How FinOps and GreenOps improve Cloud Management

Public cloud service providers like Amazon, Microsoft and Google offer a smorgasbord of cloud services, from simple storage and compute through to AI capabilities. They make it easy for customers to move on-premises workloads into the cloud and reduce their up-front capital investment and the people management required to manage IT workloads.

The cloud market has shown no signs of slowing, especially for SMEs focusing on business missions rather than management of on-premise IT environments. The enterprise is also using the cloud to deal with modernisation and the removal of expensive to maintain legacy environments.

Worldwide end-user spending on public cloud services is forecast to grow 20.7% to $591.8 billion in 2023, up from $490.3 billion in 2022, according to the latest forecast from Gartner, Inc.

However, many customers are unaware of the hidden costs looming with a move to the cloud from an on-premise environment. Developers oftentimes rent more storage and infrastructure than required from cloud providers and add functionality without completing a successful business case. Applications owners in the business can bypass procurement rules by acquiring small environments and these can quickly balloon as enterprise usage grows. However, cloud services can be very cost-effective, when carefully managed.

Business managers, procurement professionals and CIOs need to quickly improve their financial management capabilities of managing cloud environments. FinOps needs to be a retained discipline for organisations leveraging the cloud. This includes involving those that are actively shaping cloud decisions including Executives, Engineers, FinOps Practitioners, Operations, Finance and Procurement.

FinOps can serve as a powerful framework for controlling unwieldy cloud costs while driving cultural change and financial accountability across the organisation. FinOps gives visibility into cloud spend and where you are realising the value of your cloud investments. This data enables FinOps professionals to work with the organisation to optimise each component, providing more effective levels of performance and value to the organisation.

FinOps can also be used to analyse future works loads as candidates for cloud deployments that transcend simple cost savings, providing executives with the intelligence to optimise their cloud operations for better financial and business outcomes. It allows organisations to understand the financial costs associated with individual applications and services, enabling them to show or even chargeback cloud-based services to internal departments.

Cloud management is now expanding from an isolated financial view to include sustainability or GreenOps. The ICT sector currently contributes over 3% of the total carbon footprint which has driven an interest in GreenOps. GreenOps explores the environmental impact of cloud operations and is becoming a critical element in environmental, sustainability, and governance (ESG) practices. Organisations are no longer concerned purely with their greenhouse gas outputs. They must also address emissions from suppliers, including cloud service providers. This drives the need to measure and reduce carbon emissions from public cloud workloads.

The profile of the cloud workload can impact carbon output. For example, some programming languages use far more energy (C tends to be more efficient than Python for instance) to complete a task than others. However, alternative language choices may satisfy business goals (cheaper and faster) but may negatively impact sustainability choices.  This is where combining FinOps and GreenOps is so important.

The largest public cloud service providers are developing tools to provide the data that cloud management professionals can use to ascertain and track CO².  Indeed, studies by 451 Research have shown that AWS’s infrastructure is 3.6 times more efficient than the median of U.S data centres and up to five times more energy efficient than the average in Europe. 

A combined focus on GreenOps and FinOps offers significant benefits. Organisations can optimise their computing costs and lower their carbon emissions by using cloud resources more efficiently. They can also learn how to apply these resources judiciously to address specific business outcomes.

The Leidos Approach to Cloud Management

Utilising significant corporate-wide investment, Leidos UK has built on-the-shelf FinOps and GreenOps services and our customers have seen significant gains through their adoption. We worked with a critical national infrastructure customer whose cloud expenditure had risen 76% in 2022 over the previous year. With the introduction of the Leidos FinOps service, we achieved an approximate saving of £12,000 per month with no performance degradation or increase in risk.

Whatever methodology you use, a structured approach to informing, optimising and operating cloud environments is required, for example, the Leidos FinOps service consists of three key stages: Inform, Optimise, and Operate:

Inform

The Inform stage involves gathering and analysing data to gain insights into your cloud costs, increasing transparency and understanding your cloud spend. Key activities in this stage include:

• Tooling: It is important the correct tools are in place to track and monitor cloud costs at a granular level.

• Show back/Charge Back: It is vital to ‘tag’ your cloud components so your business has full transparency over your cloud bill and to allow you to allocate cloud costs appropriately. FinOps allows you to segregate your bill to show which departments, projects, teams or applications are spending what to promote accountability and aid future business cases.

• Analytics: We analyse the cloud data to gain insights into cloud spending patterns, trends, and cost optimisation opportunities and use this information in the subsequent stages.

Optimise

This stage focuses on identifying cost optimisation opportunities and implementing them without degrading performance or functionality beyond what is acceptable. Key activities in this stage include:

• Capacity Analysis: We analyse the usage patterns of cloud resources to identify over or underutilised resources. We then use this information to right-size cloud components allowing you to eliminate waste and optimise your operating costs.

• Plan Analysis: Are you utilising the best value ‘plan’ offered by your cloud providers? Would the use of reserved or spot instances provide better value for money? This analysis will allow you to understand the differing discounted pricing schemes the cloud providers offer and recommend which are best for you.

Operate

FinOps and GreenOps are not a one-time-only activity, they require ongoing activity to ensure effective financial governance cost optimisation of the cloud. Key activities in this stage include:

• Forecasting: Operations must include the ability to forecast future cloud costs based on historical data and projected growth to help set cost targets and monitor spending against your planned budgets.

• Cost Control: The correct policies, guidelines, and controls must be put in place to ensure your cloud bill does not expand unexpectedly. Activities such as defining spending thresholds, approval processes, and monitoring mechanisms are important here.

FinOps is critical when utilising public cloud that can de-risk your delivery and improve your efficiency.

To talk to our experts about how you can help drive new economic and environmental efficiencies within your cloud environments, please contact [email protected].