FinOps 101: Understanding and Implementing Cloud Cost Control

Rising Cloud Costs

Gartner forecasts that worldwide end-user spending on public cloud services will grow 20.4% to a total of $675.4 billion this year. “This growth is being driven by generative AI (GenAI) and application modernization.” Sid Nag, Vice President Analyst at Gartner, continues, “We expect public cloud end-user spending to eclipse the one trillion dollar mark before the end of this decade.”

At your organization, cloud expenses perhaps haven’t hit the billion-dollar mark, but chances are they’re also on the rise.

Unpredictable Cloud Costs

Back in the day, when we needed more compute power, we had to make large, one-time capital expenditures to buy servers and install them. While setting up the new server could be a fun experience, the flexibility of cloud has numerous benefits, chief among them is the lack of such upfront costs, replaced with pay-as-you-go pricing models. 

But since usage can be unpredictable, that means costs are too. We no longer have to budget for new servers and racks, but organizations are still sometimes surprised by large spikes – something the finance department doesn’t appreciate.

Out-of-Control Costs

Cloud costs can also get out of control quickly. Pluralsight described how: “This can occur in businesses where individuals are spinning up instances across different teams. Things get missed, costs rapidly balloon, and by the time anyone notices, the business is saddled with a big bill. Ouch!”

Cloud Cost Savings is a Top Priority

The Flexera 2024 State of the Cloud Report compiled insights from a worldwide survey of 753 cloud decision-makers and users. For the second year in a row, the report found that managing cloud expenses is the most pressing challenge, even more than security.

Flexera asked which initiatives were priorities in the next year. “This is the eighth year in a row that optimizing the existing use of cloud (cost savings) is the top initiative (increasing from 62% to 71% YoY).” The next most frequently cited initiative, “Migrating more workloads to cloud,” was 13 points behind, cited by 58% of respondents.

… Yet Cloud Waste is Rampant

Despite the continuing focus on managing cloud expenses, cloud waste is rampant. Respondents to the Flexera Report estimated wasted cloud spend on IaaS and PaaS to be 27%, down only one percentage point from last year.

Organizations are both striving to improve cost efficiency and elevating it as an important issue. “The top metric for measuring progress in the cloud has been cost efficiency/savings for the past six years.”

The Challenges of Optimizing Cloud Costs

There are numerous ways to reduce cloud costs. One of the simplest is to remove unused instances, so you stop paying for anything you’re not using. Dedicated cloud engineers like Wursta can help by delivering a rightsizing roadmap. You can also get discounted rates by ‘reserving’ capacity, similar to the concept of a volume discount for buying in bulk. These are known as reserved or spot instances and “Committed Use Discount (CUD)” with GCP. With some cloud providers, reserved instances can be stopped at any time, and therefore can’t be used for business-critical processes.

Of course, committing to use a certain quantity of compute requires knowing what quantity you will use. That isn’t always a straightforward calculation. Overcommit and you’re wasting money by ‘buying’ capacity you never use. Under commit and you’re losing out on savings.

So, What Can You Do?

I may have gotten a little FUD-heavy here (Fear, Uncertainty, and Doubt.) While managing cloud expenses is indeed difficult, there’s plenty of good news. Public cloud providers offer cloud cost management tools, such as Amazon CloudWatch and GCP Cost Management, to help you monitor usage and spend across your cloud services. Flexera found that 89% of respondents have a multi-cloud strategy, with 59% using multiple public clouds. So, while those tools are great, organizations need to view all of their cloud infrastructure across a single pane of glass. That’s where Wursta’s new service comes in,  Google Cloud Platform FinOps Accelerator.

Introducing Wursta’s Google Cloud Platform FinOps Accelerator

The scope of cloud infrastructure tends to expand over time, resulting in spend creep. It takes constant, diligent effort to manage your cloud environment and contain cloud sprawl so that your expenses perfectly match your needs.

That’s why Wursta has launched a new GCP FinOps Accelerator service to address these challenges. Within two months, Wursta can help you reduce cloud infrastructure spend by an estimated 5-25%, with the potential for even greater savings. GCP FinOps Accelerator includes a 60-day free trial of Ternary, a modern FinOps and cloud consumption cost management solution.

Connect with us to accelerate your journey to FinOps enablement.