Claranet's informed approach: FinOps insights into cloud spend

Claranet follows a three-phase approach to FinOps, and this article tackles the first step where the key focus is ensuring you have full visibility of your cloud environment.    

• Informed: Establish a FinOps culture, define goals and identify cost-saving opportunities. This involves getting visibility into all cloud spending (such as licenses, maintenance or IT resource) and benchmarking it against internal goals and industry best practices.
• Optimise: Continuously refine FinOps practices, identify new cost-saving opportunities and drive long-term cost reduction.  
• Operate: Implement cost-saving measures, monitor cloud usage and optimise resource allocation.  

Growth of the cloud marketplace

Cloud infrastructure service costs grew 23% year-on-year in Q4 of 2022, and by 2025, the global cloud application market is projected to reach $168.6 billion, with 200 applications for the average organisation. Companies with 50,000 employees or more now operate 788 custom applications on average.

The importance of effective cloud financial management

With 82% of business leaders concerned about managing cloud spending, FinOps is clearly a top priority. However, 78% were concerned about a lack of resources or expertise, when cloud management and transformation is increasingly hampered by a lack of skilled professionals. And these concerns are not limited to business size - both enterprises and SMBs consider cloud costs a challenge, with less than a fifth of companies at the 'mature' stage of adoption.

The goal of effective cloud management is to maximise business value, ensuring that cloud spending is aligned with business objectives and resources are used efficiently without compromising performance. Cloud FinOps offers several important benefits, primarily helping organisations optimise their cloud spend, eliminate unnecessary cloud costs and cloud waste, and ensure that resources are used efficiently. FinOps also encourages collaboration between finance, operations, IT and engineering teams, fostering a holistic approach to cloud financial management. With increased speed and efficiency, you can accelerate product and service time to market, gaining a competitive advantage.

The FinOps Maturity Model

The FinOps Maturity framework – also known as the “crawl, walk, run” framework – allows you to start small and grow in scale, scope and complexity when business value warrants growth. It gives insight into where you are in the process of achieving a particular goal, and also helps identify areas where you need to invest resources to achieve the appropriate level of proficiency or maturity.

In a 2022 survey of cloud FinOps practitioners, 37.1% of the 572 respondents who answered a question about the maturity level of their cloud FinOps efforts said they were in the “crawl” stage – basically getting the basics in place. Another 41.7% were in the “walk” stage, where practitioners have established practices but not yet perfected them, while just 19.5% of participants were at the leading edge of maturity - the “run” stage - where cloud FinOps is business as usual. This shows just how few businesses are really getting the most out of their cloud operations, at the right price.

Outlined below is a more detailed summary of each stage of the FinOps Maturity framework:

Crawl

• Limited reporting and tooling
• Measurements only provide insight into the benefits of maturing the capability
• Basic KPIs are set to measure success
• Basic processes and policies are defined around the capability
• Capability is understood but not followed by all the major teams within an organisation
• Plans to address “low-hanging fruit”

Walk

• Capability is understood and followed within the organisation
• Difficult edge cases are identified, but a decision is made not to address them
• Automation and/or processes cover most of the capability requirements
• Most difficult cases (that threaten the financial wellbeing of the organisation) are identified, and effort to resolve them has been estimated
• Medium to high goals/KPIs are set to measure success

Run

• Capability is understood and followed by all business teams
• Difficult cases are being addressed and resolved
• High goals/KPIs are set to measure success
• Automation is the preferred approach

Taking quick action at a small scale and limited scope allows FinOps teams to assess the outcomes of their actions and gain insights into the value of taking further action in a larger, faster or more granular way.  

This framework is extremely useful when it comes to assessing your current capabilities and can be used to understand how each individual capability looks when practised in a more or less complex environment. The goal is to perform at the level of maturity appropriate to the complexity of your environment. Building a capability to a maturity level that is beyond your current need is unnecessary and wastes resources that would be better spent maturing an underperforming capability.

Partnering with Claranet enables you to effectively manage your cloud costs, improve the agility of your cloud operations and achieve your business objectives.

Watch our webinar for more FinOps insights into cloud spend. You will learn how good intentions are often sidelined in favour of business needs and how this impacts a cloud environment and related costs, plus best practices to regain and establish permanent control: