The digital transformation process goes beyond the mere technical transition to cloud-based solutions. While migrating existing systems and processes to the cloud can bring operational advantages, the real value emerges when adopting a new mindset and embracing innovative financial management practices aligned with the dynamic nature of cloud computing.

Your financial management approach should encourage a culture that values agility, continuous learning, and collaboration. This is where implementing FinOps best practices becomes instrumental in accelerating your business value in the cloud. 

In this blog, we will delve into the core principles of FinOps and explore FinOps best practices that can drive a comprehensive transformation of your business.

As the adoption of cloud technology continues to surge, organizations grapple with the intricate challenge of balancing performance, quality, and cost. Striking the perfect equilibrium becomes daunting, as enhancements in one aspect often necessitate compromises in others. 

A survey of 753 business leaders revealed that 80% of the respondents identified managing cloud spending as a significant organizational hurdle. More alarming was the confirmation that over 1/3rd of their cloud spend is either inefficient or wasted.

The frustration and frequent failures in managing cost and performance stem from the siloed nature of the process.

Cloud services undergo a thorough lifecycle encompassing extensive design by proficient cloud architects and engineers, efficient deployment, and diligent monitoring by IT operations specialists, and a meticulous financial management led by department managers responsible for overseeing the associated costs. 

This highlights the urgent need for a strategic approach harmonizing infrastructure efficiency, application performance, and financial considerations.

Enter FinOps, a solution to this pressing need!

Introduction To FinOps

FinOps, short for Financial Operations, encapsulates the realm of cloud financial operations. It encompasses a meticulously crafted set of practices and methodologies to cultivate a financial awareness and accountability culture.

FinOps seeks to optimize the business value derived from the cloud by uniting engineering, finance, technology, and business teams. This collaborative approach streamlines cross-functional teamwork, accelerating product delivery while ensuring cost predictability and robust financial management.

Core Principles Of FinOps

The FinOps Foundation outlines six fundamental principles guiding FinOps best practices. 

• Centralized Team: A dedicated team oversees and manages FinOps practices, coordinating efforts across finance, operations, and engineering for efficient cloud spending.
• Accessibility and Timeliness of FinOps Data: Accessible and timely financial and operational data is crucial for informed decision making. Teams require convenient access to relevant information to proactively manage and optimize costs.
• Individual and Team Ownership of Cloud Usage: Every team member, department, or business unit takes responsibility for efficiently managing their cloud resources, fostering awareness and ownership of cost optimizations.
• Collaboration: Effective collaboration among finance, operations, and engineering teams is essential for a deeper understanding of usage patterns, identification of cost-saving opportunities, and successful implementation of optimization strategies.
• Business Value Drives Decisions in the Cloud: Cloud spending decisions align with the overall business objectives, emphasizing the impact of financial and operational choices on the organization's goals and objectives.
• Variable Cost Model: Leveraging the adaptability and scalability of variable cost structure in cloud computing allows organizations toenhance expenditure, improve resource efficiency, and pay only for the resources utilized.

In addition to these principles, an effective FinOps strategy should equally address significant factors influencing cloud costs, particularly, compute and storage resources. 

Despite the abundance of optimization strategies for computer resources, storage resource optimization often goes overlooked due to complexity and lack of information. 

However, by doing this, organizations are making a big mistake. This can be corroborated by a study done by Virtana on 350 cloud decision-makers.

Virtana discovered that 94% of the respondents said their storage cost was increasing, and 54% said their storage cost was growing faster than overall cloud costs. 

We researched deeper to understand further how storage affects the overall cloud cost, and upon doing multiple studies for different CSPs, we found out that:

• Block storage cost was a significant contributor to the overall bill.
• Organizations were overprovisioning because they were overestimating the growth
• Due to overprovisioning, the average disk utilization was extremely low.
• Despite the overprovisioning, organizations faced downtime at least once per quarter. 

Contrary to the myth that organizations do not struggle with the consequences of overprovisioning for EBS and Managed Disk, it is evident that overprovisioning is a primary cause of escalating storage costs.

To optimize storage costs effectively, consider both compute and storage expenses when implementing cost and performance optimization strategies.

Importance Of FinOps

What makes FinOps important is that cloud operations pose a more intricate challenge than traditional on-premise systems, where software development costs are easily traceable to physical infrastructure.

Cloud service providers operate on a pay-as-you-go model, enabling almost limitless scalability.

However, the complexities of multi-tenant systems and containerized infrastructure like Kubernetes make it challenging to discern costs and allocate them appropriately. This situation has two main consequences: 

• Finance teams need help comprehending cloud expenses while engineering.
• Product teams must be aware of their influence on cloud costs. 

FinOps comes into play to tackle these challenges. Implementing FinOps can overcome these barriers, providing greater clarity regarding your business's cloud expenditure.

Moreover, this fosters better understanding among teams and enables them to make well-informed decisions.

