Accenture research found that a value gap is emerging between planned and actual value realized, with only one in three companies (35%) reporting that they have achieved expected cloud benefits, with cost being cited as a key barrier to achieving this.

As cloud increasingly becomes the foundation of every organization’s digital core, they often encounter common problems that can lead to cloud overspend. From complex pricing and billing to a lack of accountability and transparency to reviewing supplier costs in isolation, overspend is quite common. 

Furthermore, technology leaders in organizations are increasingly asked to demonstrate how their spend on cloud is supporting the business strategy and how it is aligned to the associated targets. How can they solve this? Let’s dig deeper.

Showing ROI for cloud investments

Investment in cloud and usage across industries is pervasive, growing and constantly evolving. In fact, global spending on cloud services is expected to reach nearly $500 billion this year. Although companies are executing on cloud-migration strategies, many are not yet achieving the benefits they originally imagined.

The answer lies, in part, in the rapidly advancing domain of cloud financial operations (aka finops), a methodology that advocates for a collaborative working relationship between devops, finance and business teams to mitigate the cost overruns and close the value gap.

Finops principles

The fundamental principles of finops include:

    Deploying finops capabilities in an organization typically has the immediately measurable benefit of reducing cloud spend by 20-30% while enabling better alignment of cloud spend to business metrics and supporting strategic decision-making. 

    To be successful, finops requires a change in behaviors and culture that fosters collaboration between devops, finance and business teams. By building financial control, transparency and accountability into the cloud operating model, companies can assign the true financial cost of cloud to each relevant part of the organization. This transparency is vital in optimizing the use of cloud and ensuring individual business units and application owners take responsibility for their own cloud usage and cloud costs, aligning spending decisions with the business value being provided.

    In short, the whole organization is better aligned around the total cost of ownership of the cloud estate. What would you say if your cloud costs suddenly doubled? Well, if revenues quadrupled connected to that, twice the cloud spend is great news. Finops enables this level of business visibility.

    Adopting the finops model

    How can leaders put finops in place? It requires internal alignment across IT and the business working together to manage and optimize cloud. We recommend companies take the following actions: 

      All in all, finops is an increasingly urgent business imperative across industries. Its value is proven continuously by enabling the organization to instantly mitigate unnecessary costs and increase business value.

      Mike Eisenstein is the cloud optimization practice lead for Accenture and Dean Oliver is the cloud finops lead for Accenture Technology Strategy & Advisory



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