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FinOps / Operations

Use a FinOps Model to Control Hybrid Cloud Costs

Deeper financial analysis and earlier strategic thinking will result in a hybrid cloud deployment that delivers clearer ROI.
Jan 31st, 2024 10:00am by
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Businesses are past the rush to move applications to the cloud to accommodate remote workers. As the next phase of remote/on-site work takes place, businesses are wanting to re-evaluate and rein in their cloud spend with an eye toward a leaner, more reasoned, less costly approach.

They are turning to FinOps as a method to refine their hybrid cloud strategy and put a greater spotlight on cloud costs in the deployment planning stage.

FinOps is the right discipline at the right time. However, faced with rising public cloud costs, businesses are trying to find the right balance between moving more applications to the cloud, retaining compliance-related and other applications on premises, and in some cases, bringing data back from the cloud to an on-premises data center, known as “data repatriation.”

For example, over half of enterprises (64%) have adopted a hybrid cloud approach, a combination of public clouds, private clouds, and on-premises infrastructures, according to Parallels’ recent hybrid cloud survey.

Integrating FinOps Into Hybrid Cloud Strategy

FinOps is the practice of optimizing costs while achieving maximum business value from cloud investment. From Day 1, businesses need to apply FinOps thinking about the costs of running another application in the cloud. The reality is, not every application should be in the cloud.

Some legacy applications, for example, may not transition seamlessly to a cloud. Ninety-six percent of IT professionals affirm the ongoing necessity for access to legacy Windows and Linux applications today, and almost half (49%) anticipate this requirement persisting 5 years into the future and beyond.

It is not an “all-in” proposition. In thinking about more cloud usage, businesses must look at their server CapEx investment, which can have a 10-year cycle. For some workloads, the cost of operating via a server may be less than the cost of running them in the cloud.

If a decision is made to decommission a server, the process of moving a desktop server to Azure Virtual Desktop or AWS, for example, must be considered from the aspect of retooling, staff requirements and other costs. Using vigorous FinOps analysis will help prevent unnecessary cloud migration and protect return on CapEx.

When IT or a department team proposes migrating an application to the cloud, FinOps analysis combined with a clear strategy is the recommended first step:

  1. Cost Basis Analysis: IT budgets are flat. Businesses are having to do more with less. Before moving an application to the cloud, or deploying a new cloud-native application, a thorough FinOps cost analysis needs to occur. This should include the involvement of IT staff, the need for additional IT skills to manage the cloud application, day-to-day costs of running the application, costs relating to user population size, storage costs and ongoing maintenance.
  2. Migration Strategy: Choose one application and clearly define expectations for the migration. It should not be a generic lift for the entire company. Define a set of users for the cloud application and put population controls in place.
  3. Phased Approach: Start with small workloads and use FinOps analysis and monitoring to help gauge usage, costs incurred and any wasteful spend.
  4. Endgame Thinking: Set a time frame for deployment of a cloud application and another for achieving ROI on the investment. Adhere to the migration strategy, with checks and balances along the way to move to the end goal.
  5. Equilibrium Objective: Businesses achieve equilibrium in a cloud investment when the number of users accessing a cloud application, and the costs incurred, balance out by achieving the end goal. By clearly defining a strategy at the beginning and monitoring progress along the way, IT and other teams can prove the investment’s worth.

Making Cloud Investments Manageable

Hybrid is not a single flavor. There are companies with workloads on premises that will move parts of their workload to the cloud. A second flavor is appropriate for compliance-related workloads that just can’t move to the cloud, but can utilize SaaS apps in the cloud. These apps need to connect back to on-premises. A third flavor includes born-in-cloud (cloud native) companies that eventually consider going back to on-premises or hybrid for a variety of reasons, including costs and scale.

Regardless of the exact mix of cloud and on-premises workloads, the keys to FinOps cost control and achieving business value are superior management and flexibility to move workloads as needed.

For example, if a particular application is delivered via virtual desktop infrastructure (VDI), depending on the user and work product, one or more instances of the application can run through AWS along with others on premises.

For short-term, intensive projects, contractors can have access to cloud applications, then access ends when the project is completed. From the user perspective, any migration from cloud to on-premises or the reverse should be transparent.

Managing this ever-changing balance between on-premise and cloud applications requires a dynamic solution that can accommodate these changes, in one unified management platform that will enable the hybrid cloud environment to be managed by a single license, whether the purpose is migration or segmenting an application to be both on premises and in the cloud.

When ongoing FinOps monitoring and analysis reveals application waste or the need for more cloud compute space, a unified management and licensing platform will be able to efficiently make needed corrections.

Long-Term Planning for Hybrid Cloud

The future appears to rest soundly with a hybrid cloud environment. Popular public cloud applications, such as Salesforce, are among the key drivers of the estimated $545.8 billion market. Businesses are certainly feeling the pressure to use SaaS and IaaS services to fast-track digital competitiveness.

While the cloud offers advantages in time-to-market speed, quick spin-up of applications and business continuity, it’s smart to put these considerations through a FinOps lens and make cloud decisions for the future that can realize ROI in a given time frame.

Rather than go “all-in,” develop a hybrid cloud future that uses servers on premises to the best fiscal advantage, and the cloud where it can prove the most business value.

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