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Most importantly, owners of cloud infrastructure lack the answer to the most important question: how exactly to reduce costs on the cloud? What are the specific steps to take?

Therefore, this article will be useful for IT managers (CTO, CFO, CIO) and engineers (devops, developers and others) who are constantly looking for effective ways to solve the problem of increasing costs on the cloud.

Those who think that these are elementary things and that solving these problems is an easy task should think that if everything is so simple, why the optimization of cloud costs is leading the list of the most important cloud challenges for the sixth year in a row.

FinOps matters

The popularity of the cloud continues to grow, as does the problem of increasing its costs. Cloud optimization is the top issue for the sixth year in a row. A report by Flexera showed that organizations are throwing away 32% of the cash resources planned for cloud services. This result increased from 30% in 2021, highlighting the growing trend of the cloud waste problem. Why?

Well, in most cases, enterprises do not take full responsibility for managing their cloud assets. As a rule, companies do not develop strategies to optimize costs on the cloud and do not use effective services to optimize the operation of the cloud environment. Cloud cost management should be as much a part of the project lifecycle as development.

FinOps is perhaps the hottest buzzword in the cloud world. It is a combination of two important departments – financial and operational, which can described as follows: cloud infrastructure cost management department.

FinOps Foundation experts explain finops as the practice of bringing financial responsibility to a variable cost model in the cloud, enabling teams to make trade-offs between speed, cost and quality.

A direct “Now you work together” combination of finance and engineering is not an option. Now I will explain why.

Unlike traditional on-premises systems, where software development costs can be easily tracked, cloud-operating costs are much more volatile and difficult for non-cloud experts to understand.

5 effective FinOps methods that make up a FinOps strategy

When it comes to designing and implementing a FinOps strategy, some cloud infrastructure owners want to use the same old on-premise resource procurement process, while others prefer to grab a magic tool that will magically solve their problems.

Most cloud service providers offer a pay-as-you-go model for cloud services, which means that services are very easily and almost infinitely scalable as workloads grow. In addition, it is very difficult to track the resource allocation of complex container infrastructures, such as Kubernetes, where many of them be hidden from the naked eye.

As a result, the finance team cannot understand how money spent in the cloud. Engineers and product teams don’t know how their activities affect cloud infrastructure costs.

This is why FinOps matters. With the right FinOps practices, teams overcome the cloud cost-misunderstanding barrier and get the most out of every dollar spent on cloud resources.

Unfortunately, improving your organization’s financial results and strategies is not that easy. Implementing a consistent, well-documented process, including solid technology stack support, is the way to ensure that your FinOps can overcome any challenges.

Preliminary preparations

Team readiness. Before investing in the development and implementation of a FinOps strategy that consists of specific methods, it is important to make sure that your team is ready to implement them. Perhaps I am voicing common truths, however, many people forget to prepare specialists for the implementation of finops and this is where the main problems begin.

Teams need to understand the FinOps methodology, identify the key FinOps players, and ensure that procurement, finance and engineering teams don’t just exist in the pretty picture of the team structure, but have real, equal responsibility for variable costs in the cloud.

 Availability of experienced professionals. Organizations around the world are increasingly looking to build FinOps teams, recognizing the value of this methodology. However, despite these initiatives, many companies still try to “wear multiple hats” on the same employee, which can be called a failed approach.

Even when organizations hire employees specifically for FinOps leadership roles, the learning curve is long enough, only reinforcing the idea that successful FinOps implementation requires experienced professionals and building FinOps processes into DevOps practices.

Reincarnation of purchases. Procurement specialists are the missing piece of the perfect FinOps picture. Procurement experts should be involved throughout the process and be able to take proactive action, not just to issue invoices and report on costs.

Welcome, engineers! Engineers understand who uses cloud resources and how they should be used. There is no need to say much here, it is absolutely clear that no one understands cloud resources, their types, sizes and what they are needed for as well as cloud experts.

Involving them in the process of managing costs and cloud usage is a vital requirement for building the right finops.

Well, if you’re ready to implement FinOps, I can share with you those FinOps methods that will really help reduce cloud costs and optimize them as much as possible.

I think it goes without saying that the FinOps strategy should be carefully planned, based on analytical data of the real situation of your cloud ecosystem. These points are absolutely clear to every professional who reads these lines. But it will be much more useful to provide information about effective ways to optimize cloud costs, which can become effective points of your custom FinOps strategy.

In order for FinOps to work, you need:

  1. Provide (or improve, if already available) cloud infrastructure visualization and cloud waste management

Like any transformation program, the evolution of FinOps begins with preparation, which includes a confident scan of the existing environment, understanding the situation, and simply getting rid of everything that has been the bane of your cloud architecture’s existence, throwing money out of your business’s pockets into the wind.

  1. Choose the right size for your instances

Choosing the right family, size, and type of machines that won’t skyrocket your cloud computing bills is a daunting task. Especially if you do it without proper analysis and a solution that provides timely cloud sizing recommendations.

This solution should be user-specific and aimed at adjusting the type/size of the relevant instance. In other words, expert work is indispensable here.

  1. Organize the optimal schedule of the machines

Scheduling automatic startup and shutdown of instances during non-working hours is one of the simplest yet highly effective solutions for saving money while running your cloud infrastructure.

The losses can be easily seen in a simple formula: for example, a working week consists of 5 working days of 10 hours each: 10 * 5 = 50 hours, and this means that our instances are running only 30% of the time of the total number of hours in the week (168 hours ). If we don’t stop the instances during non-working hours for a week, then our losses will be 70%, which will be a significant cloud waste.

Therefore, it would be a perfectly reasonable decision to stop your machines during the idle period and, logically, to automate this process. Schedule automatic hibernation for your on-demand/spot instances, databases, autoscaling groups and Kubernetes clusters to optimize the use of virtual resources and save at least 50% of cloud service costs.

  1. Apply an effective spot management strategy

Spots are typically the most productive way to save on the cloud, offering discounts of up to 90%. Despite this, most companies do not fully use this opportunity to save.

Cloud service providers use spot instances to sell free resources. However, there is one small “but,” which is that the spots can be disconnected and returned in the shortest time, from 2 minutes to just 30 seconds.

Generally, spot mode can only be used for processes that can be stopped and restarted. To confidently convert even business-critical machines to spots requires a perfectly designed spot instance management strategy.

  1. Book cars or/ also skillfully use savings plans

Effectively planned and managed bookings can help you get significant discounts.

It is important to analyze the current usage of cloud resources in order to choose the right reservation attributes from the beginning and develop a long-term strategy for monitoring and managing your reserved machines and, according to statistics from AWS, save up to 72% of the costs of the cloud infrastructure.