Listed below are some of the reasons that make FinOps a must-have in overall cloud management.

• Cost Visibility and Transparency: Visibility and transparency to cloud costs and detailed insights into resource utilization can help with comprehensive cloud cost optimization.
  FinOps solutions provide a comprehensive view that enables organizations to gain a deeper understanding of expenses at a highly granular level, promoting transparency and visibility across teams.
• Optimized Resource Allocation: Organizations need to align cloud costs with actual usage and prioritize business objectives by optimizing resource allocation.
  FinOps's strategic approach ensures that resources are allocated efficiently, maximizing their value and minimizing unnecessary expenditures.
• Collaboration Across Teams: There is a need for collaboration among finance, engineering, and business teams, promoting a cross-functional approach.
  FinOps’s inclusive methodology guarantees that all stakeholders are aligned with the organization's financial goals, facilitating effective communication and cultivating a shared responsibility for cost management.

Benefits of FinOps

FinOps plays an essential role in managing cloud costs, as it integrates financial knowledge with technical expertise to offer organizations a holistic approach to optimizing costs, fostering collaboration, and achieving enhanced financial efficiency in the cloud.

By implementing FinOps policies prudently, you can gain the following benefits:

• Enhanced Collaboration: FinOps strategies foster effective communication among finance, engineering, and business teams, dismantling barriers between them. This collaborative approach ensures a comprehensive understanding of cloud costs, promoting transparency and shared objectives.
• Improved Decision-Making: FinOps gives decision-makers real-time insights into cloud expenditures. This data-driven methodology facilitates informed decision-making, optimizes resource allocation, and ensures alignment with technical and financial goals.
• Cost-Efficiency: Central to the FinOps approach is a dedication to cost-efficiency. By aligning cloud expenses with actual usage and business priorities, organizations can identify opportunities for optimization, eliminating unnecessary expenses and maximizing the value obtained from cloud investments.
• Improved Forecasting: Adopting FinOps strategies facilitates a well-organized system for predicting cloud expenses, enabling organizations to premeditate costs by analyzing past data and usage trends.
  This proactive approach toward budget planning amplifies the accuracy of financial forecasts and empowers organizations to manage their expenses efficiently.
• Risk Mitigation: FinOps acts as a safeguard against financial risks that arise from cloud utilization.
  By implementing robust controls and governance measures, organizations can effectively reduce the chances of unforeseen expenditures. Consequently, this practice promotes financial stability and ensures compliance with budgetary limitations.

FinOps Best Practices

Now that we have discussed the basics of FinOps and understood its significance, let us dive deep into the FinOps best practices built on the aforementioned principles so that you can implement them for holistic benefits to your organization.

1. Creating A Cloud Centre For Excellence/FinOps 

Establishing a Cloud Center of Excellence (CCoE) or forming a dedicated FinOps team is crucial for implementing robust FinOps best practices within an organization.

Prior to embarking on the cloud journey, this specialized team should deliver a comprehensive presentation on the financial health, utilizing agreed-upon Key Performance Indicators (KPIs). This presentation should address antipatterns, trends, and obstacles to success.

It's essential to assemble a cross-functional team, including members from finance, product, technology, and engineering, each fully committed to the FinOps initiative. This ensures establishing and continuing an effective FinOps culture within the organization.

The core responsibilities of the CCoE should include:

• Ownership and Implementation of Cloud Strategy: Develop and implement the overall cloud strategy, aligning cloud initiatives with business goals and ensuring strategic coherence.
• Facilitating Collaboration and Promoting Best Practices: Foster collaboration and share best practices among key stakeholders such as finance, product, and technology teams to ensure a cohesive approach and maximize the effectiveness of cloud operations.
• Assessment and Adoption of Technology: Actively evaluate and adopt technology solutions aligned with broader business objectives, identifying and leveraging tools that enhance the efficiency of cloud operations.
• Monitoring and Optimization of Costs (FinOps): Closely monitor and optimize cloud costs through FinOps practices, including cost visibility, budget thresholds, and continuous resource optimization for cost efficiency.
• Governance and Compliance: Establish and enforce governance policies to ensure compliance with regulatory requirements and internal standards, managing access controls, data protection, and security measures.
• Training and Skill Development: Organize training programs and provide resources to upskill employees on cloud technologies, FinOps practices, and relevant tools to foster a culture of continuous learning.
• Risk Management: Identify and mitigate risks associated with cloud adoption, addressing security vulnerabilities and data privacy concerns and ensuring disaster recovery plans are in place.
• Performance Monitoring and Reporting: Establish a robust monitoring system to track cloud resource performance, generating regular reports with KPIs and metrics to keep stakeholders informed.
• Continuous Improvement: Foster a culture of continuous improvement by regularly reviewing processes, identifying areas for enhancement, and implementing changes to stay agile and adapt to new technologies.
• Communication and Change Management: Develop clear communication channels to keep stakeholders informed about changes and progress in the cloud strategy. Manage change effectively to minimize resistance and facilitate a smooth transition.

