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July 11, 2023
Small businesses in every industry are increasingly relying on cloud computing to drive innovation, optimize efficiency and scale seamlessly. And the cloud services these businesses rely on do offer numerous benefits. Cloud solutions are incredibly flexible, easily accessible, cost effective and innovative. And, when leveraged intelligently, cloud computing can be the difference between short-lived success and a lasting competitive advantage.
Unfortunately, many small businesses aren’t prepared to handle the sky-high costs of uncontrolled cloud spending. Because without proper cost optimization strategies in place, cloud spending can quickly spiral out of control, hurting the bottom line of the businesses it aims to support.
That’s where Cloud FinOps comes into play.
FinOps, meaning the combined practice of “finance” and “DevOps,” is a management practice that focuses on optimizing the financial performance of a cloud computing infrastructure so the company as a whole can use cloud computing efficiently. It drives greater business value by helping every department, from IT to finance, recognize how their cloud usage can be contributing to the company’s overall costs — so decision-makers can minimize waste at every level.
The importance of closely monitoring your cloud computing costs can’t be overstated. Without proper oversight, not only can cloud computing take a sizable bite out of your budget, it can be difficult to reign back in.
Many cloud-based solutions are offered on a variable cost basis. That means the cost of using these tools varies by how often they’re used, how many people use them, and how much cloud computing your company utilizes each period. Unlike on-premise infrastructure, which may be a one-time expense or set monthly subscription, cloud-computing costs can vary widely from month to month — and quickly accumulate if you aren’t watching.
Identifying and eliminating cloud waste is an essential role of FinOps. By giving your company granular visibility into every team’s usage and cloud spending, you can identify idle resources, redundant processes, overprovisioned instances, inefficient storage usage and more — and cut the cloud costs you no longer need.
The earlier you adopt FinOps, the more costs your company can reduce overall. But luckily for small businesses who have already begun integrating cloud solutions into their daily operations, deploying strategic FinOps at just about any point in your cloud migration journey can help reduce your expenses and increase your cost efficiency. In fact, according to a McKinsey report, companies that use FinOps correctly can reduce their overall cloud costs by up to 30%.
Cost savings isn’t the only benefit of a comprehensive Cloud FinOps strategy. Because FinOps encourages greater collaboration between your IT, DevOps and finance teams, it can also improve the strength of the cloud-computing decisions these key leaders make.
Rather than making partially-informed decisions based on the needs of a single department, robust FinOps creates cross-functional cooperation, so the company can more accurately choose cloud services, rightsize resources, and identify opportunities for automation and optimizations. FinOps also helps ensure the cloud resources your company does leverage are truly aligned with your business goals, and that each system is implemented effectively.
A third major benefit of Cloud FinOps solutions for small businesses is that they enable greater financial control and predictability for your cloud spending.
One FinOps report that can significantly benefit your business is a cloud costs, usage patterns and trends overview. This visualization of the cloud solutions your company uses most, which solutions are leveraged seasonally, and which products are no longer useful can help your decision-makers identify cost-cutting opportunities. Plus, by recognizing usage trends, your financial planning and analysis team can make better cash flow and budgeting decisions that tightly align with your upcoming cloud expenses.
FinOps also empowers stronger real-time decisions. While traditional reporting may miss subtle trends and small anomalies, a robust FinOps system can alert your decision-makers the moment a cloud cost nears its budget cap — giving you ample time to adjust. This gives your team the opportunity to address deviations quickly before they cost more than you expect.
Rather than being surprised by high cloud-computing costs one month, and lower costs the next month, FinOps helps small businesses track, plan and predict their cloud needs — allocating the right budgets when necessary.
Today, as much as one-third of all cloud spending is wasted. And the truth is, most small businesses can’t afford to lose 30% of their cloud budget to unnecessary expenses.
When your small business is on a pay-as-you-go cloud spending model, where your expenses increase as your company leverages more cloud computing resources, it’s essential to deploy a robust FinOps initiative to keep your spending under control.
In this cloud-driven landscape, you can gain a serious competitive advantage by leveraging innovative cloud tools and carefully monitoring your costs along the way. And with an effective Cloud FinOps solution in place, you can maximize the value every department gains from their cloud-based solutions.
Want more? In addition to taxes, accounting, bookkeeping and CFO services through its FinOps, Escalon’s Essential Business Services include PeopleOps (HR, benefits, recruiting and payroll) and Risk (business insurance). Talk to an expert today.
This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here.
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