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Hybrid FinOps to balance cost and efficiency

Hybrid FinOps to balance cost and efficiency

DevOps saves money for companies

If you are reading this blog post, chances are that you have certain level of experience in DevOps, either as a practitioner, pioneer in your organisation or someone that has gotten some knowledge on the concept and why it matters.

In case you are still wondering how DevOps could save money for companies, there are articles that talk about DevOps strategy to save money, how DevOps save money and time, and many more. So this is already proven and getting more and more adopted by now.

But there is a catch, DevOps saves money… except when it’s not.

How do you keep increasing DevOps efficiency while keeping control on the cost?

While it is safe to say that DevOps can help companies save money, without an ongoing coordination and alignment, the efficiency that it brings in term of speed could be detrimental to the cost.

”Let’s spin up another instance.”

Now that the Engineering team is empowered to make decision, they can speed things up and get things done - eliminating possible opportunity cost. However, if the one instance that was spun off is no longer used and still kept open, money starts to leak. What if it is not only one instance, but many?

This is just one example amongst many, yet it’s simple enough to illustrate the topic and get us on the same page. This is where DevOps - or the by-effect of it - indeed cost companies money instead of saving it.

Now multiply that complexity with the realm of Hybrid Cloud and Multi Cloud. Something that has become the norm for companies with certain size.

Hybrid Cloud and Hybrid FinOps

Hybrid cloud has become the norm for many companies, providing the ability to take advantage of the scalability and flexibility of public cloud while maintaining control and security of on-premises infrastructure. However, with this comes a unique set of challenges, particularly in the area of financial management.

Hybrid FinOps, or the management of costs for both on-premises and public cloud infrastructure, is essential for companies looking to strike the right balance between cost and efficiency.

As more companies adopt hybrid cloud, the need for Hybrid FinOps becomes increasingly critical. The on-premises infrastructure market is currently worth $200 billion and is growing at a rate of 5%. Despite this, it is estimated that 30-40% of on-premises infrastructure is wasted, presenting a significant opportunity for cost savings.

Yet many companies struggle to take advantage of this opportunity, often falling prey to the sunk cost fallacy. Fortunately as more CIOs and CTOs recognise the importance of Hybrid FinOps, this mindset is changing.

Hybrid FinOps can help companies save money, while also drive greater business value. By utilising spare capacity of on-premises infrastructure, companies can train machine learning models, move back certain applications from public clouds, and more.

Cross-functions alignment is needed in the organisation.

How do we optimise costs in a hybrid cloud environment?

Companies should follow a six-steps process described below.

  1. Meter usage
    Obtain real-time visibility into usage to understand where resources are being consumed and where there may be opportunities for optimisation.
  2. Watch utilisation
    Continuously monitor utilisation to identify under-utilised resources and areas of inefficiency.
  3. Optimise
    Use the data gathered in steps 1 and 2 to identify opportunities for cost optimisation.
  4. Build a cost model
    Move away from quarterly excel-sheet based chargeback reports to real-time chargeback reports based on metered usage.
  5. Migrate
    Identify and migrate workloads which are VM-based, or Kubernetes-based and are less dynamic to on-premises/private cloud to use the spare capacity.
  6. Buy less
    When it comes to the next refresh cycle, make sure to purchase only what is needed, based on the data gathered in previous steps.

In conclusion, Hybrid FinOps platform is a powerful tool that can help companies balance costs and efficiency in a hybrid cloud environment.

By optimising costs in both on-premises and public cloud environments, companies can save significant amounts of money while also improving resource utilisation. With the right approach and tools, companies can unlock the full potential of the hybrid cloud and drive greater business value.

Contact us for further discussion on how we can support you.

Author - DigitalEx Team & Kiky SHANNON


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