Assembling a committed and diverse team, regularly reviewing the cloud strategy, fostering collaboration, and promoting continuous improvement will contribute to the long-term success of cloud operations within the organization.

2. Involving Stakeholders

Involving stakeholders in cloud-based projects is vital for their success. While roles like cloud architects are crucial for daily operations, the active participation of business stakeholders is equally important.

Stakeholders, representing finance, operations, and technology teams, play a key role due to their profound understanding of the organization's overarching business objectives.

Here's how stakeholders can contribute and benefit from regular involvement in FinOps conversations:

• Risk mitigation: By incorporating different viewpoints, stakeholders actively assess the risks and challenges of managing financial activities in the cloud. Their involvement in the FinOps strategy empowers organizations to proactively recognize and handle potential risks, improving cost management and financial oversight effectiveness.
• Enhanced decision making: Stakeholders' insight on business trends, market conditions, and operational needs enhances the FinOps strategy, ushering in a holistic viewpoint.
  This all-encompassing perspective holds paramount significance in making knowledgeable choices concerning resource distribution and expense streamlining, thereby playing a pivotal role in the triumph of cloud initiatives.
• Improved cloud cost management: Stakeholders comprehensively comprehend the organization's overarching business objectives. By engaging them in FinOps, financial strategies are aligned with broader business goals, fostering a unified and harmonized approach to managing cloud finances.

In summary, stakeholders contribute to the success of cloud initiatives by actively participating in FinOps conversations. Their involvement brings diverse perspectives, aids in risk mitigation, enhances decision-making processes, and ensures financial strategies align with overarching business objectives. This collaborative approach ultimately leads to improved cloud cost management and the overall triumph of cloud-based projects.

3. Calculating Unit Cost

A comprehensive understanding of how effectively your business employs cloud services is crucial.

Solely prioritizing cost reduction without considering the judicious utilization of your engineering team's time may not be advisable.

On the other hand, an escalation in cloud expenses is not inherently unfavorable, mainly when it correlates with business expansion and the integration of new functionalities. It is wise to employ a unit cost measurement approach to understand better the expenses associated with your growing business. 

For example, instead of focusing solely on a general 15% rise in overall costs, evaluating the average expenses allocated to each customer, user session, transaction, and other pertinent metrics would be insightful.

The above detailed analysis offers a more nuanced view of the influence of cloud expenditures, enabling well-informed decision-making and appropriate allocation of resources that align with the evolving requirements of your business.

4. Monitoring The Cloud Spend

Regularly monitoring the cloud spend is one of the most important FinOps best practices.

Monitoring cloud expenditure is vital for efficient cloud cost management and enhancing cloud performance for several reasons:

• Cost Transparency: By monitoring cloud spending, organizations gain visibility into resource utilization and cost allocation. This transparency is crucial for comprehending the financial implications of cloud usage and making informed decisions to optimize expenses.
• Resource Optimization: Monitoring cloud expenditures enables organizations to identify underused or excessively allocated resources. With this knowledge, teams can optimize resource configurations, adjust instances to appropriate sizes, and eliminate unnecessary expenses, resulting in more efficient resource utilization.
• Identification of Cost Drivers: Cloud expenditure monitoring aids in identifying the factors that contribute to cost fluctuations. Whether it is increased usage, changes in pricing, or unexpected spikes, understanding the drivers behind these costs is essential for effective cost management.
• Performance Analysis: The performance analysis is closely associated with monitoring cloud expenditure. By understanding how resources are utilized for costs, organizations can optimize performance and ensure efficient monitoring of applications while minimizing unnecessary expenses.
• Cost Allocation: The monitoring of cloud expenditure serves as a facilitator for effective cost allocation. This allows organizations to assign costs to specific projects, departments, or teams, promoting better accountability and assisting stakeholders in comprehending the impact of their activities on the overall cloud budget.
• Detecting Anomalies: Through monitoring, organizations can promptly detect any anomalies or irregularities in spending patterns. Unusual cost spikes may signify inefficient resource utilization, security threats, or errors requiring immediate attention.

Monitoring cloud spending is crucial to maintaining cost control, optimizing resource utilization, and aligning cloud operations with business objectives. This practice offers valuable insights for informed decision-making, proactive cost management, and enhancing cloud performance.

You can perform a manual discovery or use various monitoring tools available in the market. However, these two methods are limited by tedious DevOps efforts, and you might incur additional costs. Moreover, manual discovery is prone to errors. This is why there is an urgent need for automated monitoring solutions. 

