According to the 2024 State of FinOps Report, reducing cloud waste remains the top priority for all cloud-native organizations, which is no surprise. “Enabling Automation” has also increased in priority for FinOps teams, now ranking ahead of “Empowering Engineers to Take Action.” This shift suggests a growing focus on using automated technology to free up engineers for more strategic, higher-order tasks that require human decision-making such as usage optimization, unit economics, etc.
Engineering teams are typically focused on developing new features and products, which directly fuel business growth. Because of this, cost management efforts often get sidelined, which can lead to unchecked spending and more cloud waste. It’s understandable though; after all, optimizing costs isn’t usually in the spotlight as a core responsibility or a key objective for engineering teams who are already stretched thin with their primary tasks.
Managing cost optimization without automation increases in complexity as organizations scale their infrastructure in multi-cloud environments. Team may need to hire more resources, add new internal processes, and/or leverage technology solutions to support cost optimization efforts. Non-standardized data sets across clouds further prohibits organizations from understanding their usage and costs quickly. Organizations also need to distribute FinOps expertise across teams to better scale and alleviate risk of knowledge gaps should resources leave.
That’s precisely where FinOps automation comes into play. It handles the repetitive and labor-intensive tasks, letting engineers maintain focus on core competencies that drive innovation while ensuring that cost optimization efforts are not neglected. Highly advanced automation also continuously optimizes to ensure consistent results.
The continuous cycle of automation, saving, and reinvestment fuels itself. The time and money you save from the first automated process can be reinvested into automating another process, further accelerating the cycle. Each step speeds up the flywheel, making the next even easier and faster, which compounds your savings and efficiency over time. This means your operations not only stay lean; they also gain momentum, turning the “Do more with less” motto into a sustainable reality.
Check out the 2024 FinOpsX San Diego breakout session with ProsperOps’ Co-Founder & CPO – Erik Carlin to learn more about “Doing More with Less.”
Read on to understand the nuance of FinOps automation across domains and explore how organizations can be empowered to do more with less by leveraging FinOps automation solutions, such as ProsperOps.
Nuances of Cost Optimization Automation
Source: The 2024 State of FinOps report by the FinOps Foundation
When it comes to cloud cost optimization, there is a huge opportunity for more automation. Most FinOps activities are still being performed with humans without any automation, according to the 2024 State of FinOps report. Across different activities within four FinOps domains, there are nuances of automation:
1. Understand Cloud Usage & Cost
Organizations can make more informed decisions with automatically updated cloud data and analysis. Automation helps maintain regular checks on spend, generate customized reports, and enhance the tagging process. Because these tasks are largely administrative and don’t involve critical decision-making, there’s a strong shift toward full automation.
The application of Generative AI is becoming increasingly significant in this area, offering new levels of efficiency and insight. Generative AI tools can process vast datasets to understand historical trends, detect anomalies, and provide actionable insights, significantly saving time from manual data analysis.
2. Quantify Business Value
This domain focuses on mapping cloud usage to business outcomes, helping stakeholders understand the real impact of their cloud activities. Key activities include planning and forecasting to prevent budget overruns, unit economics, and developing performance metrics that correlate with business goals, such as cost-efficiency, sustainability, and operational impact.
By doing so, organizations can determine if their cloud strategy supports broader goals and compare their performance against industry standards, ensuring decisions are driven by the business value of the cloud. Activities in this domain require human decision-making and working with various stakeholders to come up with unique metrics and outcomes that align with the organizations’ goals; as such, there is little to no automation.
3. Optimize Cloud Usage & Cost
This domain can be divided into two sub categories: usage optimization and rate optimization. Usage optimization is the process of analyzing and adjusting cloud resource usage to ensure that organizations are getting the most value for their spending. While rate optimization is the practice of reducing the per-unit cost of running workloads by leveraging discounts, pricing models, and agreements.
Usage Optimization
Automation helps by offering recommendations to increase resource utilization, reduce waste, and ultimately avoid unnecessary cost. The final decision still rests with the engineers and FinOps teams though because these decisions may impact application performance. Most recommendations from semi-automated solutions in domain are also conservative, due to the high-stake nature of optimizing usage.
Rate Optimization
As per the above chart, nearly half responded that they do not use any automation for rate optimization activities. Awareness and trust may be reasons for the lack of automation. Organizations may not be aware of the benefits of rate optimization or how much more they can be saving with sophisticated commitment management strategies. Relying on automation requires building trust over time and making sure FinOps practitioners are comfortable with the methodologies of automated solutions.
Automated solutions for rate optimization ranges from providing recommendations to more advanced platforms that manage commitments autonomously with execution in real-time. Highly sophisticated algorithms for rate optimization also adapt to changes in usage. As technology in rate optimization continues to advance, there is a shift to organizations leveraging full-automation.
For example, FactSet’s FinOps team was initially skeptical of ProsperOps, a leading FinOps automation solution; they slowly began to trust ProsperOps when they saw the results and learned more about their intelligent algorithms. FactSet’s Effective Savings Rate (ESR) increased from 33.7% (89th percentile compared to industry peers, based on the 2024 ESR Benchmarks and Insights Report) to 41.4% (95th percentile and rising); their coverage also improved from 85% to 96%.
4. Managing the FinOps Practice
Managing the FinOps practice is all about setting up a thoughtful approach to cloud financial management that blends the technical with the financial, making sure every dollar spent on the cloud is working towards your business goals. It starts with clear rules on who decides what and who’s responsible for the financial outcomes, ensuring there’s no wasteful spending.
It’s also about bringing teams from finance, operations, and engineering together, making sure everyone’s on the same page and understands the impact of their decisions. While automation plays a role in streamlining other processes, managing FinOps is fundamentally a human-centered practice. It’s the people and the culture they foster that truly drive the success of FinOps.
Continuous improvement is key; by regularly reviewing spending patterns and performance metrics, you can spot opportunities to cut costs and boost performance. Plus, keeping everyone in the loop with ongoing education and using the right tools can really make a difference in managing cloud costs efficiently. This way, managing your cloud spending isn’t just about staying within budget – it’s about making strategic decisions that propel the whole business forward.
How Can ProsperOps Help You With FinOps Automation?
As FinOps evolves, the priority is shifting from having engineers and FinOps practitioners handle manual cost optimization tasks to enabling them to focus on higher-order activities, e.g. unit economics and fostering FinOps as a culture within their organization.
ProsperOps automatically blends discount instruments, such as AWS Savings Plans, Google Cloud Committed Use Discounts, and Azure Reservations, to maximize savings and minimize commitment risk. By removing the effort, latency, and risk associated with manually managing rigid, long-term commitments, we simplify cloud financial management for you.
With ProsperOps automation, there is no impact to engineering. Our platform setup is quick, and our systems work behind the scenes to optimize your cloud costs. This allows your teams to concentrate on innovation and growth while we automate rate optimization for you.
To see ProsperOps in action, book a demo today.
