has hundreds of services and potentially thousands of SKUs. Cloud service providers each have their own data formats and terminologies, which are reflected differently in detailed bills. And with the granularity of cloud metering, enterprises could be staring at hundreds of millions of rows of cost data. Now, extrapolate that across multiple cloud service providers, SaaS and APIs, and you can see the dilemma that the modern CFO faces.

“There are many nuances that FinOps practitioners need to understand,” said Dewaraja. “And a lack of a common definition can be a scalability challenge as you add more things.”

It’s relatively easy to spend money on more and more cloud-based consumption models. As Dewaraja said, “Everyone has the company credit card.” Of course, you can use tools like AWS Cost Explorer, Cloudability or Datadog to garner some insights to reduce spending. But to really get the fuller picture, you need to rationalize cost metrics across many areas. Plus, in 2023, The State of FinOps report found the widest variety of cloud cost management tools in use in the history of the report, indicating tooling sprawl.

Overview of FinOps Foundation

First, for those unfamiliar, the FinOps Foundation is a Linux Foundation-supported group that aims to help practitioners understand the discipline of FinOps. Representing a community of over ten thousand FinOps practitioners, the FinOps Foundation routinely shares best practices and oversees a FinOps framework. “FinOps is more of a cultural practice that should be adopted,” explained Dewaraja. As such, the initiative aims to oversee training, meetups and events and encourage executive buy-in around the FinOps concept.

Understanding the FOCUS Specification

So, what exactly does FOCUS entail? Well, FOCUS is an open source royalty-free specification for cloud billing data. It will provide standard dimensions, attributes, and terminologies for cloud billing data sets. To formalize the specification, the project contributors are actively considering the essential FinOps capabilities and what requirements these cloud bill data sets have in common.

The specification itself has yet to be officially released and is still being formalized at the time of writing. Microsoft and Google have joined the initiative, as well as numerous cloud finance and cost analysis vendors. And while the group waits for additional CSPs to join, the community is building out open source validators and converters, said Dewaraja.

Benefits of a Standard Cloud Billing Spec

Cost management solutions are already available, but what’s not readily available is a method to make business decisions based on broader richer datasets, explained Dewaraja. This is where standardized cloud billing can greatly aid efforts by creating a more holistic picture.

Specifically, this can aid objectives like allocation, chargeback, budgeting, and forecasting. Doing so is often an incremental process, explained Dewaraja—as you gather insights into data, you iteratively use this visibility to make improvements over time.

Some other benefits of adopting FOCUS will likely be:

Putting finance in engineering terms. In the cloud, finance is quite dynamic. And interestingly, the FinOps discipline is becoming engineering’s responsibility as part of the shift left approach, said Dewaraja. Engineers now need to understand this problem and how to architect their solutions cost-effectively. As such, bringing specifications into the mix will help put financial responsibility squarely on the shoulders of engineering terms.

Bringing accountability to cloud consumption. A standard specification should empower essential FinOps capabilities that rely on usage segmentation like internal cost reporting, showback and chargeback. Because if invoices are just one big pie, there is no accountability for individual departments, and you can’t drive the behaviors you need, said Dewaraja.

Win-win for practitioners and cloud vendors. With FOCUS, cloud providers will drive more trust in cost data, providing more visibility. And corporations using the cloud can make their adoption more efficient, likely influencing them to bring on more workloads. “Driving trust and understanding of this cloud data is mutually beneficial,” Dewaraja said.

FOCUS Set to Improve FinOps

Dewaraja, who previously spearheaded FinOps practices at Citigroup, knows all too well the strains of managing disparate cloud billing data. He oversaw a broad, dynamic cloud-native platform of distributed cloud and SaaS and sought to embrace platform engineering principles. In this environment, you need a holistic cost picture that associates various expenses to make the right calls, he said. “You really see success if you can plug this into the workflows of those developers and into business processes themselves,” he said.

