When finops costs you more in the end

It’s always healthy to take a critical view of any new technology or approach, and cloud finops (financial operations) is no different. As we learn about what finops does well, we also learn about what needs to be worked on.

While some people will find great value in finops, mainly by doing things in a more streamlined way, others will make common mistakes and cause finops to resort to more resources. Therefore, the business value that it was supposed to generate does not materialize, or perhaps it is even negative. This is one of the biggest fears about finops.

Here are some common mistakes to avoid:

Don’t over-optimize cloud resources. Now, I know you want the best performance at the lowest possible cost, but be careful not to take it too far. If you constantly resize your provisioned resources to the absolute minimum necessary to support your workload requirements, you may end up spending more on monitoring and management tools to find that perfectly optimized configuration.

I’ve seen this recently when companies use their automated finops tools to automatically remove and add instances. They’re trying to find that fully optimized setup where the number of provisioned instances (storage and compute) aligns directly with the number of instances needed to support the application and data workloads for the business.

The only chink in that armor is that you have to buy management tools to balance your resource utilization with necessity. You end up saving 20% ​​in a year through better value for money, but that costs you 40% more in finances and management services to achieve. Net loss, but at least you’re fully optimized.

Don’t overspend on finops governance. The same can be said of finops governance, which controls who can allocate what resources and for what purposes. In many cases, the cost of Finops governance tools outweighs any savings from urging cloud users to use fewer cloud services. You saved 10%, but governance systems, including human time, cost much more than that. Also, your users are more upset that they are denied access to the services they feel they need, so you also take a hit in morale.

Be careful with Reserved Instances. Another thing to watch out for is the mismanagement of Reserved Instances. Reserved Instances are a way to save money by committing to use a certain amount of resources for a certain period of time. But if you’re not optimizing your usage, you may end up spending more than you need to.

Once again, the cure is worse than the disease. He has decided that using Reserved Instances, for example, buying cloud storage services upfront at a discount, will save him 20% each year. However, he has little control over the demand, and if he ends up underutilizing Reserved Instances, he still has to pay for resources he didn’t need.

In many cases, finops tools, if used correctly, can help you optimize the use of your reserve instances, considering demand planning and prospective consumption modeling. The problem is that most companies that have these tools don’t know how to use them for these purposes or don’t have enough historical data to accurately predict demand.

I still believe that finops is an essential part of a healthy cloud deployment and operations, but preventable mistakes end up costing more money than saved. Many of these errors are not very visible, considering that IT tends to only look at the money saved and not the cost of other things that are part of saving that money. This is a fundamental flaw that provides false positive feedback to those tasked with defining a finops strategy and analyzing the resulting metrics.

The question may be asked at some point: “If we saved a huge amount of money with our finops practices and tools, where did it go?” Will you be able to answer that question?