FinOps: Public cloud spend is seeing massive adoption

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Expect big growth for cloud financial-management–FinOps–as the enterprise speeds its cloud expansion, while struggling to contain and optimize cloud spend, according to new research.

Image: iStock/gearstd

Depending if you’re a glass-half-full or glass-half-empty person, you can lament or cheer the current state of cloud financial management, also known as FinOps: It’s experiencing huge growth, but there’s a lot to tackle ahead. 

FinOps (cloud financial management) combines systems, best practices, and culture to increase a company’s ability to understand its cloud costs and determine how the company can accommodate its cloud budget, while still making money choices on what’s best for the company between speed, cost, and quality.

Newly released data from The FinOps Foundation highlighted the state of FinOps as the foundation surveyed 804 practitioners worldwide who had a collective $45 billion in annual cloud spend. Nearly half of those surveyed were from companies with more than 10,000 employees, which means it is likely bigger companies leading and driving FinOps adoption. Respondents rated their FinOps maturity level: Crawlers/beginner (43.5%), walkers/intermediate (average 2.5 years; 41.5%), and runners/experts (average 4 or more years; 15%). 

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Key data showed that while FinOps is popular and on a quick rise, companies are accelerating cloud plans, but are still having issues with containing and optimizing cloud spend. In the first of its kind, the State of FinOps Report 2021 revealed that FinOps is now a necessity and has become mainstream across all sizes of cloud spend. It’s also likely a career path for more than 90% of respondents.

The FinOps Foundation is a program of the Linux Foundation as are Kubernetes, Cloud Native Computing Foundation, Hyperledger and others. Promotional material said that its mission is to “advance the people who could do financial management through community, best practices, education, and standards. It has more than 3,000 practitioner members at more than 1,400 companies. 

FinOps team sizes grew 75% in the last 12 months (they grew 47% last year), and expect 50% more growth in the next year.

There are investment opportunities in FinOps, as respondents predicted a more than 40% growth in FinOps team size in the next 12 months. Understanding the opportunities and challenges that FinOps teams face, can better create informative and educational content to help the community.

Nearly half (49%) of survey respondents had little or no automation of managing cloud spend (one of the core disciplines of a FinOps practice). 

Of those with some automation, almost one-third (31%) automated notifications and tagging hygiene (29%). Only 13% automated rightsizing, and 9% spot use, which indicates that companies are likely missing opportunities to optimize cloud spend. Half of compute spend on public cloud was for on-demand, the highest-priced service, and 49% for reserved, savings or committed use coverage, the net-costliest option. Only 13% was for spot use, the least-expensive service, even though respondents identified 29% as being an “excellent” target for that option.

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The biggest challenge (40%) was getting engineers to act on cost optimization, followed by dealing with shared costs (33%) and accurate forecasting spend (26%). Only 15% of respondents described their FinOps practice was in the “run” phase of maturity, meaning they can improve a built-out processes continually; 40% of firms are in the “walk” phase, with core processes running but with much maturity remaining, and 44% are in the “crawl” phase, getting back to basics.

Runners tended to have three years’ experience with FinOps being their primary job 41% of the time, while walkers had a year of experience, while only 19% had FinOps as the primary focus of their jobs.

Financially, research showed that the more complex the company and cloud usage, the greater the FinOps need. Still, only a few businesses have “found their stride,” and a majority are still in the early stages of establishing FinOps practices. Asked the total cloud spend per year, 35% said $1M to $10M. 25% said $10M to $50M, 23.5% said less than $1M. Eight percent said $50M to $100M, 6% said more than $100M, and 2.5% said more than $1B.

finops-where-do-you.jpg

Image: The FinOps Foundation

FinOps practitioners, the data found, work in many different roles and backgrounds: 43% are FinOps/cloud financial management focused, 26% are IT/engineering or DevOps, 11% are executives, 8% are cloud or cloud management solution vendor staff, 3% are in finance, less than 1% are in procurement, and 8%  said they worked in “other.” The average number of employees dedicated to FinOps among respondents was seven per organization.

finops-challenges.jpg

Image: The FinOps Foundation

This first report offered a more in-depth analysis at how FinOps teams practice adoption, how they build teams, what common challenges they face, and how those challenges are solved. 

Analysis indicates that the top the needs to support practitioners are:

  • A roadmap of FinOps capabilities needed in an organization
  • Benchmarking and KPI data to understand what great looks like
  • Platform/tooling landscape to know what vendors solve which challenges

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