Theoretically, FOCUS could deliver on these goals. But although the project is gathering momentum, it’s still in an early stage. For the standard to gain a foothold, it will require greater awareness and more contribution from other CSPs. The specification is community-driven but is being led from the practitioner down, adopting corporate contribution licenses instead of individual developer contributions. Thus, cloud vendors and cost management vendors will likely lead the initial charge.

FOCUS looks great in the long run but will require a little bit of work upfront to get folks on board. That said, it should be on the radar for 2024 roadmaps, said Dewaraja. To learn more about FOCUS and how to contribute, software providers should check out the FinOps Foundation materials.

May 25, 2023
Survey: Much Greater Focus on Reining in IT Costs

A survey from Vega Cloud found 62% of respondents are more closely monitoring all IT costs, with more than half (52%) more closely evaluating their cloud service provider options.

The survey polled 100 vice presidents from organizations with more than 1,000 employees and was published today by Vega Cloud, a provider of a platform for managing multiple clouds.

Overall, nearly half of respondents (48%) said they expected to reduce their IT spending a little or a lot in 2023, with 65% identifying the reduction of cloud spending as a specific goal. Three quarters (75%) are looking to cut cloud costs by 10-50% in 2023, the survey found.

A full 93% reported they have invested at least a fair amount of money on tools to optimize cloud costs, with 82% having invested in FinOps staff or people with FinOps experience. The challenge is that 70% of respondents said it was difficult to find people with these skill sets, the survey found.

The best way for organizations to reduce cloud costs is to become more informed about what they’re spending (40%), and 33% said that the best approach is to consistently optimize use of cloud resources. A total of 61% identified reserved instances/savings plans as the best way to optimize cloud use, while 55% said optimization was best achieved through waste elimination followed closely by right-sizing (54%).

Vega Cloud CEO Kris Bliesner said it’s clear the days when organizations allowed developers to consume cloud resources at will are coming to an end as cloud services consume a much larger percentage of the IT budget. In fact, the survey noted that 91% of respondents are spending at least one million dollars annually on cloud infrastructure alone.

The issue is that finance departments not only want to reduce cloud spend but also want cloud spending to become more predictable from a budget perspective. Nearly half of survey respondents (45%) said they’d received a surprise in their cloud bills “a number of times” over the past 12 months, with 70% of respondents noting surprises have happened at least a half dozen times in the past year.

A total of 40% admitted they had exceeded budgets multiple times in the past year, and 38% said they had to modify their forecast cloud spending budget numerous times over the past 12 months. More than half of respondents (55%) said database costs are the metric that matters most when looking at cloud usage followed by bandwidth costs (51%), storage costs (49%) and compute costs (47%). Nearly two-thirds (64%) said they track metrics at least somewhat often, while 46% said they have somewhat optimized their cloud use. A total of 11% said they’re not optimized at all.

A full 88% said they’re using artificial intelligence (AI) at least somewhat to optimize cloud use and costs, with nearly three-quarters (74%) noting they think ChatGPT or a similar generative AI tool could be used to optimize cloud use/costs further. Specifically, 42% said they thought it could improve decision making and 30% said it could automate decision making.

Among the cloud service providers, Google is cited as doing the most to help customers manage and reduce cloud costs (38%), followed by Amazon Web Services (34%) and Microsoft (28%)—but a full 85% said they could all be doing more.

Of course, changing economic conditions are naturally driving organizations to look harder at cloud spending. Well over half of respondents (56%) said they are concerned about the economy, and 95% of those respondents said those concerns have, at least somewhat, impacted their IT strategy.

It’s not clear whether organizations will continue to exercise greater control over cloud spending should the economy recover. For now, at least, there’s clearly more desire for control than ever.

May 4, 2023
Vega Cloud Commits to Reducing Cloud Costs

Vega Cloud today made a commitment to save customers at least 10% on their cloud infrastructure spending or it won’t charge for its software. Vega Cloud’s software automates cloud infrastructure management.

