While the prevailing macroeconomic conditions reinforce the need to control cloud spend, CFOs still require a solid business case for any net-new spend. Building a business case for FinOps is relatively straightforward with a fairly quick ROI. First, most companies just purchase a relatively inexpensive cloud cost management and optimization (CCMO) solution that adds efficiency, lowers cloud spend, enables collaboration, and provides holistic cloud visibility. Unlike other management products, the cost generally aligns to the value received and product deployment is fast. Usually, companies report almost immediate ROI on the tool alone. The next step is building a practice that enables organizational alignment and better cross-group collaboration. This ensures that you get the full value from the technology and create a sustainable practice around one of your company’s largest platforms.
To make the case for FinOps, cloud leaders need to:
- Make the business case about the FinOps practice, not just a tool. Yes, the CCMO solution will save your organization money and quickly. However, without individuals to use the tool, communicate with finance, and convince engineers to take action, only a portion of these savings will be realized. Just like with any major technology investment, your business case for this initiative should encapsulate the larger FinOps practice, not just the technology.
- Leverage Forrester’s TEI model. Forrester aligns business cases to its Total Economic Impact (TEI) model which not only addresses benefits and costs but risks and new flexibility. For example, for FinOps, the practice establishes financial governance which protects the organization against unrestricted autoscaling that might consume your annual cloud budget overnight. With these guardrails, manual financial approvals that slow agile development teams can be automated, allowing teams to build and iterate on code more freely. These attributes are often left out of business cases to the detriment of the initiative.
- Decide which path is right for you. Every business case estimates the total cost of the initiative. With FinOps, your costs will vary drastically depending on the solution path you pick and the size of the team. Before you get started, figure out which path makes the most sense for your company (most organizations pick a standalone CCMO solution) and the size of the organization that will support this effort (most organizations start out with three FTEs).
Need help populating your FinOps business case? Check out my latest report, “Build Your Business Case For FinOps” or schedule a guidance session.
Written with Zachary Stone.