Considering the issues associated with the contemporary monitoring procedures, Lucidity designed a storage audit. Lucidity Storage Audit is a simple, ready-to-use executable tool that automates discovering idle and unused resources. It will

• Provide you valuable insights into the health and usage of your disk, allowing you to optimize costs and prevent any periods of downtime effortlessly. 
• Ensure security by only utilizing CSPs' internal services to collect storage metadata, such as storage utilization percentage and disk size. It doesn't access your customers' personally identifiable (PII) or sensitive data.

With Lucidity Audit, you can be confident that your cloud environment and resources will remain undisturbed, providing you with a seamless and secure experience.

With just a click of a button, Lucidity Storage Audit will provide you with the following information.

• Overall disk spend: Evaluate your present disk expenses, ascertain the most efficient billing arrangement, and unearth potential avenues for reducing costs by up to 70%. 
• Disk wastage: Pinpoint the underlying sources of waste, including inactive volumes and excessive provisioning, and explore proficient tactics for their eradication.
• Disk downtime risk: Identify potential downtimes in advance, taking proactive measures to minimize the risk of financial losses and safeguard your reputation.

Once you have identified the idle or unused resources, delete them to ensure you only pay for the resource you are using.

5. Utilizing Reserved Instances

Reserved Instances (RI), offered by leading cloud service providers such as AWS, Azure, and Google Cloud, present users with a pricing model that rewards commitment through a one- or three-year term. In return, users unlock a significant reduction in the hourly rate of their virtual machine instances.

What Are The Advantages Of RI?

Following are the benefits of using RI as a FinOps practice.

• Cost Savings: With Reserved Instances, significant cost savings can be achieved compared to on-demand pricing. By committing to a term, users gain a discount proportional to their usage's predictability.
• Assured Capacity: RIs guarantee access to a specific computing capacity. This ensures availability during peak times, which is advantageous for applications with consistent and predictable workloads.
• Payment Flexibility: While upfront payment options present higher savings, users also have the choice of no upfront payments or smaller upfront costs. This payment flexibility facilitates adaptable payment structures to suit different user preferences.

How to use Reserved Instances?

Use the Reserved Instances in the following ways to maximize the benefits of your cloud spending.

• Analyze Workload Patterns: Identify workloads with consistent and predictable usage patterns. Reserved Instances offer the best cost advantages when applied to instances with a steady demand.
• Choose Instance Type: Select the specific instance type that matches the performance requirements of your applications.
• Select Region: Remember that Reserved Instances are specific to a particular region, so choose where your workloads are concentrated.
• Evaluate Terms: Decide whether a one-year or three-year commitment aligns better with your business strategy. Longer-term commitments provide higher discount rates.
• Implement a Mix of Standard and Convertible RIs: For stable workloads that won't undergo significant changes in the upcoming years, use Standard RIs. Opt for Convertible RIs if there is potential for workload modifications, as they allow you to modify instance attributes during the term.
• Third-party tools: Consider using third-party cost management tools to analyze and optimize your Reserved Instance portfolio. These tools offer valuable insights and recommendations for enhancing cost savings.
• Regular Review: Cloud environments and business needs are subject to change. Make it a practice to regularly review your Reserved Instance usage to ensure it aligns with your evolving requirements.

6. Leveraging  Savings Plan

Savings Plans are a pricing model offered by certain cloud providers that are both flexible and cost-effective. They enable users to make substantial savings compared to on-demand pricing by committing to a consistent compute usage, measured in $/hour.

What Are The Advantages Of A Savings Plan?

• Flexibility: With Savings Plans, users have more flexibility than Reserved Instances. They are not bound to a specific instance type in a particular region, allowing for greater adaptability to changing workloads.
• Coverage for usage across families: Another advantage of Savings Plans is their coverage across instance families. Users can switch between different instance types, sizes, and regions while enjoying the committed usage discount.
• Automatic discount application: One of the conveniences of Savings Plans is that the discount is applied automatically to the user's bill. This ensures optimal cost optimization without the need for manual adjustments.
• Consistency: Users commit to a specific hourly usage for a 1- or 3-year term to take advantage of Savings Plans. This commitment ensures consistent cost savings for workloads that remain stable over time.

How To Use Savings Plans?

To make the most of Savings Plans, follow the tips below.

• Analyze Workload Variability: To achieve maximum efficiency, Savings Plans are best suited for workloads that exhibit consistent and predictable usage patterns. Gain a comprehensive understanding of your workload patterns to recognize which compute usage commitment would align with your needs.
• Select the Appropriate Savings Plan Type: Compute Savings Plans are well-suited for workloads that consistently compute usage (measured in $/hour) across various instance families, regions, and operating systems. If your region predominantly utilizes a consistent family of instances, opting for EC2 Instance Savings Plans would be more suitable.
• Combine with On-Demand and Reserved Instances: Opt for a combination of Savings Plans, On-Demand instances, and Reserved Instances to create a cost-effective and flexible strategy. This approach ensures that you can readily adapt to the fluctuations in your workload demands.

