AWS re:Invent 2023: How FinOps Helps Your Organization Manage Cloud Spending

As organizations continue moving more data, apps and workloads to the cloud, the costs involved in using those platforms can become overly complex. For many organizations seeking to get a handle on cloud costs, FinOps can be a valuable tool.

According to the FinOps Foundation’s Technical Advisory Council, “FinOps is an evolving cloud financial management discipline and cultural practice that enables organizations to get maximum business value by helping engineering, finance, technology and business teams to collaborate on data-driven spending decisions.”

“It's about informing all the cloud stakeholders on what the actual costs of their applications are and what the actual cost of their infrastructure is,” said David Wharton, CDW’s chief architect for the AWS cloud platform.

At this year’s AWS re:Invent conference in Las Vegas, Wharton presented a session titled “FinOps on AWS: Accelerated Outcomes to Maximize ROI” in which he shared how FinOps can help organizations optimize their cloud spending. One of the biggest advantages to a FinOps approach, he said, is gaining greater visibility into the costs that organizations incur.

“Sometimes they don't know that something cost a particular amount, and sometimes it's not even in their budget. Sometimes it's just in the IT budget and not in their department budget,” he explained. “To be able to allocate costs, even charge back in certain circumstances — that's important. Because sometimes, there are different subsidiaries involved, and it makes more financial sense to bill it back to the actual owner of the cost.”

According to Wharton, the entire concept is about transparency. Once an organization has surfaced the data behind its cloud spending, IT decision-makers can choose wisely where and how to trim costs, which is the optimization step of a FinOps strategy. Once an organization has optimized its spending, operations can be continuously improved for even greater savings.

“A lot of the first stages of FinOps and cloud cost management are cleaning up what was done wrong in the first place, and you don't really want to do that anymore,” Wharton explained. “That's where it comes in, is to start cascading the best practices down to the engineers and all the cloud stakeholders so that you don't have to play catch-up and clean up all the time. Once you get to a steady state, it's a lot easier, and you're just continuously saving.”

Some cloud cost mistakes are easier to identify, and recommendations on those changes can be made by various cloud cost management software offerings. “More often than not, they have lower environments that are always on,” Wharton said. “In those cases, they really shouldn't get a reserved instance for those environments. They shouldn't even necessarily have to apply a savings plan for those environments. What they should do is have a business hours schedule going that schedules those things only for when they're needed.”

Another common mistake organizations make in the cloud is about sizing. “They look at the performance of the servers, and they're underutilized. They don't need to be as big as they are, and they just have to tighten them up,” Wharton said. “Now, again, you want to be careful because if you resize something, and you had a reserve instance for that, now you're running that at a rate that the RI was not bought for. So that's where RI management comes into play.”

For some cost-saving solutions that might be considered low-hanging fruit, software from NetApp and other vendors can help. For more complex situations, Wharton spoke about CDW’s recently launched FinOps Accelerator and how it can provide organizations an IT roadmap to help drive down cloud costs. “So, as their FinOps maturity increases, they go from crawl to walk to run over time. And as that finance maturity increases, cloud costs actually decrease,” he said.

Cloud cost reduction is one of the main outcomes of CDW’s FinOps Accelerator, which Wharton described as a 68-week engagement that works with cloud stakeholders to make initial recommendations. “We look at their initial data, and we provide that roadmap. And, we have a whole synopsis workbook that we go through that is aligned with all the FinOps foundation principles and other things that we've added to it.”

Wharton also recommended CDW’s FinOps advisory services, “where we sit with the customer, and we actually help them with the execution of these things. It's more powerful because we show them — we tell them how they can do it, not just why they should do it.”

Not every organization is looking to implement FinOps in the same capacity. “There are some customers that don't want to have a FinOps department. They don't want to have a guy, they don't want to have a team,” Wharton pointed out. For those organizations, CDW offers a third tier of service. “As part of the FinOps practice, we have a member of managed services now who's taking all the learnings from the accelerators and the advisories, and cascading that over into managed services.”

Armed with CDW’s expert assistance, IT leaders can develop greater clarity around their cloud environments to help prioritize spending and reduce costs, thereby driving a greater return on their investments.

Story by Joe Kuehne, the associate editorial director for BizTech magazine.