The cloud is undoubtedly transformative for both IT and businesses, but the business has often been left out of the process when it comes to cloud technology decisions. In a traditional environment, everyone must collaborate on building servers, storage, and networking equipment. For instance, if IT requires more processing or storage, the team needs to initiate a capital expenditure to purchase additional hardware. The business has to get involved.
But these processes simply don’t apply in the cloud where infrastructure is automatically deployed as code. That ease of deployment bypasses conventional checks and balances, which means spending decisions are made without alignment to business needs. The end result is a lack of visibility and accountability, with resource inefficiencies that cause cloud costs to spiral.
To address this misalignment, enterprises need a model that provides IT the agility, scalability, and flexibility of the cloud while allowing the business to make value-based decisions overspend.
The first step is gathering information to facilitate transparency around cloud usage and costs. Many stakeholders play a role in bringing financial accountability to cloud costs, such as engineers, finance, procurement, operations, and product owners. That means reports will need to reflect a variety of needs. For example, ‘putting data in the path of the engineer’ encourages them to take action and look for ways to optimize cloud costs.
This initial phase is also the best time to implement the necessary technical plumbing to map cloud resources to business accounts for accurate allocation and reporting. It’s not a simple task, given the ephemeral nature of cloud resources. Properly tagged resources can be automatically monitored, with alerts that notify stakeholders when infrastructure is deployed outside of governance policies established by the business.
But insight alone isn’t enough to realign the business and IT. Organizations need to build a new practice that analyzes all this data to provide management with the right kind of insight.
Ultimately, the business needs to understand infrastructure costs to develop cloud-centric economic unit calculations such as the cost per customer or transaction. Understanding cloud unit economics allows a business to predict gross profit margins and break-even points better, which are critical to making data-driven decisions for cloud investments.
Much of this should ring a bell for those familiar with FinOps because much of the methodology is similar and the goal is the same: ensure cost data is accessible to the people who need to see it and that teams see how costs map to individual business units so they can make value-based decisions.
UST, a global digital transformation solutions consultancy, has helped some of the world’s largest, best-known companies realign their business and IT to reduce cloud spend, gain efficiency, and progress faster toward achieving their business goals. UST’s people have deep expertise in FinOps, cloud operations, data analysis, and business analysis. If your organization needs to align the business and IT when it comes to cloud, learn more about how UST can help.
Cloud Management