Avoid the ‘What the Finance Moment’ with Agile Cloud Finance Processes (Guest blog from TCS)

Authors: Verity Greig, Cloud Evangelist at Tata Consultancy Services and Venu Gudimetla, Head of UK Cloud Business 

Every Chief Finance Officer (CFO) is aware of the different challenges that can arise from being responsible for managing the financial risks, controls and investments of an organisation. CFOs play a critical role in transforming the operating model of a traditional business into a future-ready smart enterprise. To do this efficiently and sustainably, many are leveraging the potential of cloud computing to enhance key business processes.

Today, new interconnected technologies such as AI-powered financial solutions are proving invaluable for increasing the speed and scale at which business leaders can drive strategic changes. The cloud acts as the digital foundation which supports these innovative integrations and there are numerous well-known benefits to CFOs of migrating to the cloud. These include:

Lowering Total Cost of Ownership (TCO)

The cloud offers a multitude of benefits from enabling efficient operations, with a significant reduction in the amount of onsite space required. Additionally, cloud service agreements reduce the need for costly maintenance contracts which can result in time savings, reduced hardware and software remediation costs, and infrastructure management efficiencies. Gartner recently reported how public cloud providers can ‘produce 70% to 90% fewer GHG emissions than traditional server rooms, owned datacentres, and midsize data centre facilities to support sustainability initiatives.

New revenue and income generation

Cloud technologies allow businesses to accelerate product development and go-to-market strategies, with faster release times, faster application response times, and the ability to innovate more often. There is even the opportunity to license your own applications to other organisations to generate new revenue streams and increase the bottom line.

Full visibility of an organisation’s IT estate

Before cloud ubiquity, many organisations didn’t have a or full understanding of exactly what assets they owned, where they were and their current level of security. Now with organisation-wide cloud monitoring solutions, businesses will have a much clearer visibility and awareness of the status of all connected assets and important digital environments. The result is that all IT infrastructure owned by the estate it is much easier to conduct maintenance and updates, perform audit controls or protect against potential cybers attacks or data breaches.

All CFOs understand the vital need to maintain efficient, secure, and cost-effective IT systems for accurate forecasting to provide a solid basis for enterprise-wide decision making. However, even the most agile finance functions face tough challenges in their business analysis and planning work, so we must consider if these benefits actually get realised.

Let’s take a look at the four phases of cloud adoption and what should be done in each phase to leverage the maximum benefit and value.

1) Experimentation

In the early phases of cloud transformation initiatives, an organisation may conduct sporadic experimentation with different teams testing different processes to test their cloud capabilities. It can be difficult to move on from this phase due to lack of cloud expertise, central governance challenges and a large number of different operational models. 

2) Migration

This is the phase where cloud consumption truly begins. Once you feel comfortable with managing cloud service subscriptions, cybersecurity governance and operations, including Identity and Access Management (IAM), the migration phase can begin. As workloads transition to new cloud environments, organisations must take advantage of the key features, such as agility and elasticity, Platform as a Service (PaaS) solutions, ‘right-sizing’ and Reserved Instance s(RI) which allows savings on cloud costs. 

Moreover, by setting up a Cloud Centre of Excellence (CCoE), organisations can ensure architectural and operational best practice. This should include cost visibility with tagging, cloud assessment and ‘right-sizing’, and correct subscription management. 

3) Realisation

This phase should be avoided or at least managed as early as possible. This is often the CFO’s ‘What the Finance’ phase, when the old datacentre is still running simultaneously, so the cloud service is an additional cost.

Behaviours in the first phases of adoption will dictate the nature of this phase, as immature practices can lead to early technical debt, lift-and-shift Virtual Machine (VM) over-sizing, and poor planning. The focus here should be on ensuring accurate billing and developing effective strategies to further reduce costs.

4) Experienced

This is the objective for every organisation. Once you have implemented an organisation-wide cloud adoption and migration roadmap that supports lean and agile cloud processes, all processes and activity can be executed with confidence to secure the maximum benefits of cloud technology.

The ideal path for a cloud-powered business transformation

Organisations should aim to avoid the ‘realisation’ phase and progress from the ‘migration’ phase to the ‘experienced’ phase as quickly as possible. If the correct design is agreed on at start of the process, this can help to avoid creating unnecessary technical debt through poor cloud practices. 

