FinOps gains traction as cloud costs rise, says esynergy

A new report from technology consultancy esynergy has highlighted the increasing significance of FinOps in addressing escalating cloud expenses amid intensifying economic pressures.

The study surveyed 700 business and technology leaders, revealing critical insights into cloud spending and cost optimisation strategies.

The research found that nearly three-quarters (74%) of organisations are grappling with cloud spend optimisation, while over half (51%) are anticipating modifications to their cloud strategy due to cost-related pressures. The survey was conducted by Censuswide, targeting top-level professionals in business and technology sectors, offering a comprehensive overview of current trends and challenges.

FinOps, or financial operations for cloud services, aims to enhance the efficiency and cost-effectiveness of cloud resource usage. Effective FinOps practices can prove crucial for the financial sustainability of businesses, particularly as they navigate the complexities of inflation, advanced technological demands, and sustainability issues.

The combined impact of generative AI advancements, inflationary pressures, and sustainability requirements has placed increased scrutiny on cloud expenditures. Findings indicate that many organisations are leveraging FinOps strategies for the first time to manage these rising costs effectively.

Organisations have experienced several cost increases in recent years, including a 2.8% annual uptick in data processing and hosting fees. While many businesses reported employing various methods to control expenses—65% focusing on storage optimisation and 59% on boosting cost visibility and monitoring—these measures are often seen as short-term solutions.

Despite the adoption of multi-cloud strategies to drive efficiency, two-thirds (66%) of respondents acknowledged that managing a multi-cloud environment was more complex than expected. Improved visibility is believed to offer potential savings, with organisations estimating a 20% reduction in cloud costs with enhanced transparency.

Beyond financial pressures, environmental sustainability has emerged as a significant concern for organisations, driven by investor and public expectations to reduce carbon emissions and manage rising energy prices. The survey revealed that 81% of organisations are prioritising Green Ops (green operations) this year, reflecting a broader commitment to sustainability.

Chief Information Officers (CIOs) are increasingly considering FinOps as a holistic solution to these multidimensional challenges. However, the maturity of FinOps adoption varies, with 45% of organisations describing their current capabilities as "having the ability to walk" and 36% believing they have progressed to "the ability to run".

Commenting on the findings, Matt Lockyer, Platforms Practice Lead at esynergy, remarked, "FinOps is the smartest thing a CIO can do. It is clear from our research that few people have a good understanding of FinOps, despite how crucial it is to business profitability in a digital age. Having a good understanding of your systems and costs is make-or-break for companies."