FinOps Insights and Management from Spot by NetAppv1.0

1. Executive Summary

Modern IT environments increasingly employ complex multicloud infrastructures that prove challenging to provision, monitor, and manage. The discipline of FinOps (a blending of ”finance” and “DevOps”) enables organizations to collaborate to get maximum business value from the cloud by supporting data-driven decision-making on cloud spending. A growing cadre of FinOps solutions are designed to detect opportunities for cost savings, achieve waste reduction, and provide the right sizing recommendations and resource optimization. These tools can support organizations at all levels of maturity, making a FinOps practice possible for virtually every organization that uses the cloud.

Spot by NetApp provides a robust FinOps offering with a broad portfolio of functional modules and FinOps capabilities. The depth and breadth of capability are extensive, so in this report, we discuss specific elements of the Spot by NetApp FinOps functionality that focuses on providing stakeholders with costs and billing insights, efficiency, and management.

These capabilities provide an excellent starting point for organizations embarking on their FinOps journey. They allow an organization to ease into the basics of visibility and optimization recommendations with a simple implementation and intuitive dashboards. Organizations can then grow and expand their FinOps capabilities as they learn and improve their processes.

The FinOps Foundation is dedicated to advancing the discipline of cloud financial management through best practices, education, and standards. According to its 2024 State of FinOps report, the top priorities for organizations engaging FinOps solutions are reducing waste or unused resources and managing commitment-based discounts. The report further identifies accurate forecasting and full allocation of spend as important areas of focus. These areas align with the Spot by NetApp FinOps insight and management capabilities.

This document explores the challenges organizations face with their cloud spend and the escalating need for FinOps to manage it. We analyze the value provided to support various FinOps use cases. We also show how FinOps stakeholders can leverage data to discover anomalies, implement changes, and to focus on optimizing cloud spend, leading to double digit percentages in cloud spend savings.

2. Challenges: Cloud Spend and FinOps

Today, complex multicloud infrastructures are commonplace for companies of all sizes. Many roles in these companies, such as DevOps, product owners, cloud cost analysts, cloud architects, finance, leadership, and cloud procurement have run into challenges with runaway cloud costs due to lack of collaboration, unmonitored growth, and unbudgeted spending.

The lack of real-time multicloud visibility and a single source of truth for cloud spend and resources, in particular, present challenges for the business, including:

• Inability to know the actual cloud costs and track trends across all providers collectively.
• Inability to allocate and chargeback costs to the right cost centers, product, BUs, accurately bill for cloud services, or figure out how to improve cost of sales margins.
• Difficulty in identifying and remediating anomalies quickly as well as an inability to identify cloud waste generated by ineffective use of cloud resources, right sizing, and other cost optimization opportunities.
• Inadequate ability to understand the financial impact of resource choices and limited ability to control and optimize cloud spend without impacting business operations.
• Inability to effectively maximize resource utilization for reserved commitments while retaining flexibility and avoiding costly mistakes.
• Lack of collaboration and ownership for cloud between stakeholders–from leaders to DevOps teams and infrastructure engineers to cloud spending analysts, which also creates friction across teams and can potentially delay resource provisioning for critical workloads.

Scenarios for Adopting FinOps
Attempting to address these challenges with just human resources and manual processes results is time and labor-intensive requiring extensive staffing with significant expertise. Moreover, performing cost analysis, cost allocations, commitment management, resource tagging, and budget management manually are all prone to human error and ultimately can only provide limited insights into spending patterns, usage, and cost trends. Predicting and modeling future costs without sophisticated forecasting tools in this environment becomes even more challenging, yielding inaccurate projections. The task becomes even more cumbersome as cloud environments scale to support large workloads and diverse cloud resources.

Many organizations, especially those beginning their cloud journey, attempt to stitch together a patchwork of products using a combination of spreadsheets, cloud provider tools, and customized scripting and coding to solve these challenges. But the scale and complexity of the average cloud environment, plus the lack of expertise and skilled resources (and their cost), means this is not sustainable, especially in a multicloud environment.

Cloud FinOps solutions provide formal tools and processes that enable stakeholders to collaborate on achieving the maximum business value from the cloud by focusing on data-driven spending decisions. Top solutions provide the data needed to support decision making to help cost-effectively run the business. Cloud FinOps solutions should be used by any organization consuming cloud resources. The larger the organization, the greater the need to adopt FinOps practices and tooling due to the sheer number of development teams, the broad adoption of cloud resources, the cumulative spending across teams and resources, and the applicable financial reporting requirements.

