A new consortium has been formed to promote best practices for controlling cloud computing costs.
Announced at the Cloud Economic Summit, the non-profit FinOps Foundation counts among its founding members Atlassian, Autodesk, Cloudability, HERE Technologies, Just Eat and Nationwide.
Cloudability co-founder J.R. Storment said the goal is to bring financial accountability to variable cloud spending that can easily spiral out of control if not monitored carefully. The adoption of best DevOps practices makes IT organizations more agile, but not every organization has the financial controls in place to ensure spending on cloud services is aligned with business outcomes, said Storment.
These days engineers can use their corporate credit card to spin up virtual machines in the cloud. The FinOps Foundation is making a case for more accountability over the spending.
Gartner estimates worldwide cloud spending will reach $360 billion by 2022, which is five times the compound annual growth rate for overall IT spending. The unfortunate truth, however, is that most finance organizations don’t have a lot of visibility into how those dollars are being allocated.
To coincide with the launch of FinOps, 451 Research also published a survey of 300 IT and finance executives in the United States and the U.K. that finds more than half (57 percent) of large enterprises worry about cloud costs daily, with 80 percent admitting poor cloud financial management has had a negative impact on their business.
In fact, the 451 Research report makes it clear most finance departments have little visibility into cloud spending. Almost three-quarters (72 percent) of finance executives acknowledged they have no formal reporting capacity between departments. More than half (51 percent) of respondents admitted to occasionally overspending and 68 percent said they are only alerted to overspend too late. A full 82 percent of finance respondents rely on cloud vendors, spreadsheets and manual processes to track cloud costs.
Despite much of the variable cost hype surround cloud computing, 73 percent of the finance respondents in the United States and 81 percent in the U.K. still treat cloud as a fixed capital expense rather than an operating expense.
To help finance teams better understand how cloud spending is being allocated, the FinOps Foundation will provide access cloud economic research and related articles, FinOps training and meetup groups. Early access to the forthcoming “Cloud Financial Management Strategies, Creating a Culture of FinOps” book published by O’Reilly Media will also be provided.
As IT organizations increasingly employ multiple cloud platforms to run different classes of workloads, understanding the true cost of choosing to use one cloud over another will become more important. At the same time, IT organizations have a greater appreciation for the need to move workloads between platforms as costs rise. Just because an application workload was created in the cloud doesn’t mean that workload should be deployed there. Many long-running applications are less expensive to deploy in an on-premises IT environment. The challenge IT organizations arguably face going forward will be integrating streams of real-time financial data into DevOps processes to make more economically informed decisions about how to allocate their cloud resources.