Two different ways that data is driving the cloud FinOps conversation

FinOps - financial operations management for cloud computing - has been charting a steady course in usage by Australian organisations since this time last year. 

It was always anticipated to become a core part of being in the cloud, but it is now everywhere - baked into the Australian Government Architecture (AGA) and even earning businesses awards for controlling their spending, as two recent examples of its dominance.

The emergence of FinOps as a practice and discipline reflects the level of adoption and maturity of organisations in the cloud, whether that's public, private or hybrid cloud environments. 

Over time, cloud has evolved from a technical destination for workloads and applications into an "operating principle" that is being used to drive desired business outcomes. It's a place where teams can swiftly experiment, evolve, and deliver value.

But it's also an environment that is operationally distinct to what technology teams are traditionally used to managing. Organisations, on the whole, have found it difficult to track, manage, and optimise cloud resources cost-effectively. 

This is precisely where FinOps has become a pivotal force. By unpacking how and where cloud spend is being incurred, organisations can optimise their spending and make different users accountable for what they provision and how they consume cloud resources.

These days, the 'why' of FinOps is perhaps less interesting than the 'how' - and on that note, the role of data in FinOps should not be underestimated. 

We have observed two ways that data is driving FinOps initiatives in Australian organisations: firstly, in creating a data-driven conversation about cloud consumption and use, but secondly, in helping organisations reduce their cloud storage requirements, which can have a significant positive impact on curbing spend.

Data means better accountability over cloud spend

The first role of data in FinOps is perhaps the obvious one: when FinOps is integrated into organisational culture, it fuels a data-driven mindset.

This is a key outcome that adopters of FinOps tend to want. 

Business leaders know from experience that it's easy to overspend on cloud services when you have limited visibility and predictability on utilisation. FinOps addresses this issue and lowers the total cost of ownership by mapping spend data, tagging and allocating shared costs equitably, and recommending data-driven cost take-out measures.

Product teams have historically overestimated the size of the cloud instances they need to run their workloads. This is a vestige of traditional IT infrastructure provisioning, which often involved buying hardware with considerable overhead such that it had space to accommodate future usage growth or spikes in user demand over time. Cloud does not need to be procured and provisioned in this manner, however, and so an early victory from FinOps initiatives is often rightsizing cloud instances to workload requirements, which can immediately reduce costs. 

The reason this is achievable is because there is data about the workload, its usage and traffic patterns. By understanding the cost implications of different technology choices to support those patterns, teams can make more informed decisions when allocating resources. 

FinOps tends to lead to improved financial accountability among product teams. Once they have access to the data, it makes sense to make them responsible for cloud spending and for doing everything possible to keep their cloud spending under control.

Data growth is also contributing to rising cloud costs and spend

Data platforms are also increasingly critical components of a successful FinOps strategy. They provide a unified view of data across hybrid environments, enabling organisations to extract valuable insights and optimise resource utilisation. By integrating data management, governance, and analytics, data platforms empower businesses to make data-driven decisions and drive innovation.

The amount of data the world captures and consumes continues to increase exponentially. Between 2023 and 2025, data volumes are expected to nearly double, according to a Hitachi Vantara survey. Optimising data and the amount that is being stored in the cloud represents a way to reduce costs. This is especially the case when you consider that about 50% of the average IT budget goes to data infrastructure.

By consolidating data, improving data quality, and enabling data-driven decision-making, data platforms empower organisations to optimise cloud spending and achieve their financial goals.

More than that, the convergence of FinOps, hybrid cloud, and data platforms can act as a force multiplier, creating powerful synergies that can accelerate digital transformation. By aligning financial goals with technology initiatives, organisations can make informed decisions about where to deploy workloads - on-premises or in the cloud, in the most strategic and cost-effective way.

FinOps continues to gain momentum as a vital component of cloud operating models. According to McKinsey, organisations that adeptly employ FinOps can achieve a 20% – 30% reduction in cloud expenses.

Data will play a key role in that, both as a source of intelligence to continue to reduce cloud spend, but also as a key contributor to cloud costs. By becoming more data-driven and savvy in the way enterprise data is collected and stored, organisations reduce waste and optimise their cloud-based footprint.