I am a big proponent of cross-functional alignment, as I reminded our ELT at a recent off-site meeting. There’s a lot of buzz about FinOps bringing financial accountability to cloud spend by eliminating procurement siloes and implementing cross-functional best practices. As the CFO of a SaaS company, I fully support this practice. In fact, Virtana recently made some changes to our cloud infrastructure as part of our own evolution. As was true for us, many other organizations may find challenges putting their cloud spend where their FinOps mouth is. Our recently published survey—The State of Hybrid Cloud and FinOps—reveals that many enterprises still have a long way to go.
You’re not cross-functional if other functions don’t participate
We asked survey respondents which groups are active cloud stakeholders within their organization. We included the four key stakeholder groups listed in the FinOps.org team structures (executive IT team, business/product owners, finance/procurement, and engineering operations), and added several others for good measure (DevOps, application teams, C-suite, and the board of directors).
The vast majority of respondents (81%) said that the executive IT team is an active cloud stakeholder. This should come as no surprise. But the number of respondents who report active participation from other groups outside of the executive IT team is in the minority. Fortunately, here at Virtana, I am responsible for several of these groups and work hard to make sure all stakeholders have a seat at the table. Here’s what we found in our survey about the breakdown of participation by the groups that FinOps.org recommends in their FinOps team structure:
- Engineering/operations: 31%
- Finance/procurement: 25%
- Business/product owners: 21%
None of the other functions we asked about play an active cloud stakeholder role in significant numbers either:
- C-suite: 26%
- Application teams: 25%
- Board of directors: 20%
- DevOps: 19%
From where I sit—as a member of the finance, business operations, IT, and C-suite groups—I find these low numbers very surprising given the investments companies are making in hybrid, multi-cloud deployments. Additionally, it’s interesting to note that 39% of respondents stated that only one group is an active cloud stakeholder. Of those, 77% said, unsurprisingly, that solitary group is the executive IT team. Another 37% have two to three stakeholder groups, and only 24% have four or more.
The gap between here and best-practice FinOps
According to FinOps.org’s State of FinOps Report 2021, which asked FinOps practitioners about their organization’s FinOps maturity using a crawl-walk-run analogy, only 15% stated they are running with a mature and evolving practice, and 41.5% are walking with an established practice that needs maturing. The remaining 43.5% are crawling—they’re just getting the basics in place.
While the two surveys aren’t apples-to-apples, looking at the results side by side is, however, illuminating. Over half (56.5%) of organizations employing FinOps are beyond the “crawl” phase, and therefore should have participation from key cross-functional teams if they are following those best practices. But the numbers our survey uncovered are nowhere close to that. This could be because FinOps simply isn’t widespread among our survey respondents, but that would then mean that FinOps is far from a mainstream approach. Or it could be that the FinOps practitioners inflated the maturity levels they self-reported in the FinOps.org study. (Our own survey found inflated levels of confidence in existing tools and capabilities for managing cloud performance and spend, so this is entirely possible.) It actually doesn’t matter which is true, or even if it’s a little bit of both, because the whole point of FinOps is that a siloed approach to managing cloud costs can hurt the business, yet this is exactly what the majority of cloud decision makers we surveyed are doing. By the way, it’s not just about costs—organizations are also struggling with cloud visibility and management challenges that create real business issues.
The business needs to understand cloud costs on their terms
The cloud can be complex, especially given the hybrid, multi-cloud approach many companies employ. Understanding the sources of escalating cloud hosting costs can be challenging as environments become even more complex. Many of the tools available for monitoring and managing these environments, or some portions thereof, are often technical in nature and don’t necessarily reflect the business. For example, if your organization uses IT chargebacks, you need to be able to segment your cloud spend by individual cost center, which many tools may not be able to provide. It’s frustrating when I can’t get an answer to a seemingly simple (to me, at least) question about a large line item in our cloud bill. I’m sure it’s just as frustrating for the IT messenger who can’t easily get that information from the cloud provider.
Enable FinOps with Virtana Optimize
All of this is to say that in addition to the tools the IT team needs to carry out their technical responsibilities, they also need tools and capabilities that align with the business imperatives. FinOps teams need to both understand what is driving costs and have tools to help rightsize or plan resources appropriately. This is a cross-functional effort, because there are truly many stakeholders in an organization running SaaS products. Without being able to “talk cloud” in the language of different functions, it will be difficult to get those functions engaged the way they need to be for an effective FinOps partnership. With Virtana Optimize, you can do both. Optimize delivers deep insight into your cloud configurations. You’ll get clarity on costs across multiple cloud providers and accounts, and identify and eliminate unused instances and storage so you can scale smarter. You can drill deep into recommendations and set policies that will programmatically balance performance and cost against your determined acceptable level of risk, and you can examine charges sorted by Attribute and Tag to develop a deep understanding of where your expense is occurring and alert on unexpected jumps. Share these insights with all FinOps stakeholders and you start to buld a more robust cross-functional team who owns responsible management of your cloud infrastructure.
The cloud is foundational to business transformation, and with Virtana Optimize, you can align the way you view and manage your cloud deployments to the business—and build the foundation for successful FinOps that truly engages the right stakeholders and improves financial accountability in cloud investments.
Get the survey report: State of Hybrid Cloud and FinOps survey
Chief Financial Officer, Virtana