The Vega Cloud platform enables IT teams to connect, automate, manage and optimize new and existing networks, applications and other multi-cloud IT environments from a single console. As part of those capabilities, the company includes cost allocation and cost identification tools using a curated set of data to surface daily recommendations for cost improvements.

Vega Cloud CEO Kris Bliesner said the goal is to provide a financial operations (FinOps) capability within the context of a platform capable of acting on those recommendations that, on average, reduces cloud costs by 15% to 25%.

During uncertain economic times, IT leaders are under more pressure than ever to reduce costs. FinOps has emerged as a discipline for applying a set of best practices for specifically reducing cloud costs. In addition to reducing cloud costs, Vega Cloud is also making a case for reducing the total cost of IT by relying on a single automation framework to manage multiple clouds.

In the cloud era, many organizations have found themselves employing multiple clouds, each of which requires a separate set of tools to manage. IT teams then need to hire additional staff to manage each of those tools. As a result, the total cost of IT increases with each additional platform added to the overall IT estate.

Many organizations, of course, have allowed the number of platforms they manage to proliferate. This is because many application deployment decisions were driven by developers who can easily provision cloud infrastructure on their own. However, as concerns over the cost of cloud computing continue to rise, many organizations are revisiting how cloud infrastructure resources are used. Many of those reviews are being driven by finance teams that want cloud costs to become more predictable as cloud computing continues to account for a much larger percentage of the IT budget, noted Bliesner.

In fact, one of the challenges IT leaders have is finding a way to make sure developers and DevOps teams are more motivated to reduce costs rather than focusing entirely on how fast they can build and deploy applications, he added.

The reality is the average developer doesn’t need application build infrastructure running 24/7, so application development and testing is a great place to focus on cutting cloud costs initially, noted Bliesner. There’s also plenty of opportunity to better schedule workloads to reduce costs by relying more on lower-cost instances of cloud infrastructure, he said.

DevOps engineers, by nature, don’t want to be inefficient, so the issue comes down to providing them with the tools needed to identify resources that are being wasted, added Bliesner.

Most cloud service providers, of course, provide tools that enable IT teams to optimize spending, but Bliesner said those tools don’t go deep enough in terms of exposing issues. As a provider of an independent management framework, Vega Cloud is more committed to providing cost optimization capabilities that can be applied to multiple clouds, he added.

In general, interest in controlling cloud costs has risen sharply. Vega Cloud has been engaged with more customers researching this issue in the last four weeks than in the last three years, said Bliesner. The challenge—and the opportunity—is to not just cut cloud costs but also identify patterns that make it easier to predict them, noted Bliesner.

At this juncture, cloud costs are coming down. The only issue left to be determined is whether that goal will be accomplished with precision versus a fiat that adversely impacts an organization’s ability to continue to build and deploy software.

March 30, 2023
AWS Delivers on Latest Graviton3 Price/Performance Promise

Amazon Web Services (AWS) has expanded the number of virtual machines based on the latest generation of its Graviton processors to include instances that support DDR-5 memory.

The latest Amazon EC2 instance types, dubbed M7g and R7g, that are now generally available are based on the AWS Graviton3 processors developed using an architecture created by Arm. Previously, these instances were only available as part of a technology preview program.

Rahul Kulkarni, director of product management at AWS, said these latest offerings take advantage of DDR-5 memory to provide 25% better performance than the previous sixth generation of Graviton instances. DDR5 memory increases the amount of bandwidth available by 50%, he noted.

Graviton processors now provide the lowest-priced instance of virtual machines in addition to the best performance and overall price/performance across the AWS portfolio, Kulkarni added.

AWS is making a case for employing its AWS Graviton processors for general-purpose workloads as more IT teams are being tasked with reducing costs as the overall number of applications being deployed in the cloud continues to increase. In fact, all of the top Fortune 50 companies have already deployed workloads on Graviton processors, noted Kulkarni.

