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FinOps 101: Top 7 Cloud Cost Optimization Strategies

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Since the advent of cloud computing, many small and large businesses have moved their workload to the cloud to reap its benefits. Moving the workload to the cloud surely comes with advantages, but it also comes with increased cloud costs if not managed effectively. 

So we have created an article that will guide you to know the meaning of FinOps and optimization strategies that will help an organization reduce cloud costs. 

What is the Meaning of FinOps? 

What does FinOps mean is one of the top questions asked by businesses who haven’t gotten very acquainted with managing their cloud cost. Any organization using cloud solutions must spend money, and FinOps manages the cost of getting these cloud solutions. FinOps ensures that an organization analyzes, tracks, and manages the cost of buying cloud computing solutions. 

FinOps isn’t based only on reducing cost; it also ensures that an organization purchases cloud services that align with its business objectives. For instance, assuming a business is buying the services of a cloud solution like Globaldot, FinOps’ best practices would ensure that it aligns with their objectives and is cost-effective. 

Top Cloud Optimization Strategies 

  • Right Size Your Cloud Computing Services 

One of the major problems many businesses have with their cloud usage is that they often purchase many services that are of no use to them. Sometimes they will buy the right cloud services, but the plan they selected is above what the business needs. Assuming a company has a total of 5 employees and buys a cloud service meant for 20 employees, it leads to wastage. 

That being said, selecting the cloud services that suit your organization and in the right size is very important to reducing cloud costs. Right-sizing an organization’s cloud needs should not be done passively but proactively for more effective cloud costs. 

  • Provide Visibility and Prevent Cost Anomalies 

Sometimes an organization can see its cloud spendings increase drastically without even knowing what led to the spike in cost. To correct and prevent cost anomalies, an organization must provide visibility on all the cloud services. 

Providing visibility will let an organization know when they have changed their cloud service plans to what they don’t need. Assuming a small organization starts using a plan for a large organization, visibility on their cloud costs will let them correct this anomaly. Visibility will also allow a company to know the services they don’t use, and this will stop any subscription to such services. 

  • Implement Cloud Cost Optimization 

Finding what makes an organization’s cloud spend high is one thing; deriving means how to reduce the cost is another. Once there’s visibility in an organization and the cost drivers have even been identified, the next step is for the organization to implement strategies that would help them optimize the cost. 

One of the primary recommendations for reducing costs is removing idle or unused services, which the organization is still paying for. Assuming an organization wants to buy a cloud service that they only need for a month, they shouldn’t make payment for a yearly plan. Making payments for yearly plans means they will only waste more money for the next 11 months. 

  • Integrate Automation into Cloud Optimization 

Automation to cloud optimization is one of the best procedures to integrate while looking to cut costs in your organization’s cloud usage. Automation in your cloud usage will be very effective in helping the organization identify cost-saving opportunities like discounts. The organization will also get the perks of automating its cloud billing and automatically provisioning your cloud resources. 

Cloud automation tools like Globaldot will help an organization get automated reports and insights into tools that have little or no use in the company. It will also provide the organization with the best cloud services that suit the exact descriptions of their cloud needs. 

  • Limit Software Licensing Spend 

The amount companies spend on renewing their software licenses is staggering, but some of these costs can be reduced if monitored effectively. Some licenses companies have been renewing for years are not needed again, but they don’t know yet. 

Tracking software licenses and the amount paid for them can be incredibly hard when done manually. But integrating automation in monitoring an organization’s software licenses and fees will help them know exactly how much they spend. Besides knowing the amount they spend, they will also get visibility on some of the licenses they don’t need again. 

  • All Department Should Be Aware/Educated about Cloud Costs 

An organization can implement all they know about cloud cost optimization, but if all departments are not carried along, it will still lead to some leakages. The IT department in an organization shouldn’t be the only one aware of cloud cost optimization. 

Every other department, including the executives, should be educated on the importance of cloud cost optimization. They should also be taught of FinOps practices which would help prevent any form of excessive cloud spend. 

  • Create Cloud Governance 

Cloud governance is the creation of rules and policies guiding cloud expenses and usage in any organization. Cloud governance isn’t only about usage policies; it also entails giving out roles and responsibilities to every department in the organization regarding cloud cost optimization. 

Wrapping Up  

FinOps is the idea that an organization should get insights on the cloud services they use, analyze those insights, and look for ways to cut unnecessary cloud expenses. 

Some FinOps practices will help organizations reduce and restructure their cloud costs monthly or annually. Examples of these top FinOps practices include providing visibility and preventing cost anomalies, integrating automation to reduce expenses, and cost optimization education.