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ProsperOps Wants to Automate Your FinOps Strategy

There are opportunities to spend 32% less money on your cloud bill and still achieve the same outcome. Here's how can it be done.
Sep 20th, 2023 5:00am by
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Out of sight, out of mind? Unfortunately, not so for the cloud, whose not-so-distant data centers each year are responsible for an increasing amount of waste.

Consider that the three major public cloud providers hit a $180B annual run rate in 2021 (a number that is only growing). Within that juggernaut hides an astounding 32% cloud spending waste, revealed the Flexera 2022 State of the Cloud Report. In other words, there are opportunities to spend 32% less money and still achieve the same outcome.

But how can it be done?

Automating the Cloud to Reduce Waste

Adopting FinOps best practices is likely the first answer you’ll hear. But Erik Carlin, co-founder and chief product officer at ProsperOps, thinks teams need to go one step further: “If reporting and visibility could solve the waste problem, then we wouldn’t have this much waste. But we do.”

It was this quest to reduce cloud spending waste that led to ProsperOps’ launch in 2018.

At the time, Carlin was working with the startup’s other two founders, Chris Kuehl and Chris Cochran, at Rackspace Technology, where the trio came to a realization: As the cloud continues to develop and become more complex, companies need more outcomes than just visibility reports. Specifically, they need automation.

According to Carlin, ProsperOps fundamentally believes that the wasted cloud spending problem can only be remedied by automation and AI solutions that can take action at 3 a.m. when people aren’t working. In his words, “A computer can outperform a human — at least regarding cloud optimization. So we should let computers handle the things they’re good at; then humans can focus on the things we’re good at.”

Most Cloud Optimization Tools Aren’t Doing Enough

With new AI solutions being offered left and right as the set-it-and-forget-it quick ticket to success, it’s easy to be skeptical of bringing automation into your organization. But Carlin insists that without automation, the current cloud optimization tools just aren’t doing enough.

Consider: If you launch with Amazon Web Services (AWS) today, you’ll have to pay the on-demand hourly rate if you want to turn instances on and off on a whim. Or you can take advantage of steep discounts (usually clocking in between 30 and 60%) by committing to usage over a period of time. The catch? If you turn that instance off, you still have to pay your cloud provider, albeit at the discounted rate.

On the surface, this seems like a good deal for companies. But things get complicated when you have thousands of instances that are constantly starting, stopping, and autoscaling. To optimize every dollar, engineering teams are left trying to decide which instance to use based on the price — no easy task when the environment is constantly changing.

And herein lies the problem, according to ProsperOps: “Most tools just look at the information and give recommendations on what to purchase based on the price,” explains Carlin. But this information is ephemeral. “Every time you log in, it’s a different recommendation. Worse, it’s all rearward-looking; it’s based on your past usage. And that’s all these tools do. They recommend, but they don’t actually automate or even manage the outcome.”

ProsperOps: Like a Robo-Advisor for Your Cloud Spend

Carlin likens these recommendation tools to never-ending to-do lists that, despite their best efforts, teams will never be able to accomplish.

To deliver tangible outcomes and not just recommendations, ProsperOps touts a platform that does the work for you. Their FinOps platform is outfitted with 24/7/365 automation strategies that they claim can maximize savings outcomes beyond what any human can achieve. As Carlin points out, “We don’t just provide you visibility.”

Instead, a ProsperOps user can expect an experience similar to that of working with a robo-advisor. First, you answer a series of high-level questions to essentially establish constraints that will govern the platform’s operations, e.g., a monthly budget that ProsperOps is allowed to deploy. After that, ProsperOps supposedly takes the wheel, watching your environment in real-time and automatically managing your commitments. “This way, you don’t just get a report,” notes Carlin. “You get outcomes.”

Beyond maximizing savings outcomes, there’s another potential advantage of ProsperOps that Carlin asserts will change the game: its ability to de-risk cloud spend.

“Basically, in the pursuit of trying to save more money, companies tend to overcommit themselves. This means that when usage drops, they’re left having to send money to cloud providers — for no benefit,” he explains. However, ProsperOps’ advanced techniques can remove commitments if usage drops, which reduces risks of wasted cloud spending.

Carlin also points out that many other tools are not actually incentivized to help their customers. This is because most cost optimization platforms bill you based on a percentage of your cloud spending; so the more you pay to a cloud provider, the more they get paid. “We believe that that system has fundamentally misaligned incentives,” says Carin. “With ProsperOps, we take a percentage of savings, so our fee only increases if we save you more money.”

One Standardized Cloud Metric for All

Of course, as much as ProsperOps deems themselves outcome-focused and not just chasing the numbers, metrics still matter. At least, some metrics do.

“When we started the company, there was no standard cloud ROI metric,” says Carlin. Because although cloud providers do offer helpful input metrics like coverage and utilization, they fail to capture what most businesses are ultimately after: how much money they’re saving.

Enter the advent of ProsperOps’ Effective Savings Rate (ESR), which Carlin refers to as “an un-gameable metric.”

ESR is a way to quantify the savings performance of a customer’s commitment-based discount portfolio. With their model, ProsperOps can measure a company’s ESR over a 12-month period to show them what their ESR has been, where it puts them in line with the competition, and what their ESR could be if they worked with ProsperOps.

It’s this kind of standardized benchmarking that Carlin said the FinOps industry as a whole was lacking — so they created it. And now, the rest of the industry is following suit. In fact, Carlin reports that many of their customers have since taken ESR and made it a top-level KPI that they track and report internally.

A FinOps Certified Platform and a founding member of The FinOps Foundation, ProsperOps is also in the process of contributing ESR to the foundation, many of whose practitioners have already adopted the metric. Carlin hopes it will go much further: “We want ESR to be something every business measures. Over time, I think it will become a standard metric that everyone knows.”

Outside of their work for the FinOps Foundation, ProsperOps plans to expand their platform to support other clouds in the future.

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