As my family’s “chief financial officer,” one night I meticulously scanned my utility bills. As I went through them, line by line, I became confused and frustrated: I couldn't understand the increase in costs and what was driving them. It was a confusing mix of kilowatt hours, supply and transmission costs, and local rates. I'm seeing a very similar phenomenon with cloud spending.
My day job at IBM is creating automation solutions to help solve efficiency and observability problems for organizations in the IT industry. As the foundation for today's digital transformation, cloud and hybrid cloud technologies offer many benefits, from cost savings to flexibility, security and automatic software updates; However, all benefits come with various costs that can be difficult to measure and manage.
What makes cloud spending difficult?
The difficult part about cloud spending is that it is too complex to fully understand how much cloud costs will be. Surface-level cloud spending is pretty easy to track, but when it comes to things like Kubernetes workloads (how software is deployed, scaled, and managed in and between clouds), inference, and sourcing AI models, cost projections are extremely difficult and often far-fetched. inaccurate because there are too many gaps that are not taken into account.
Some lagoons are the size of canyons and others are difficult to detect. Remember, this isn't the pinnacle of cloud complexity either; it will only get worse.
Think about this situation in the spirit of getting AI initiatives off the ground. Organizations tend to accept the high upfront costs associated with the cloud to generate more revenue and profits; However, this way of spending is not sustainable.
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What is FinOps and how can it help manage cloud spend?
Managing cloud costs is so important that the IT industry created a practice to manage it. FinOps, as it is known in my industry, is an operational framework for managing cloud costs, from engineering to operations. In fact, according to Civo's 2024 Cloud Cost Report, 60% of organizations saw cloud spending increase last year, and 40% of them said costs increased by more than 25%.
When you include the larger macroeconomic factors of companies cutting resources for efficiency, inflationary price increases and spending on new technology, CFOs need more support and visibility.
How can partnering with CIOs and using automation help CFOs address cloud costs?
CIOs can help their fellow CFOs by adopting FinOps practices powered by AI technologies that reduce the burden of constantly tracking, tagging and chasing their operations team to understand how budgets are being spent, putting real-time visibility at their fingertips. and decision support.
The cloud operates in real time, but can be predictable and forecasted in a way that improves visibility and automates resource management, observability, and cost transparency.
SEE: How AI is changing the cloud risk and security equation (TechRepublic)
Automation can save by over-provisioning CPU/GPU, memory, and storage. It can help observe application health and proactively troubleshoot issues. Automation can also provide a holistic and granular breakdown of how cloud costs are stacking up.
Partnering with CIO colleagues and implementing automation solutions can help get a CFO out of the woods. CFOs must be able to manage budget expectations while keeping the business on track with innovation and spending.
CFOs, CIOs, engineers, DevOps, and cloud/AI team leaders must address this issue together. The synergy of aligning business and financial results will allow you to reduce spending and maximize your potential simultaneously. A good FinOps posture means everyone has equal visibility and responsibility for spending.
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Is it worth investing in a FinOps automation solution?
Yes. The additional upfront cost of purchasing a FinOps automation solution will pay for itself in less than two years; I bet it could happen in 12 months.
Implementing a FinOps automation solution is essential. Get it right from the start—maximize connectivity, efficiency, and collaboration—and watch your cloud expenses and CFO stress disappear.
Some old financial advice has never been more prevalent than now: Live within your means. Invoices shouldn't surprise you or make you sweat, and CFOs shouldn't have to pay the price for your overspending.
Bill Lobig is responsible for product management of IBM's IT automation software. This includes a range of technologies that enable people and organizations to optimize their technology spend and ensure application health and performance.
Bill has been in the enterprise software space for over 25 years serving in various engineering and product management roles ranging from content/unstructured data management, information lifecycle governance, business process management, learning automation and artificial intelligence, and application modernization, FinOps and IT. Operations. Bill graduated Summa Cum Laude from the University of Maryland College Park.
