So, let’s look at cloud costs. According to Flexera’s recently released 2022 State of the Cloud Report. Sixty-six percent of executives said cloud usage is “higher than initially planned this year,” They estimated that their organizations waste 32% of cloud spend, up from 30% in last year’s survey.
In addition, “spend is likely less efficient and likely even higher on average, as many organizations tend to underestimate their amount of waste,” the survey’s authors report. In addition, respondents reported their public cloud spending was over budget by an average of 13% for the previous year. They expect their cloud spending to further increase by 29% in the next twelve months.
The ZDNet article highlights FinOps, the practice intended to help organizations get maximum business value from the cloud by helping engineering, finance, technology, and business teams collaborate on data-driven spending decisions.
Flexera’s State of the Cloud says that as many as 53% of SMBs surveyed in the latest report are spending more than $1.2 million annually on the cloud. That’s up from 38% last year. In this case, SMBs refer to companies with 1,000 or fewer employees. Cloud spending is up for organizations of all sizes, the report shows. As many as 8% of all respondents spend more than $60 million, and more than half spend over $2.4 million on the public cloud each year. And public cloud spending is even more significant among larger organizations.
The average number of SaaS apps is now at 89 per organization, according to Okta, up 24% since 2016.
Why do we care?
I’m less convinced about FinOps specifically, although I’m on board with the concepts. Just not sure we need another name for it.
If I think about this from the value of a provider, I can break this down into good, better, best. It’s good enough to keep things running. In Good, actions are tied to SG&A spending. Better is to focus on reducing costs specifically, connecting IT spend to things in Cost of Goods Sold, bringing operational costs down. Best is when the tech consulting can tie directly to the revenue numbers and drive growth.
FinOps sounds a lot like my better… and frankly, I think we can do more.