FinOps Journey
A FinOps practice combines systems and tools, best practices, and cultural shifts. It increases an organization’s ability to understand and control the variability of cloud costs, breaking down silos between technology, business, and finance professionals to gain the most value from cloud spend.

Driving an adoption approach for FinOps takes some up-front planning. The team must seek the right stakeholders to participate in the planning and implementation. It is essential to lay the groundwork and socialize the reasons FinOps benefits the organization. This includes identifying pain points, communicating how a solution can improve outcomes, and determining requirements to ensure the right solutions are identified. Additional considerations can include cloud vendors used, size of operations, planned growth, and other types of cloud related costs.

Preparing the organization includes assessing FinOps readiness, such as defining tags, metadata, and taxonomies. It can also include setting initial KPIs for adoption, usage, and spend thresholds, identifying stakeholders and creating the reports and dashboards that meet their needs. While regular cross-team collaboration and continuous process improvements are necessary, there is a straightforward way to start FinOps by focusing on better financial visibility.

At heart, FinOps solutions collate and present information to support the cloud FinOps operational lifecycle, which is the most efficient way for organizations to manage cloud costs. The FinOps Foundation recommends that organizations follow the “Crawl, Walk, Run” approach to enable organizations to develop their FinOps capabilities gradually.

In addition to these phases, we suggest adding a baseline step to recognize the key initial phase of gaining visibility into cloud spend. At this stage, organizations often have very little tooling and reporting to see issues and understand cloud spend; they are just starting to learn about FinOps capabilities. Each capability in a FinOps practice can be at a different stage at different times. See Figure 1.

Figure 1. FinOps Baseline, Crawl, Walk, Run Progression

The second phase of maturity–crawl–focuses on cost and waste. It leverages the information from the visibility or “see” baseline to assess where to make improvements. This stage of maturity includes determining and following basic KPIs to help measure and demonstrate early stages of success. It is also where the comparison of forecasted budgets to actual spend starts. Minimal resource-based commitment management begins in this phase too.

The third stage of maturity is walk, where teams collaborate to understand the FinOps strategies and processes. The KPIs in this stage are more advanced in measuring success than the previous one. Processes and automation extend beyond the basic waste management and cost-cutting to focus on ensuring the allocations and billing of resources are accurate. Commitment management and optimization is maturing at this stage also.

The highest stage of maturity is run. Here, cloud cost analysts and DevOps teams fully collaborate to ensure that cloud spend and resource management are optimized with high accuracy and efficiency. Billing and budget forecasting is more and more accurate and automated.

Cloud services, business strategies and the economy are in a constant state of evolution and change, and as such, an organization may choose to emphasize one capability over another. In this way, organizations will find themselves, by design, at the crawl, walk, or run stages for different capabilities, based on their priorities at the moment. Achieving a run state for all capabilities is not the goal—in fact, it can be counter-productive due to the investment and effort involved. Mature FinOps practices prioritize the capabilities that are important right now and deprioritize others as changes occur.

3. FinOps Insights and Management Capabilities in Spot By NetApp

Spot by NetApp is a portfolio of products that bring cost management and infrastructure optimization into an integrated solution for FinOps. This allows organizations to “operationalize” FinOps, using data, analytics, and AI to deliver visibility and actionable insights, and drive automated optimizations to maximize the efficiency and impact of every dollar spent in the cloud.

Figure 2. FinOps from Spot by NetApp

This report focuses on the FinOps cost insights and management features as a subset of the larger Spot by NetApp offering for FinOps. These features are key as an organization progresses through the phases of maturity in managing cloud spend and driving resource efficiencies. Spot by NetApp’s cost-related insights and management capabilities are delivered through three core products:

• Cost Intelligence: Delivers granular, actionable analytics on costs and resources across multi-cloud environments through customizable dashboards, best practice checks for cost, usage and utilization as well as cost optimization workflows.
• Billing Engine: Streamlines invoicing and delivers comprehensive billing reporting with intelligent cost allocation, including chargeback/showback.
• Spot Eco: Provides lifecycle management for reserved instances (RIs)/savings plans, covering commitment portfolio design, purchasing, rebalancing, and optimization.

