FinOps matters greatly for an organization operating in the cloud, as it is the only way to avoid overspending and using subpar resources. This is because it is a concept that believes an organization can reduce how much they spend on cloud resources while maintaining high quality.
Nevertheless, many challenges appear as organizations strive to reduce how much they spend. So, in this article, we will share some of the challenges the FinOps team faces while trying to reduce costs and how they can be solved.
Enterprise FinOps Challenges and Solutions
1. Bringing in Costs Due to Cloud Overprovisioning
One of the major challenges of implementing cloud FinOps in organizations is the issue of incurring costs due to over-provisioning. Many organizations pay for products with little or no use — sometimes, this goes unnoticed for as long as possible. FinOps is an active process that doesn’t require a passive approach, meaning that an organization should be up to the task of constantly monitoring its finances to know when there’s abnormal spending.
To solve the issue of over-provisioning, an organization needs cloud optimization tools such as Globaldot to alert them of an overspend. Moreover, tools such as this are very important in planning the cloud services needed by an organization and in what numbers or sizes.
2. Lack of Understanding on Where to Begin
A company starting with FinOps is a challenge, as they might not know exactly where to start with their cloud cost optimization. For a company that hasn’t done this before, there can be overwhelming questions that need immediate answers. Some of them can be what workloads they need to move to the cloud and where and how they undergo this task. In some other scenarios, the problem can be as simple as assigning and defining the role of the FinOps team.
In this case, the solution to this might come down to an organization employing the services of a FinOps consultant. However, each department in an organization will have to cooperate with this FinOps consultant to determine what, how, and the type of FinOps model suits an organization. Cooperation from every department makes tracking down cost anomalies easier for everyone involved.
3. Disconnection Between FinOps Team
Generally, the finance and engineering departments in FinOps, besides the supervisors and project managers, are the major departments. Apparently, these two departments are the bedrock or the core of any FinOps team. However, there can be a problem with the whole FinOps operations in an organization when there’s a disconnection between the two.
Assuming there’s a lack of collaboration, the engineering department, in the bid to increase speed and security and release better code, can incur huge costs. On the part of the finance department, this can be quite daunting to trace these costs, not to talk of reducing them.
Nevertheless, the solution to this FinOps challenge is quite straightforward — there should be more communication between the two departments. This would help each department to know when their actions are detrimental to their organization’s FinOps objectives. Teams should also hold discussions to review and make changes to their FinOps objectives and strategies regularly.
4. Inaccurate Forecasting
Often, the FinOps team might want to make a forecast of the future to adjust finances or make changes to the number of cloud services they use. While this process is considered a part of FinOps, it can be a hit or miss. And when it’s a miss, it can mess up many things that took a lot of time to optimize or get working. One of the first signs of a miss in forecasting is that an organization begins to overspend on products and services.
Underutilization becomes problematic, making organizations pay for things they don’t use. The solution to this is quite straightforward. An organization should engage in trials before making forecasts — they can do this by creating a trial budget. Under this trial budget, they will get an overview of how their forecasts and predictions will work, assuming it is implemented in the future.
5. Lack of Visibility
Before there are FinOps objectives, the team must identify the problems and create strategies to solve them. However, many organizations don’t have visibility of their cloud usage — they don’t even bother to have one until overspending becomes extremely terrible.
Overcoming this involves an established and independent FinOps team actively monitoring a company’s cloud activity. Many tools aid this monitoring, such as Globaldot. Also, considering engineering velocity and Monthly Recurring Revenue (MRR) will be key.
6. Incorrect Resource Tagging
Resource tagging is an important part of FinOps, but when done wrong, it can result in an organization exceeding its budget. Most of the time, resource tagging helps an organization to allocate costs correctly. So, when it is done incorrectly, the allocation of costs will also be done incorrectly.
Resource tagging is a hell of a task when done manually, especially for an organization using many cloud services. Hence, there’s a need to employ cloud cost optimization tools that help tag resources correctly. Even after the resource tagging, an independent review should be done to ensure everything is in place.
Conclusion
It involves a great deal of time and effort for an organization to reach its objectives of reducing the amount it spends on cloud resources. However, many challenges come up in reducing cloud costs and improving performance.
As mentioned above, some of these challenges include inaccurate forecasting, lack of visibility, over-provisioning, ignorance of where to begin, and many other issues. Nevertheless, each of these problems has guidance on how to solve them.
