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Compliance / Operations

Very Large Enterprises Need a Different Approach to FinOps

Very large companies face special cloud cost-management challenges that simply don't apply to smaller businesses. Here's how to think about large-scale FinOps.
Jul 13th, 2023 10:00am by and
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You can find plenty of advice these days about how to optimize cloud spending, a discipline known as FinOps. If you google the topic, you’ll discover articles that suggest practices like rightsizing your workloads and shutting down unnecessary cloud resources.

Actions like those will help to reduce cloud spending in many cases. The problem with that advice, though, is that it’s designed for the typical organization, and the FinOps best practices that work for an ordinary company might not work for your company — especially if your company is very large and therefore faces different FinOps pain points than smaller organizations.

To prove the point, allow me to discuss the cloud-spending challenges faced by very large enterprises — those with thousands of employees and very complex IT estates. As I’ll explain, very large enterprises have unique FinOps needs, and the strategies that are effective at reducing cloud spending for smaller companies aren’t always the best place for larger organizations to start.

The Unique FinOps Challenges of Large Enterprises

The main reason why very large enterprises face unique cloud cost-management challenges is simple: Their size makes them sprawling, complex organizations. As a result, there’s more information to sift through, more moving parts to manage, and more stakeholders to engage with when forming and implementing a cloud cost-optimization strategy.

After all, a small or medium-sized organization might use just one public cloud platform. But a very large enterprise likely uses many clouds. Because each cloud has different pricing models and different types of services, monitoring costs in a uniform and consistent way becomes harder when you’re dealing with a multi-cloud organization.

Likewise, understanding the needs of the various stakeholders inside a very large organization can be tough because the organizations are broken into disparate teams that may not engage with each other on a routine basis. Developers might talk to finance people when they all work for a smaller company and are based in the same office. But when your development team is located on a different continent from your finance experts, it’s harder to ensure that everyone is on the same page and understands each other’s needs when it comes to cloud cost management.

That’s especially true at enterprises that have a history of acquisitions. Acquisitions not only have a tendency to increase the number of different teams that exist inside a company (at least until teams are consolidated, a process that can take years), but also to create disparate corporate cultures. As a result, you might have one subset of employees within a large enterprise who understand FinOps because it was a priority at the organization they worked for before, while other employees are less familiar with FinOps concepts.

How to Control Cloud Costs at Large Companies

Given the size and complexity of large organizations, small-scale cost-optimization measures — like choosing different VM instance types or moving data to a lower-cost object storage tier — aren’t a good starting point for FinOps at these enterprises. Those measures may work for smaller companies, and they can help enterprises to reduce spending even further once they’ve conquered their bigger-ticket cloud cost inefficiencies, but they shouldn’t be the focus of enterprise FinOps for organizations that are just beginning to implement a cloud cost-management strategy.

Instead, large enterprises should start by identifying cloud cost-saving opportunities that will deliver major across-the-board cost reductions in a short period of time. Negotiating enterprise pricing discounts with cloud-service providers is a great way to do this — although it typically won’t work for smaller companies, which don’t consume cloud services at sufficiently large volumes to have negotiating power with cloud providers.

Large companies should also invest in educating their workforce about FinOps. Again, it’s likely that there is wide variation within an enterprise when it comes to familiarity with cloud-spending challenges and cost-saving strategies, so educating teams about the cost implications of changes they make to cloud environments can go far in building a culture that prioritizes cost optimization.

Deploying solutions to monitor costs is critical, too. At large companies with complex IT estates and cloud architectures, simply getting systematic data about what’s running where in order to identify cost-saving opportunities can be challenging. Enterprises must do the hard work of implementing solutions for tracking costs on an ongoing basis. When they achieve that, they are able to identify and act on cost inefficiencies early, before they lead to the loss of hundreds of large sums of money.

Finally, probably the most critical component of effective cloud cost management is creating a strategy for engaging all stakeholders — development and IT teams, finance teams, executives and beyond — on an ongoing basis to manage cloud costs. Each team — and, in some cases, each member of a given team — has different requirements from the cloud, as well as different spending priorities.

The only way to ensure that everyone across a sprawling enterprise gets what they need from the cloud in the most cost-effective manner is for leaders responsible for cloud cost management to establish ongoing communication channels with stakeholders of all types.

Conclusion: Making FinOps Work for Everyone

To be clear, I don’t mean to suggest that smaller organizations don’t have FinOps challenges of their own, or that only very large companies should bother to invest in cloud cost management. Every organization has opportunities to spend less on the cloud, and every company should act on those opportunities no matter its size or overall IT budget.

But the fact is that very large companies face special cloud cost-management challenges that simply don’t apply to, or are not as severe for, smaller businesses. Those challenges — and solutions to them — are sometimes absent from standard conversations about FinOps, which don’t always factor in the scale or complexity of the largest companies. But very large organizations need to think beyond basic FinOps practices if they want to get the most from cloud cost optimization.

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