Cost Intelligence is key to visibility and identifying cost savings and waste reductions across multi-cloud environments. It includes “best practice checks” that help identify idle, underutilized, and overutilized resources, which can be immediately addressed to save money and better utilize resources. With dashboards and insight-driven visualizations of cloud costs, services, and the entire environment, Cost Intelligence can drive the success of both short-term projects and the overall FinOps strategy. The dashboards include a variety of out-of-the-box cost breakdowns to help identify issues and can also be tailored for specific projects, business units, or stakeholder roles. Through this data, teams can respond quickly when anomalies are detected or trends identified that pinpoint areas to optimize.

Billing Engine simplifies complex billing processes and provides highly granular chargeback and showback to cost centers. It also includes flexible business rule-based billing capabilities. With Billing Engine, teams can easily and quickly understand costs and how they are generated, assess profits across all cloud providers at the macro level, and drill down for more insight. It can also track savings and waste reduction at a granular level with detailed reports.

Both Cost Intelligence and Billing Engine ingest and normalize cost data from AWS, Azure, and Google cloud providers along with other SaaS cost data using the FinOps Foundation FOCUS standard.

Spot Eco manages reserved commitments to obtain the largest cloud discounts with the smallest commitment footprint. Eco uses highly trained cost analysts together with ML driven automation to purchase, exchange, and sell flexible commitments that maximize coverage, reducing on-demand use and commitment waste. As the infrastructure needs change, Eco will adapt coverage and balance the commitment portfolio to ensure maximum utilization of the cloud commitments. Eco drives collaboration between FinOps and DevOps teams with full visibility into consumption across compute, databases, and other cloud services.

These three products holistically deliver FinOps insights to optimize costs, provide cost analysis, and align FinOps stakeholders to drive greater efficiencies and support business decision-making. They support all the major cloud providers and can ingest cloud billing data from third-party applications. They are designed to support organizations of all sizes of cloud spend as well as managed service providers (MSPs). They can help both experienced and beginner FinOps practitioners as they progress through the baseline, crawl, walk, and run stages of FinOps maturity.

4. Benefits Analysis and Use Cases

In our exploration, we reviewed several use cases for these products’ FinOps insights and management capabilities. Overall, they can benefit companies of any size across virtually all industries.

Visibility Use Cases and Personas
The Cost Intelligence and Billing Engine products are based on the idea that you cannot manage what you cannot see. These modules, based on the original CloudCheckr capabilities acquired by NetApp in 2021, offer simplified implementation and rapid time to value.

The Cost Intelligence product focuses on providing visibility across cloud spend and anomaly detection with best practice recommendations. This allows customers to see details that cannot be easily seen without technology. Billing Engine then takes care of the accurate allocation and billing of cloud resources and shared cloud spend. This enables customers to allocate and/or bill customers or organizations the correct cloud spending amount and ensures that the value is derived from the cloud spend.

Figure 3 shows examples of profit analysis, cost center breakdown and total spend graphics and charts provided out of the box by Cost Intelligence and Billing Engine.

Figure 3. Cost and Spending Highlights Examples

Here are examples of how different personas benefit from the these products:

• Gain actionable insights: As a leader of a FinOps practice with a thousand things to do, I need to see all my cloud costs in one place and quickly know where to concentrate efforts to have the greatest impact on cloud cost management.
• Get granular cost reporting: As a FinOps practitioner, I must monitor costs at a granular level for different projects, teams, or any parameter that I need, so that I can hold everyone accountable for their spend and offer praise when they are successful.
• Know my cloud services inventory: As a cloud strategist, I need to understand and be able to quickly answer questions about the cloud resources deployed and not have to spend time navigating between multiple cloud consoles with different panes for each region.
• Gain business intelligence: As a cloud strategist, I need to quickly and frequently get to the cloud unit cost without a lot of spreadsheet acrobatics so that I can feel certain my team is providing value to the company.

