The FinOps way: How to avoid the pitfalls to realizing cloud’s value

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In their drive to move to cloud, organizations are running into expensive pitfalls. While there is often a broad range of reasons for these setbacks, many can be traced back to immature cloud financial management capabilities, known as FinOps. As a result, organizations often make costly decisions about their cloud consumption. This is particularly troublesome in current macroeconomic conditions, where organizations have even less room for mistakes.

While FinOps is most effective when organizations implement it from the start, using it at just about any point during a company’s cloud migration journey delivers significant benefits. Organizations that use FinOps effectively can reduce cloud costs by as much as 20 to 30 percent.

To better understand where the FinOps pitfalls are in the cloud migration process, and how to avoid them, we conducted a survey of more than 200 business executives and identified five common pitfalls on the journey to unlock value from cloud.

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1. A wait-and-see strategy can be costly

Enterprises often don’t develop at-scale FinOps capabilities until cloud spend hits $100 million per year.

2. Business executives get involved too late in the game

Business executives don’t get meaningfully involved in FinOps until cloud spend is more than $100 million a year.

3. Tactical activities are prioritized over higher-impact strategic initiatives

FinOps should drive strategic initiatives as well as operational tact.

4. FinOps teams often lack crucial skill sets

FinOps teams need a broader array of skills to be effective.

5. Companies have a limited understanding of cloud unit economics

Only 15 percent of companies have sufficient understanding of cloud unit economics.

FinOps is as much a mindset as a technical capability. It enables companies to unlock maximum value from cloud consistently and continuously, not just in cost savings but also in growth and innovation. For this reason, companies need to treat the development of advanced FinOps as a top business priority.

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