7. Using Tags And Labels

Tags and labels are metadata attributes attached to cloud resources for enhanced information. They function as key-value pairs, aiding the organization, categorization, and administration of resources within a cloud environment.

Various cloud service providers widely utilize these tags, including AWS, Azure, and Google Cloud.

Utilization Of Tags And Labels In FinOps

Tags and labels in the cloud can be used for the following.

• Cost Allocation: To ensure precise cost allocation, organizations can utilize tags to attribute expenses to specific projects, departments, teams, or applications. This level of detail enhances visibility into how resources contribute to overall cloud spending.
• Budgeting and Forecasting: Organizations can create budgets and forecasts based on these tags by appropriately tagging resources. This facilitates more effective financial planning and enables stakeholders to comprehend and manage costs associated with various aspects of the business.
• Showback and Chargeback: Tags support showback and chargeback models, enabling organizations to communicate transparently and attribute costs to individual departments or business units. This level of transparency fosters accountability and awareness regarding resource usage.

How To Utilize Tags In FinOps?

Below are some tips to help you use tags and labels to their maximum potential.

• Maintain a Consistent Tagging Convention: Establish a uniform tagging convention throughout the organization to guarantee consistency and facilitate easy management.
• Harness Tag Automation: Use automation tools to ensure that tags are consistently assigned to resources. Automating this process reduces the risk of manual errors and ensures compliance with tagging policies.
• Perform Periodic Review and Cleanup: Regularly assess the relevance of tags and eliminate any unnecessary ones to avoid clutter and enhance resource management.

8. Rightsizing The Resources

Rightsizing pertains to adjusting capacity for virtual machines (VMs), storage, and other cloud resources to align with your needs. It entails optimizing the allocation of resources according to the specific requirements of your applications and workloads. 

What Are The Advantages Of Rightsizing The Resources?

Rightsizing is an essential practice for effective management of cloud costs, and it offers the following advantages.

• Cost Optimization: By rightsizing your resources, you can avoid unnecessary expenses associated with paying for unused or underutilized capacity. This leads to cost savings since you are billed based on the resources consumed.
• Improved Performance: Rightsizing empowers you to allocate the appropriate amount of resources to meet the performance demands of your applications. This ensures optimal performance without any wastage of resources.
• Resource Efficiency: The allocation of resources is optimized to match the current demand, thereby maximizing resource efficiency. This is particularly crucial in dynamic environments where workloads constantly fluctuate.
• Scaling Flexibility: The ability to rightsize allows for seamless adaptation to changing workloads, allowing resources to be scaled up or down as required. This flexibility is vital in accommodating fluctuations in demand.
• Budget Control: By aligning resources with the requirements, you gain better control over your cloud budget, ensuring that unexpected cost spikes due to overprovisioning are avoided.

How To Rightsize The Resources?

The tips mentioned below can prove helpful in rightsizing your cloud environment.

Performance Monitoring

• Regularly monitor the performance of your applications to gain insights into resource utilization patterns.
• Employ cloud monitoring tools to gather data on CPU usage, memory consumption, disk I/O, and network activity.

Utilization Analysis

• Study historical utilization data to pinpoint peak usage periods and average resource consumption.
• Identify underutilized resources during non-peak hours and overutilized resources during peak times.

Cost Analysis Tools

• Harness the power of cloud cost management tools to scrutinize spending and pinpoint areas for optimization.
• Utilize cost forecasting to predict future resource requirements and allocate budgets accordingly.

Regular Reviews

• Conduct periodic reviews of your cloud infrastructure to ensure continuous right-sizing.
• Stay up-to-date on cloud service updates and feature enhancements that may impact resource allocation.

9. Auto-Scaling The Resources

One of the best practices to optimize performance and cost is implementing auto-scaling. Auto-scaling is a cloud computing feature that enables organizations to effortlessly adjust cloud resources by real-time demand and predetermined policies.

Auto-scaling functions similarly to a thermostat for your cloud environment, automatically optimizing the number of server instances based on workload fluctuations.

Auto-scaling offers the following benefits:

• Intelligent Resource Availability: The intelligent mechanism guarantees a consistently optimal availability of resources, ensuring efficient utilization.
• Automated Orchestration: Through the auto-scaling feature, resource overpayments for unused resources are automatically prevented, mitigating unnecessary costs.
• Adequate Provisioning: By avoiding inadequate provisioning, the solution eliminates performance risks that may arise due to resource shortages.
• Dynamic Resource Adaptation: The system dynamically adjusts resources to align with demand, enhancing efficiency and responsiveness.
• Cost Savings: With Auto-Scaling, you only pay for genuinely utilized resources, guaranteeing significant cost savings.
• Seamless Traffic Handling: Supporting agility, an Auto-Scaler enables applications to effortlessly handle traffic surges, ensuring uninterrupted operations.
• Optimized Performance: It enhances overall performance without the need for manual intervention, providing a seamless experience.