With critical visibility, users can now take action. These use cases emphasize how automation helps different user personas take action to optimize cloud operations and spend:

• Get actionable alerts: As a FinOps practitioner or DevOps engineer, I must be notified immediately when something’s wrong and be able to quickly and–oftentimes–automatically take action when an anomaly is detected or another specific event is triggered.
• Optimize costs: As a FinOps practitioner or DevOps engineer, I need to be able to easily take action to optimize costs, such as remove idle or orphaned instances, rightsize instances, make changes to ensure effective resource utilization, and perform other optimization tasks.
• Charge accurately for cloud: As a central IT or Finance department paying the cloud bill, I need to automatically bill (chargeback/showback) for services based on applicable policies to ensure that the right cost center is accurately charged for their costs.
• Optimize commitments: As a FinOps practitioner, my commitment portfolio is configured correctly to serve my business needs and be able to change these commitments if/when anything changes in my environment or my business.

Figure 4 shows examples of monthly commitments over time, savings over time, and best practice check graphics and charts provided out of the box from Cost Intelligence and Spot Eco.

Figure 4. Cost Optimization Examples

Commitment Optimization with Spot Eco
Spot Eco is a flexible service that manages cloud commitments (reserved instances, savings plans, and CUDs) for customers of the major cloud providers. In this next section, we take a deeper look at the financial impact that Spot Eco has delivered to several companies using the service.

We analyzed eight enterprise companies from seven industries, representing examples of typical deployments ranging from $1 million of annual cloud spend to almost $70 million. Both single-cloud and multicloud deployments are represented to demonstrate the impact that the Spot Eco module can have, regardless of cloud spend or vertical. The data has been anonymized.

Note that because each company has unique cloud agreements with specific discounts, we converted the pricing of their configurations to reflect undiscounted “on-demand” pricing. This allows us to make better apples-to-apples comparisons of costs and savings. The Average Savings Amount (USD) column shows the dollar savings produced by commitment optimizations provided by Spot Eco.

Table 1. Spot Eco Average Cost and Average Savings Comparison

Using Spot Eco sharply reduced on-demand spend across the board. In total, the eight companies produced $201.7 million of annual spend. With Eco’s reserved commitment management employed, that figure dropped to just $85.8 million. Figure 5 shows the sharp 57% reduction in cost.

Figure 5. On-Demand Cloud Spend Comparison for Eight Companies

Savings vary across all customers and industries, however all sizes of cloud spend produced double-digit percentage savings. Some customers are only using commitments in one cloud, while others are using them across multiple clouds; as the chart shows, customers gain significant savings whether they are single or multicloud.

Adoption Approach for FinOps Insights and Management
Depending on a company’s relative FinOps maturity, different approaches can be taken to adopt these Spot by NetApp products. For organizations new to FinOps, these capabilities can help them get started and grow the FinOps practice.

Organizations can begin with one cloud and expand as they learn how the products and processes work. As they mature in FinOps, they can add more clouds and take action on broader recommendations.

More advanced organizations may load information from all the clouds from the beginning, gaining faster insight and visibility across the entire portfolio. Overall, Spot by NetApp supports implementation based on each customer’s independent needs.

The onboarding process for these products is straightforward and minimal. For Cost Intelligence and Billing Engine, the organization simply needs to connect each cloud to the product. This can be done easily through the step-by-step instructions provided by NetApp. Once the data is flowing, it takes about 24 hours for the dashboards to populate with data from the hyperscalers.

For commitment management, using Eco, organizations meet with Spot by NetApp’s cost analysts to discuss and understand business goals, objectives, constraints, and special use cases. This is typically completed in about an hour.

Overall, the consulting, implementation, and set-up time for each product is minimal. By the following day, the deployed tooling was providing visibility and insights and helping to reduce waste and optimize cloud spend.

In the long term, organizations may want to take advantage of the larger Spot by NetApp portfolio by adding modules that help with automated infrastructure optimization for VMs, containers, and Kubernetes.

Purchase Considerations
Pricing for Eco is based on a percentage of cost savings from effective commitment management. During a user’s Eco onboarding session, the customer’s commitment strategy is tailored to their business needs; since Eco is fully managed, no product training is needed.

Pricing for the Cost Intelligence and Billing Engine is based on a percentage of total cloud spend under management by these products. If a customer wants additional reports and configurations than those provided out of the box, additional training is available at no cost. The depth of this training is based on user needs. It covers setting up billing rules within Billing Engine and creating custom reports and dashboards on Cost Intelligence.

The total cost for all three modules includes consulting with a cost analyst for onboarding and access to ongoing help, including for questions and adjustments related to special situations.

