Kyndryl 44513_eBook_FinOps: Optimizing Costs Across a Hybrid Landscape

Optimizing Costs Across a Hybrid LandscapePew Research reports that 54% of employed adults want to work from home after the global pandemic ends, compared to just 20% who worked from home...Contents

As enterprises ramp up migration
of key workloads to cloud, many struggle with the changing dynamics of cost management
and the need to optimize usage of the hybrid landscape for maximum business value.

But there’s good news: Modern financial management practices such as FinOps can counter complexity and out-of-control hybrid cloud spend. What’s key? A culture and set of governance processes, supported by the
right technology, that improve visibility, increase accountability, and drive intended business outcomes.FinOps represents a cultural shift to a
new operating model designed to bring accountability and cost control to consumers of IT services. FinOps is more than a tool or a technology — it’s a combination of technology, best practices, and reimagined cross-functional business teams. The approach examines hybrid multicloud operations through a financial lens, deploying a set of integrated tools and processes to enable faster product
delivery, adaptable financial controls,
and improved predictability.Although companies have been doing cost management and fiscal governance of IT expenditures for years, cloud and DevOps have changed the model of purchasing. Traditionally, long procurement cycles contained several phases: Engineers requested IT capacity, centralized control meant that financial approval was required, and costs were extremely predictable. CapEx defined the spending model, and multiyear budgets and plans were the norm.Fast-forward to today: Cloud has shifted that equation to a more decentralized environment with OpEx at the core of the spending model. The self-service nature of cloud makes it easier to tap IT resources without the bottlenecks of the traditional
IT purchasing cycle. The result is greater levels of innovation, but at the expense of predictability and accountability of IT spend. Remote work has accelerated the move to cloud, exacerbating the challenge of managing cloud costs. As a result, a new operating model is needed to bring together consumers of cloud with Operations and Finance, delivering greater control over cloud spend along with higher predictability. By reimagining processes and practices in embracing the FinOps model, companies can achieve that much-needed course correction. IDC estimates that 30% of cloud costs are wasted expenses.¹To counter this dynamic and maximize value, IDC expects, 80% of organizations using cloud services will establish a dedicated FinOps function by 2023 to automate policy-driven observability and cloud resource optimization.² Data from Forrester confirms the emphasis on IT fiscal accountability: 78% of chief technology officers and 50% of the business-decision-maker respondents to Forrester’s “Buyers’ Journey, 2022” survey cited measuring IT performance based on the contribution to business results as a
top priority. “Consumers of cloud have reached a point where they’ve consumed about as much as they can without having a higher level of discipline around managing spend,” notes Derek Catlin of Kyndryl’s Hybrid Cloud Services Center of Competency. “We’re falling into the cycle in the cloud world where there’s a confluence between our ability to optimize and the need to optimize. There’s enough maturity and technical capability within the industry to support FinOps because of the maturation
of skills and tools.”

¹IDC Metri

² “IDC FutureScape: Worldwide Cloud 2022 Predictions” https://www.idc.com/getdoc.jsp?containerId=US47241821