While it’s not clear how many applications are being developed to run natively on Arm processors, the process of refactoring existing applications to run on Arm processors is not as intensive for most applications as it was when previously moving applications from one class of processors to another.

In addition, Kulkarni noted AWS has committed to providing a full range of DevOps services, including a continuous integration/continuous delivery (CI/CD) platform, to help facilitate any transition to Graviton processors.

There are, of course, multiple strategies for containing cloud costs that range from committing to consuming a specified amount of compute resources annually at discounted rates to relying more on spot instances that are available for limited amounts of time. Regardless of approach, the days when developers were allowed to invoke cloud resources at will appear to have come to an end as enterprise IT organizations become more aware of the total cost of IT. As a result, many of them are adopting financial operations (FinOps) best practices to maximize the utilization of cloud infrastructure resources.

AWS, like most cloud service providers, gives organizations a wide range of processor options. However, it’s apparent that AWS views Arm processors in the form of Graviton to be the most efficient from both a price and performance perspective. It’s not clear how quickly organizations are embracing Graviton in the cloud given the dominance of x86-based platforms, but it’s apparent there is now a clear alternative for general-purpose workloads. If fact, the more data-intensive those workloads become, the greater the interest in more efficient processor architectures.

Of course, x86 platforms are not going away anytime soon. But as more Arm-based processors find their way into the enterprise, DevOps workflows will only become more challenging to manage.

March 6, 2023
FinOps & ITAM Must Team up to Cut Cloud Spend
Ahead of its Wisdom NA 2023 event taking place in Florida March 21-22, Rich Gibbons from the ITAM Review explores the relationship between FinOps and IT Asset Management when it comes to managing software costs. With on-premises revenues in decline, will the major software publishers respond by increasing policing and enforcement of their licensing rules in the cloud? Are cloud audits ahead in 2023? And will a marriage of convenience between FinOps and ITAM see us through?

It’s already clear that, in 2023, corporate spending will be under the microscope more than ever. With software publisher price increases, rising energy bills and a global recession all contributing to the need for businesses to focus on cost, IT–and particularly software–is a prime place to focus. Concentrated efforts to monitor and manage software spending present a fantastic opportunity to materially improve an organization during these difficult times, enabling it to weather the storm and emerge from it lean, strong, and heading in the right direction.

Annual spending on public cloud is predicted to reach $809 billion (IDC) by 2025, so ensuring this money is spent as efficiently and effectively as possible must become a key corporate-wide priority for every business.

It’s Not All About Reduction

One important aspect to realize is that, in the modern cloud age, cost management efforts shouldn’t be all about cost reduction. Rather, it is more appropriate to focus on spend efficiency. With cloud computing as a driver of digital transformation which enables organizations to offer new services to new audiences, it’s completely understandable that your cloud bill may increase; the important thing is whether the value to your business has risen commensurately.

If your cloud bill rises by $1 million and your revenue rises by $1.5 million because you’re reaching more customers and/or have a new product line–happy days. If, however, you’re seeing your bill increase without that associated revenue increase, then that is a sign of spend inefficiency; you’re spending more for no return. This will likely be due to resources that are over-provisioned, under-used and/or incorrectly architected.

Who’s Involved?

The management of on-premises software such as Microsoft, Oracle, IBM, etc. has long been the domain of the software asset management (SAM) team or IT asset management (ITAM) team and their remit quickly grew to incorporate software-as-a-service (SaaS) products such as Adobe Creative Cloud, Microsoft 365 and Salesforce alongside SQL Server, Oracle DB and IBM Websphere.

More recently, with the massive and continued growth of infrastructure-as-a-service (IaaS)/platform-as-a-service (PaaS) cloud environments, the discipline of FinOps has experienced considerable growth and become the de facto strategy for managing public cloud spending for many enterprises.

While the two areas may seem separate, the growth of hybrid infrastructure means the two disciplines must learn from each other and work together to deliver the best overall results for a business. As John Donne said in 1624, “No man is an island,” and the same applies to teams managing corporate assets–what one team does (or doesn’t do) often impacts the other.