Auto-Scaling Compute Resources

Auto-scaling compute resources is the automated process of flexibly adapting the computational power within a computing environment, such as virtual machines or containers. This adjustment is based on the prevailing workload or demand, ensuring optimal resource utilization, enhanced performance, and efficient cost management. 

How to Auto-Scale Compute Resources?

Use the following tips to develop a strong and productive auto-scaling plan for your compute resources. This will ensure your infrastructure can easily adjust to fluctuating demands and optimize expenses.

• Take advantage of Auto-scaling Groups: If supported by your cloud provider, use auto-scaling groups to effectively manage and automatically adjust the number of instances within a group. Auto-scaling groups streamline the process of scaling multiple instances by implementing predefined policies.
• Incorporate Cooling-off Periods: To prevent rapid and frequent scaling events, introduce cooling-off periods. A cooling-off period ensures that the system doesn't immediately scale up or down after a previous scaling action, allowing enough time for the changes to take effect.
• Establish Clear Scaling Policies: Clearly define specific auto-scaling policies based on metrics such as CPU utilization, memory usage, or network traffic. Set thresholds that trigger scaling actions, specifying when to scale up or down.
• Leverage Predictive Scaling: Make the most of predictive scaling features that utilize historical data and machine learning algorithms to anticipate future resource requirements.

Auto-Scaling Storage Resources

As mentioned above, storage significantly contributes to the increasing cloud bill. Hence, when auto-scaling, make it a point to also auto-scale storage resources. The need for an automated scaling solution arises from the problems that come with traditional approaches. 

Scaling storage resources using conventional methods often leads to the following challenges:

• Overprovisioning, which wastes valuable resources, or underprovisioning, which causes performance bottlenecks. 
• The disk upgrade leads to latency
• Shrinking a 1TB disk would require at least a downtime of 4 hours. 
• The next scaling process can only be done after 6 hours.

This is why there is a need for an automated scaling solution such as the one offered by Lucidity. It makes the scaling process automated and dynamic through a block storage auto-scaler. 

Lucidity’s Block Storage Auto-scaler is an autonomous storage orchestration solution that automatically adjusts the storage resources per changing requirements. It supports all the leading CSPs: AWS, Azure, and GCP.

How Does Block Storage Auto-Scaler Work?

Lucidity provides seamless integration between your cloud storage and applications, enabling a discreet intelligence layer to enhance several components like block storage databases, application server disks, or Kubernetes. By preserving your data in cloud storage, Lucidity empowers your lift-and-shift applications to effortlessly leverage cloud-native functionality without needing any code modifications.

What Are The Benefits Of Block Storage Auto-Scaler?

As an industry’s first storage resource auto-scaler, Lucidity offers the following benefits:

• Seamless expansion and shrinkage: Get rid of woes associated with manual provisioning and automatically expand and shrink storage resources within minutes of the requirement being raised.
  Whether there are sudden spikes or periods of low activity, Lucidity’s Block Storage Auto-Scaler optimizes efficiency, ensuring optimal performance that perfectly aligns with your workload.
• Zero downtime: With Lucidity’s Block Storage Auto-Scaler, you can rest assured that storage resource shrinkage and expansion will occur without downtime or performance issues.
  This is achieved with the provision of customized policies. By customizing disk utilization and buffer settings, you can create policies that will ensure when the auto-scaler should adjust the resources. 

• Up to 70% savings on storage cost: You can save up to 70% with block storage auto-scaler’s automated expansion and shrinkage of storage resources. Moreover, it will also help increase your disk utilization from 35% to 80%.
  After implementing the block storage auto-scaler, you can also leverage the ROI Calculator to check how much you will save.

10. Streamlining Budgeting & Forecasting

Budgeting and forecasting play a crucial role in a FinOps strategy by equipping organizations with indispensable tools to strategize, manage, and enhance their cloud expenditure. They serve as a guiding compass that steers the organization's cloud expenditure with accuracy and future-oriented insight.

What Are The Benefits Of Budgeting And Forecasting?

Budgeting and forecasting benefit from the proactive and strategic cloud management approach.

• Cost Control: Budgeting enables organizations to limit cloud spending, avoiding unexpected expenses. Forecasting helps predict future costs and facilitates proactive cost management by analyzing historical data and usage patterns.
• Resource Optimization: By utilizing budgeting and forecasting, organizations can pinpoint resources that are either over-provisioned or underutilized. This valuable insight allows for the efficient optimization of resources, ensuring that computing power is aligned with actual needs.
• Strategic Planning: Budgeting and forecasting enable strategic planning by aligning cloud expenditures with business objectives. This ensures that resources are allocated to projects and initiatives that significantly contribute to organizational goals.
• Risk Management: Organizations can reduce financial risks by anticipating and including potential fluctuations in cloud costs within the budget. Forecasting assists in identifying trends and potential cost drivers, empowering organizations to implement effective risk management strategies.
• Scalability Planning: Planning for scalability is aided by cloud budgeting and forecasting, enabling organizations to predict resource requirements during high-demand periods. This ensures the cloud infrastructure can effectively handle increased workloads without unexpected financial burdens.
• Financial Accountability: Budgeting fosters financial accountability by assigning spending limits to teams and projects. This practice encourages responsible allocation of resources and helps prevent any instances of overspending.

