Cloud cost optimization is now a boardroom discussion

Discussions on cutting cloud costs are everywhere, from the internet to top tech conferences. It is not only the executives from finance or DevOps who are pondering over the issue, but cloud cost optimization has emerged as a critical boardroom discussion too. Once confined to IT departments, the management of cloud expenses has evolved into a strategic imperative that directly influences an organization's financial performance and overall strategy.

In a unique survey, IOT Analytics published a report, “What CEOs talked about in Q4 2023, over the calls”, stating that in Q4 2023, economic concerns rose as the priority topic of CEOs’ minds globally. Quoting the report, “Discussions about budgets increased by 17.4% and cost optimization discussions rose by 21.4% in Q4 2023 compared to the previous quarter, as CEOs considered the costs of borrowing money and servicing their debts among relatively high interest rates. As these and other operational expenses start to weigh on the bottom line, many enterprises try optimizing costs, with cloud-related optimization as an example focus area.  In response to this trend, AWS announced its Cloud Cost Optimization Hub at AWS re:Invent 2023, which aims to help customers optimize their cloud spending.”

This suggests that CEOs are becoming more aware of this critical factor that spikes the business cost and hence, are actively involved in exploring the ways of cloud cost optimization.

In this blog, we explore the changing dynamics of the cloud landscape that has led to the emergence of FinOps, the factors that drive active involvement of business leaders in Cloud FinOps driving its significance, and the role of leadership squads in leading cloud cost savings. 

FinOps Adoption for Cloud Cost Optimization: Senior Leaders Taking the Control 

As economic uncertainties rise globally, CEOs and board members are increasingly focused on optimizing costs across all sectors. Cloud-related expenses have gained prominence, with unmanaged bills potentially causing financial strain. As per a recent survey by the Everest group, 46% of organizations struggle to define comprehensive cloud unit economics, hindering clear measurement of cloud cost's impact on business value.

FinOps has become a widely recognized approach in the business world, as it promises to empower organizations with cloud cost ownership across all levels and provide valuable data for business leadership to strategize upon cloud cost optimization. 

Cloud FinOps practices facilitate the adoption of a well-structured collaborative framework that bridges IT, finance, and business units. It helps businesses establish clear cost ownership, set realistic budgets, and align cloud costs with business value. This cross-functional collaboration ensures that cloud expenses are not just controlled but strategically aligned with organizational goals.

The Everest report, based on a survey of 450 organizations globally, highlights the growing significance of FinOps. The FinOps market, valued at $5.5 billion, is projected to grow at a robust 34.8% CAGR from 2023-2025. Senior leadership, including SVPs, VPs, Directors, CIOs, and CTOs, actively participates in FinOps decisions (12% representation from business and management leaders), underscoring its strategic importance.

Drivers of Business Leader Engagement in Cloud FinOps

Earlier, we mentioned that ‘economic uncertainties’ is one of the major factors pushing shareholders and businesses to focus more on cloud cost reduction. However, other drivers have led to this shift in responsibilities.  

• Rising Costs:  Underutilized resources, inefficient configurations, and a lack of cloud cost visibility contribute to wasted spending, thus escalating uncontrolled cloud bills. With increasing pressure on budgets, board members are scrutinizing cloud expenses at the granular levels and feel the need for strategies to control them.
• Focus on ROI: Shareholders and board members are becoming increasingly concerned with getting a good return on their investment (ROI) from all technology initiatives, including using cloud computing. Their main question is whether cloud adoption provides benefits beyond just saving money. They want to know if controlling cloud costs can also maximize the value, they get from their cloud investment by allocating resources responsibly.
• Data-Driven Decision Making: A well-informed business decision should always be backed up with real-time data points. The availability of detailed cloud cost data empowers boards to understand the pretext of cloud expenses, allowing them to make appropriate budgeting decisions. The use of various sophisticated cloud cost visibility tools like CloudKeeper Lens that provide insights into spending patterns, identify potential cloud cost savings opportunities and enable better budgeting and forecasting are becoming popular among business teams.
• Sustainability Concerns: Environmental, Social, and Governance (ESG) considerations are gaining traction in boardrooms. Cloud cost optimization can contribute to sustainability goals by reducing the energy consumption associated with underutilized resources. This encourages board members to actively learn about optimizing cloud usage and show their commitment to managing resources responsibly.

Finding Their Place: Business Leaders in the FinOps Landscape

The FinOps team structure, as defined by the FinOps Foundation, is made up of the following personas:

The FinOps framework comprises six domains aligned with business outcomes. All six domains are important, but the Real-time Decision Making and Organizational Alignment domains play a particularly significant role in driving cloud cost optimization strategies.

So, where and how do business leaders fit with their roles, in this FinOps Framework? Here is how:

Embrace FinOps for Cloud Cost Optimization & more

Cloud cost optimization has become a top priority in boardrooms, with business leaders taking an active role in driving optimization efforts. Thanks to FinOps adoption, leadership now has a deeper understanding of cloud operations and associated costs, enabling them to develop effective financial strategies and maximize the value of their cloud investments.

Ready to unlock the full potential of FinOps in your organization? Our team of cloud FinOps experts is here to guide you every step of the way. Connect with us today to discuss your specific needs and discover how we can help you.