Let’s take a look at some of the ways this collaboration can pay off in the real world.

Azure Hybrid Benefit

This is a perfect example of how regular, clear communication between ITAM and FinOps benefits everyone. Most enterprise organizations purchase their Microsoft volume licenses via an enterprise agreement (EA) and one of the characteristics of this agreement is the mandatory inclusion of software assurance (SA). This suite of extras includes a range of benefits such as new version rights, disaster recovery rights and, most pertinent here, the Azure Hybrid Benefit.

Azure Hybrid Benefit is an SA benefit that allows you to allocate your existing on-premises licenses to cover portions of your cloud costs in Azure and on-premises hybrid infrastructure. It is currently applicable to:
- Windows Server Azure virtual machines
- SQL Server Azure: Virtual machines, managed instances, databases
- Azure stack hyperconverged infrastructure (HCI)
- Azure Kubernetes Service (AKS)
- Red Hat Enterprise Linux (RHEL)
- SUSE Linux Enterprise Server (SLES)
Each of these scenarios can help an organization reduce their cloud bill, make better use of their overall Microsoft spend, and potentially use higher-level services–all increasing their return on investment (ROI) and spend efficiency. Microsoft claims savings of 50% for Windows Server and 85% for SQL Server are possible (see here), although your mileage will, almost undoubtedly, vary.

However, while enabling the Azure Hybrid Benefit is, in many instances, as simple as ticking a box when deploying the cloud resource, that is far from the only requirement. First of all, there is a need to know how many applicable on-premises licenses you currently own and what your future plans are for renewals.

Then you must be aware of the various licensing rules that pertain to the range of Azure Hybrid Benefits and understand their implications for your specific environment. Rules and usage allowances differ between editions, such as standard/enterprise/data center, while certain benefits may not be used concurrently. Also, given Microsoft’s penchant for regularly updating and changing licensing rules, this understanding needs to be frequently reviewed and any changes highlighted.

Furthermore, given the direct link between on-premises licenses and cloud resources, changes at either side may have a knock-on effect. To keep hybrid spending as efficient as possible requires strong processes, capable discovery/monitoring tools and clean lines of communication between the ITAM and FinOps teams to keep things running smoothly:

Example One:
During the Microsoft Enterprise Agreement renewal process, a decision is made to reduce the number of SQL Server Enterprise licenses on which Software Assurance is renewed. This will require the Azure Hybrid Benefit to be removed from certain cloud workloads, resulting in increased cloud costs that need to be mitigated in other ways.

Example Two:
There is a blanket policy to activate Azure Hybrid Benefit for all applicable workloads in Azure. A new project is spun up consisting of dozens of Windows Server VMs and SQL Server instances which surpasses the number of on-premises licenses available; ITAM needs to be notified so they can purchase new licenses to ensure continued license compliance and, in most cases, keep spending at a minimum.

Two Sides of the Same Coin

In a hybrid environment, spend management and license compliance are often interlinked. So far, the software publishers have been relatively hands-off when it comes to policing and enforcement of their licensing rules in the cloud, but that could change at any point. Given that we’re already seeing the impact of the recession with layoffs across several major software vendors (Microsoft, Google) and Microsoft’s FY23 Q2 operating income dropping, traditionally on-premises software vendors such as Oracle, Microsoft, IBM, et al. may seek to realize untapped revenue in the cloud through license non-compliance audit penalties. While the examples above look at Microsoft licensing, the ability to use on-premises licenses in the public cloud exists with most software publishers and so, too, do the risks.

A close relationship between ITAM and FinOps with regular and comprehensive data sharing and a clear understanding of each other’s priorities will be integral to the growth and development of any business using software and cloud services. Ensuring the best use of existing assets, enabling the most cost-effective cloud spending and reducing the risk of unexpected budget hits are all fundamental aspects of ITAM and FinOps collaboration.
February 16, 2023