Budgeting and forecasting within cloud management are critical for organizations aiming to manage expenses, enhance resource utilization, and align their cloud strategy with broader business goals.

These FinOps best practices are crucial in promoting financial steadiness, informing strategic decision-making, and driving operational effectiveness within the cloud environment.

11. Investing In Cloud Cost Management Tools

Cloud cost management tools are essential for organizations to efficiently monitor, analyze, and optimize their expenditures on cloud services. These invaluable tools offer valuable insights into usage patterns, identify key factors driving costs, and provide recommendations to achieve savings.

By employing cloud cost optimization tools, organizations can effectively maintain control over their spending, optimize the utilization of resources, and ensure that their cloud investments are aligned with their business objectives.

Some of these tools are:

• AWS Cost Explorer (Amazon Web Services): AWS Cost Explorer is an efficient solution within the Amazon Web Services (AWS) ecosystem that offers comprehensive visibility into AWS usage and associated costs. 
  This tool allows users to analyze spending patterns, predict future costs, and generate customized reports. Organizations can optimize their AWS expenses and achieve better financial management using AWS Cost Explorer. 

• Azure Cost Management and Billing (Microsoft Azure): Microsoft Azure's Azure Cost Management and Billing tool is designed to assist organizations in efficiently managing and optimizing expenses on the Microsoft Azure platform. 
  This user-friendly tool provides detailed insights into resource consumption, cost trends, and budget adherence. By leveraging Azure Cost Management and Billing, organizations can better track and control their Azure-related costs, enhancing overall financial governance. 

• Google Cloud Cost Management Tools (Google Cloud Platform): Within the Google Cloud Platform, Google Cloud offers an array of cost management tools to help users effectively manage their expenses. These tools include the Google Cloud Pricing Calculator, Cost Explorer, and Budgets. 
  With these intuitive tools, users can conveniently estimate and monitor costs, analyze spending patterns, and set up budget alerts. 
  Google Cloud's cost management tools empower users to make informed decisions, ensuring optimal financial utilization of the Google Cloud Platform.

• CloudHealth by VMware: CloudHealth is a cloud management platform that supports a range of cloud providers, such as AWS, Azure, and Google Cloud. It encompasses a comprehensive set of capabilities for cost optimization, performance management, and governance.
  This empowers organizations to leverage their cloud investments effectively and extract maximum value from them.

To optimize cloud costs, it is crucial to adapt your approach based on the service provider you choose.

Maximize efficiency by employing various tools, including built-in features and external solutions. Our thoughtfully curated selection comprises a variety of cloud cost optimization tools specifically designed for AWS, Azure, and GCP. These tools guarantee comprehensive and tailored cost management strategies.

12. Ensuring Cloud Governance

Cloud governance in cloud cost management involves the implementation of organization's policies, processes, and controls to ensure responsible and efficient administration of cloud resources.

The primary emphasis is on cost control, necessitating the establishment and enforcement of regulations and practices that maximize resource utilization, monitor expenditures, and align cloud utilization with business goals. 

How To Ensure Cloud Governance?

The following cloud governance practices will help you maintain financial control and optimize resource usage.

• Policy Establishment: Define clear policies that outline the rules and guidelines for managing cloud resources efficiently. Further, establish policies related to budget limits, resource provisioning, and adherence to compliance standards.
• Cost Monitoring and Reporting: Implement robust monitoring mechanisms to track and report on cloud expenditures. Regularly generate reports that provide insights into cost trends, usage patterns, and potential areas for optimization.
• Resource Utilization Optimization: Enforce practices that optimize resource utilization, ensuring that allocated resources match the actual requirements. Implement auto-scaling and right-sizing strategies to dynamically adjust resources based on demand.
• Budget Controls: Set and enforce budget controls to prevent unexpected spikes in cloud spending. Implement alerts and notifications to keep stakeholders informed when expenditures approach or exceed predefined thresholds.
• Alignment with Business Goals: Ensure that cloud resource utilization aligns with overarching business objectives. Regularly review and realign cloud strategies based on changing business needs and priorities.
• Compliance and Security: Enforce compliance with regulatory standards and internal security policies. Implement access controls, data encryption, and other security measures to safeguard cloud resources.
• Cost Allocation and Chargeback: Implement mechanisms for accurate cost allocation to different departments or projects. Introduce chargeback models to promote accountability and transparency in resource usage.
• Continuous Improvement: Foster a culture of continuous improvement by regularly reviewing and updating governance policies. Encourage feedback loops and learn from experiences to enhance cost management practices.

