Introduction
A prominent financial services organisation in ANZ faced significant challenges in managing their AWS Cloud operational costs, engaging D6 to implement and drive FinOps cost optimisation initiatives. I successfully led and delivered a Financial Operations (FinOps) enablement program, helping the organisation to reduce their operational costs by 40% and increase their spend-to-value ratio to enable increased innovation and growth opportunities.
What is FinOps?
FinOps is an evolving financial management discipline and practice that enables organisations to attain maximum business value. It involves helping finance, technology and business teams to collaborate on cloud spending decisions to drive cost optimisation initiatives.
The implementation of FinOps can often be a double edged sword, whereby, if implemented unfittingly, it could have an adverse impact on operational performance where quality of workloads, fail to deliver the primary goal of cost savings and business benefits. In this blog, I would like to share my experiences, the business challenges I’ve faced, what made the project interesting, lessons I’ve learnt and recommendations for future FinOps projects.
Challenges
The financial organisation recently migrated to AWS Cloud and due to their complex multi-tenant and multi-platform cloud computing environments, they noticed a significant increase in operational complexity, finding it difficult to manage and control costs. They identified a business case for a FinOps Cost Optimisation initiative to address the following challenges:
- Overrun cloud cost
- Lack of visibility and insights into cloud spending
- Lack of Cloud Financial Management
- Difficulty in effectively managing complex cloud environments
- Lack of proactive cost optimisation
- Manual and reactive management
- Inefficient resource allocation
- Lack of holistic approach or strategy on cloud cost decisions
Coupled with above business challenges, the organisation faced project challenges as well in identifying the right resources, effective collection of cloud metrics, defining realistic cost saving goals and lacked an approach in bringing all their tenants together into the FinOps journey. These difficulties led the organisation to partner with D6 for FinOps Project Management, alongside its sibling company Cevo for cloud advisory and engineering services. The project goal was to reduce the operational cost by 40% within a timeline of 12 months. The project team consisted of one Project Manager and five specialised AWS Cloud Engineers.
Solution - FinOps Enablement
The FinOps project followed a systematic approach, including the following key steps:
Step 1: Discovery
D6 conducted an initial 4-week discovery phase to understand the organisation’s structure, identify key stakeholders and platform owners and evaluate their current cloud cost spending patterns. This was followed by the formulation of a high-level cost optimisation strategy. Further, D6 performed an in-depth technical analysis on cost savings opportunities through following Use Cases:
- Rightsizing resources
- Deleting idle resources
- Deleting obsolete/unused resources
Cost Avoidance through the following use cases:
- Compute Saving Plans
- Reserved Instances
Step 2: Planning
The Outputs of this discovery phase are the justification for the business case, budget approvals, curated backlog items, well scoped use cases, defined acceptance criteria and a detailed plan for the execution of the FinOps project. D6 introduced a well-defined project governance framework and structured cadence for a smooth execution of the project and seamless integration of the change.
Step 3: Execution
FinOps Cost Optimisation is a continuous and iterative process and D6 followed the industry best practice three pillar approach to execute the project:
- Find
- Fix
- Forbid
Find: This pillar involves identifying the cloud resources that are being used and their associated costs. This is done by using tools that provide granular visibility into cloud spend, forecasting, and optimisation. By having a clear understanding of what resources are being used and their costs, organisations can make data-driven, informed decisions about the opportunities for optimisation.
Fix: This pillar involves optimising cloud usage to reduce costs. This is done by identifying and eliminating waste, such as unused resources or overprovisioned instances. It also involves implementing cost avoidance measures, such as buying-saving plans and reserved instances.
Forbid: This pillar involves setting policies and guardrails to prevent unnecessary cloud usage and spending. This is executed through the implementation of governance policies that restrict certain types of cloud resource and/or by setting up alert mechanism to notify users when they are approaching their usage limits.
Step 4: FinOps Process
A comprehensive FinOps execution process has been established covering three phases – inform, optimise and operate. This involved implementing cost optimisation strategies, utilising cost allocation and reporting tools, adding real-time monitoring and alerting systems and establishing governance and controls for cloud costs and usage.
Step 5: Key Metrics and Reporting
During the execution phase, the project progress was tracked and reported using metrics such as cloud cost savings, spend efficiency, value delivery, and governance maturity. This facilitated the identification of gaps, challenges, and opportunities for improvement, which were subsequently presented to the cloud centre of excellence team to iterate the FinOps benefits.
What made the project interesting?
The challenge of exploring and identifying new cost optimisation initiatives to reach to the goal of 40% cost reduction made the project interesting – it was like solving a mystery. A total of thirty initiatives have been identified and, with further exploration, an additional ten initiatives were discovered which attributed to overall cost savings. The other interesting factor is the collaborative working environment where D6 collaborated with AWS, AMS, CCOE teams and platform owners to drive the change and instil the cultural and mindset change towards cost savings. At the monthly governance forum, AWS provided an Amazon Alexa every month to Platform Owners as a recognition for their efforts on cost savings. This was done through the organisation’s rewards and recognition program and was listed on leader’s dashboard.
Outcomes
With the implementation of FinOps project, the organisation has reaped several tangible business outcomes including:
- Reduced AWS spend by 40% through the introduction of several cost optimisation measures, improving agility and financial strength.
- Improved visibility of opportunities for further cost optimisation to encourage data-driven decision-making regarding resource utilisation and budget allocation for cost-efficient cloud management.
- Automation-driven operational efficiency has optimised the organisation’s resource allocation.
- Proactive performance improvements have fostered innovation and created new avenues for growth for the organisation, allowing them to pursue new business models and revenue sources.
Lessons Learnt & Recommendations
Throughout the execution of this FinOps project, key lessons learnt are:
- Stakeholders buy-in – the key success factor for the successful implementation of FinOps project is early buy-in from business stakeholders as this establishes improved visibility, transparency and collaboration across cross-functional teams.
- Set realistic savings goals – the initial discovery phase would provide a potential cost savings, however, due to the elastic nature of cloud environment the cost saving goal post would fluctuate and re-calibration of the savings target at various stages of execution is quite essential.
- Cost optimisation tools – use industry standard tools such as AWS Cost Explorer, AWS CloudWatch, AWS Trusted Advisor, AWS Budgets, AWS Cost and Usage Report and Apptio Cloudability to derive and implement cost savings initiatives.
- Automation-driven optimisation – wherever possible, implement automation-driven cost optimisation instead of manual process. Further, implement automated forbid policies to prevent cost savings regress.
- Self-managed optimisation – provide integration with cloud-based IT support systems, such as ServiceNow and/or Salesforce to automate end-to-end process for optimisation change implementation.
Conclusion
FinOps cost optimisation is a crucial aspect of financial management in the ever-evolving cloud-computing landscape. To navigate this dynamic and elastic environment successfully, companies must not only comprehend the pillars of AWS capabilities but also consider automation and cost optimisation. By implementing FinOps best practices and leveraging the available tools and techniques, organisations can achieve substantial cost savings while maximising efficiency and resource utilisation.
Finally, FinOps provides accountability, collaboration and improved data-driven decision-making – which, in-turn, helps organisations increase the value of their cloud investments, It’s never too late to adopt FinOps in your cloud transformation journey.