Operations and Governance also needs to be fit for purpose, so you should avoid straight lift-and-shift if possible.  This means when you migrate workloads, make sure to take advantage of the cloud’s unique characteristics, such as its elasticity, resilience, and operational management capabilities. Leveraging other features such as PaaS, infrastructure-as-code, serverless, seamless integrations, automation and service reinvention with embedded GenAI will help drive improvements in operational efficiency and compliance.

Cloud FinOps to maintain competitive edge and boost margins

Cloud FinOps is an evolving cloud financial management discipline and cultural practice that enables organisations to get maximum business value from their Cloud estate. This is achieved by helping engineering, finance and business teams collaborate on data-driven spending decisions.

FinOps is not shorthand for “Financial Operations”. It is actually a portmanteau of ‘Finance’ and ‘(Dev)Ops’, highlighting the communications and collaboration between business and engineering teams.

FinOps is not just about saving money. It’s about managing cloud adoption in the best way possible to make generate more value and profit. By investing more in cloud services and solutions, organisations can generate more revenue, via faster delivery of products and features.

According to The FinOps Foundation, we can only build successful practices when people, processes, and reporting are aligned to a set of FinOps core principles and values. There are six key principles of FinOps as suggested by the FinOps Foundation:

1. Teams need to collaborate: Finance, technology, product, and business teams work together in near real-time to continuously improve for efficiency and innovation.
    
2. Business value of cloud drives decisions: The cloud as a driver of innovation.
    
3. Everyone takes ownership of their cloud usage: Individual feature and product teams are empowered to manage their own cloud usage against their budget for decentralised decision making around cost-effective architecture, resource usage, and optimization.
    
4. FinOps reports should be accessible to all: Fast feedback loops result in more efficient behaviour. Internal team benchmarking drives best practices and celebrates wins while industry peer-level benchmarking assesses your company’s performance.
    
5. A centralised team drives FinOps: Executive buy-in for FinOps and its practices and processes are required. Rate, commitment and discount optimisation are centralised to take advantage of economies of scale. 
    
6. Take advantage of the variable cost model of the cloud: The variable cost model of the cloud should be viewed as an opportunity to deliver more value, not a risk. Embrace just-in-time prediction, planning, and purchasing of capacity.

Alongside this list of principles and values, we have listed the five core capabilities that are required to maintain a mature FinOps practice in any organisation:

• Billing & metering: An aggregated console for cost management, cost allocation, usage and billing.
   
• Spend visualisation, tracking & reporting: granular visibility of usage, spend & performance.
   
• Cost allocation & budgeting: Allocate cost by departments, setting thresholds and alerts for resource groups then take remedial action.
   
• Cost monitoring: Day-to-day tracking of usage to uncover and identify patterns by hour, day, week, month, or year.
   
• Cost optimisation: Actionable insights into reducing waste through forecasting and cost show-back or chargeback.

Those organisations who adopt these practices tend to achieve a more predictable and accurate spending, achieving savings in the range of 10% -35% on annual cloud costs and with further benefits of real-time decision and optimised rates.

By adhering to these guidelines, CFOs and finance leaders can capitalise on the full value of their cloud investments, which will give them more probability of succeeding in their innovation and growth goals, as part of a successful cloud FinOps strategy.

Authors

Verity Greig

Cloud Evangelist, TCS

I’m a Leader who believes that technology can be a force for good for Public Services. As a Cloud Evangelist, I have the privilege of leading TCS' cloud strategy for the UK Public Sector.  Recently TCS was named the Number One IT Services Provider in the UK by TechMarketView.  A moment of pride for us but also a moment of obligation. Prior to that I was an Azure Product Manager at Microsoft tailoring the Azure service to meet Public Sector needs. As the mum of two daughters, I’m particularly passionate about inspiring more women into STEM industries.

Venu Gudimetla

Head of UK Cloud Business, TCS

Venu is Head of UK Cloud Business, TCS.  A leader with diverse international experience across strategy, sales and delivery in IT and consulting. Venu has spent a significant part of his career establishing trusted relationships with customers and driving transformation initiatives across sectors and markets.