By implementing effective cloud governance in cost management, organizations can ensure that their cloud resources are used responsibly, aligning with business goals while maintaining cost efficiency.

This proactive approach enables better control over cloud expenditures and supports overall financial health in the cloud environment.

13. Including Risk Management

Risk management involves recognizing, evaluating, and alleviating possible financial risks linked to cloud operations.

What Are The Benefits Of Implementing Risk Management?

Including risk management in FinOps strategies is crucial for multiple reasons:

• Financial Stability: Ensuring the stability of an organization's finances requires effectively managing financial risks. Unforeseen cloud costs or exceeding the budget can significantly impact financial stability.
  By proactively identifying and mitigating risks, FinOps plays a vital role in maintaining a more predictable and stable financial environment.
• Cost Predictability: One of the primary goals of FinOps is to provide predictability in cloud costs. Potential factors that may result in cost overruns or unpredictable expenses can be identified through efficient risk management.
  By addressing these risks, organizations can enhance cost predictability and better adhere to their budget.
• Resource Optimization: Efficient usage and maximum utilization of resources are pivotal in mitigating financial risks. By adopting risk management practices, FinOps facilitates resource allocation optimization, guaranteeing that cloud resources are utilized efficiently and cost-effectively.
• Budget Adherence: To ensure adherence to budgets, FinOps encompasses the establishment of budgetary limits and continuous monitoring of expenditures. By employing risk management strategies, potential factors that could lead to budget deviations are promptly identified, enabling the implementation of measures to stay within designated budgetary constraints.

How To Ensure Risk Management?

A holistic risk management strategy will involve the following steps.

• Risk Identification: Initiate the process by identifying potential financial risks associated with cloud usage. This includes an in-depth analysis of unforeseen cost surges, alterations in cloud service prices, compliance risks regarding regulations, and resource allocation concerns.
• Risk Assessment: Assess the impact and probability of each identified risk. Prioritize the risks based on their potential influence on financial objectives and overall business goals. Consider historical data, prevailing industry trends, and the specific attributes of your cloud environment.
• Define Risk Tolerance: Establish explicit criteria for determining acceptable levels of risk. Set thresholds for risk tolerance to aid in decision-making. This involves defining the maximum allowable deviation from budgeted costs and the level of risk that the organization is prepared to tolerate.
• Set Budgets and Limits: Establish budgets and spending limits for different projects, departments, or teams within the organization. This will ensure that expenditures remain within predefined boundaries.
• Implement Approval Workflows: Introduce approval workflows for significant provisioning of cloud resources, changes, or expenses. This practice guarantees that important stakeholders thoroughly review and authorize actions that could impact costs, providing an added control layer.
• Continuous Monitoring: Implement tools and processes for monitoring cloud spending and resource utilization.
  Regularly reviewing reports and analytics helps identify deviations from established budgets or potential risks. Real-time monitoring facilitates prompt action to address any issues efficiently.
• Automated Alerts: Set alerts to notify relevant stakeholders when spending nears or surpasses predetermined thresholds. These alerts act as early notifications, empowering teams to address possible risks promptly.
• Implement Resource Tagging: Enforce a strong tagging strategy to classify and monitor cloud resources effectively. Tags aid in assigning costs to particular projects or departments, facilitating in-depth analysis, and assisting in identifying potential financial risks.
• Regular Risk Assessments: Conduct periodic risk assessments to pinpoint emerging risks and reevaluate the impact and likelihood of previously recognized risks. Ensure the risk management strategy remains adaptable and flexible to changes within the cloud environment and the business landscape.
• Documentation and Communication: Ensure comprehensive documentation of identified risks, assessments, and mitigation strategies. Additionally, ensure effective communication of risk management policies and practices among relevant teams to foster a collective appreciation of the significance of managing financial risks in the cloud.
• Mitigation Strategies: Devise and execute appropriate mitigation strategies for the identified risks. This could entail optimizing resource utilization, negotiating with cloud service providers to acquire more favorable pricing, or introducing amendments to governance policies to address specific risks effectively.

Balance Performance and Cost With FinOps Best Practices

By incorporating the above-mentioned FinOps bestpractices, your organization can foster a culture that prudently manages expenses, promotes financial responsibility, and enhances adaptability.

Tailoring these methodologies to your organization's specific objectives, cloud utilization patterns, and business requirements is crucial.  Additionally, we recommend regularly assessing and modifying your FinOps approaches to ensure they remain aligned with the ever-changing dynamics of the cloud environment. 

If you find pinpointing the cause of increasing cloud costs and declining performance challenging, consider having your storage resources checked with Lucidity. Schedule a demo to explore how automation can assist you in achieving a balance between performance and cost in the cloud environment. This proactive step can help identify optimization opportunities, enhance resource utilization, and improve your cloud operations' overall cost-effectiveness.