5. Analyst’s Take

Adopting a FinOps solution with the cost insights and management features provided by Spot by NetApp can holistically address the challenges around cloud spend and FinOps. In addition, cost savings are not the only reason to implement a FinOps solution. The FinOps focus is evolving to enhance organizations’ decision-making in support of company goals, ultimately enhancing business value across the offering.

The Spot by NetApp insights and management capabilities:

• Provide a single source-of-truth on cloud, giving stakeholders accurate data to make informed decisions for the business.
• Help organizations achieve the greatest cost optimizations, in alignment with business needs and strategies.
• Enable cloud costs to be allocated accurately and transparently across different locations, teams, and lines of business.
• Promote a FinOps culture with alignment, collaboration, accountability, and shared responsibility for the cloud across the organization.

In addition to providing a one-stop shop for FinOps insights and cost management, Spot by NetApp can expand with other modules to:

• Ensure that application workloads are optimized for performance, reliability and cost-efficiency, and thus fully operationalize FinOps.
• Integrate with other CloudOps capabilities, including cloud security and compliance (Spot Security).

NetApp maintains strategic partnerships with the hyperscalers and the FinOps Foundation. It has extensive experience managing thousands of real-world customer accounts over many years, which continues to drive portfolio enhancements.

Overall, Spot by NetApp FinOps insights and management capabilities support organizations whether they are completely new to FinOps or work at various maturity levels along the FinOps continuum. The products facilitate collaboration between technical teams, cloud procurement, FinOps groups, finance teams, and business units. They allow organizations to “see” and “act” to enable cloud cost efficiencies and greater business productivity.

One of the greatest benefits is that it provides value within the first few days of implementation with minimal training. It is also part of a larger, more extensive portfolio of tools organizations can leverage as they advance with FinOps. The implementation of these FinOps insights and management capabilities through Cost Intelligence, Billing Engine, and Spot Eco is a key step in starting and/or continuing the journey of FinOps.

6. About Dana Hernandez

Dana Hernandez is a dynamic, accomplished technology leader focused on the application of technology to business strategy and function. Over the last three decades, she had extensive experience with design and implementation of IT solutions in the areas of Finance, Sales, Marketing, Social Platforms, Revenue Management, Accounting, and all aspects of Airline Cargo, including Warehouse Operations. Most recently, she spearheaded technical teams responsible for implementing and supporting all applications for Global Sales for a major airline, owning the technical and business relationship to help drive strategy to meet business needs.

She has led numerous large, complex transformation efforts, including key system merger efforts consolidating companies onto one platform to benefit both companies, and she’s modernized multiple systems onto large ERP platforms to reduce costs, enhance sustainability, and provide more modern functionality to end users.

Throughout her career, Dana leveraged strong analytical and planning skills, combined with the ability to influence others with the common goal of meeting organizational and business objectives. She focused on being a leader in vendor relationships, contract negotiation and management, and resource optimization.

She is also a champion of agile, leading agile transformation efforts across many diverse organizations. This includes heading up major organizational transformations to product taxonomy to better align business with enterprise technology. She is energized by driving organizational culture shifts that include adopting new mindsets and delivery methodologies.

7. About GigaOm

GigaOm provides technical, operational, and business advice for IT’s strategic digital enterprise and business initiatives. Enterprise business leaders, CIOs, and technology organizations partner with GigaOm for practical, actionable, strategic, and visionary advice for modernizing and transforming their business. GigaOm’s advice empowers enterprises to successfully compete in an increasingly complicated business atmosphere that requires a solid understanding of constantly changing customer demands.

GigaOm works directly with enterprises both inside and outside of the IT organization to apply proven research and methodologies designed to avoid pitfalls and roadblocks while balancing risk and innovation. Research methodologies include but are not limited to adoption and benchmarking surveys, use cases, interviews, ROI/TCO, market landscapes, strategic trends, and technical benchmarks. Our analysts possess 20+ years of experience advising a spectrum of clients from early adopters to mainstream enterprises.

GigaOm’s perspective is that of the unbiased enterprise practitioner. Through this perspective, GigaOm connects with engaged and loyal subscribers on a deep and meaningful level.

8. Copyright

© Knowingly, Inc. 2024 "FinOps Insights and Management from Spot by NetApp" is a trademark of Knowingly, Inc. For permission to reproduce this report, please contact sales@gigaom.com.