From Chaos to Control: How CIOs Are Using FinOps to Rein in Cloud Spending

Democratization Leads to Unprecedented Use of Public Cloud

As EY teams work with financial services clients around the world, we often find CIOs and CTOs battling through similar cloud conversations. The original business case for cloud was built around cost reduction. But years after migration and increasing consumption, cloud costs still appear to outweigh the benefits for many clients. For the uninitiated, it’s easy to jump to the conclusion that IT departments oversold cloud to their business.

In fact, the prime reason cloud costs are exploding is that most companies have yet to venture much beyond the “crawl” stage of cloud financial management to embrace FinOps. Like any other business service, optimizing cloud requires balancing financial discipline with consumption. CIOs need visibility of who is using which cloud services and how much they cost. The services need to be tagged so they can be transparently charged back to the consumer.

Right now, even in more mature Asia-Pacific financial sectors such as Australia, Singapore and Hong Kong, few institutions have these capabilities – and the consequences can be severe. Features like the elastic scaling of cloud resources mean provisioning costs regularly exceed their original forecast many times over.

Imagine if the business wasn’t being charged for training, but had access to a smorgasbord of free, cool-sounding programs. Managers would send entire teams on courses, rather than just the people who needed those skills. People would choose to take heaps of courses – because they could. Business units would ask for new courses to be created and then wouldn’t even use them. No one would be held accountable for their training provision requests, use or cost.

In some of the region’s most tightly regulated organizations, this is exactly what’s happening with cloud services.

When It Comes to Financial Accountability, Cloud Is the Wild, Wild West

Before cloud, if a manager or developer wanted an additional server, they had to put in a requisition request, wait for approval, and deal with in-service lead times of up to six months. Now almost everyone can request and immediately provision cloud services at the click of a mouse. The business exercises little control over these requests and may not even become aware of them until the end of the month or quarter. By that time, it’s too late to find a more efficient solution or spend.

Equally, business units may ask for or support the building of services that they don’t use. Or they’re building services they do use, but that usage is inefficient. Or the services are great, work efficiently and deliver cost savings that no one is tracking – so cloud isn’t credited with the return on investment.

For CIOs, the result becomes a painful reality about the cloud lines on the income statement and balance sheet. Cloud costs are blowing out and the CIO or CTO must determine how to rein them in.

Many large institutions have a reasonable handle on their cloud services. Their service catalogs are current and understand which services business units requested. However, they are struggling to track how much of each service each business unit consumes, making chargeback difficult. Cloud wastage, treating cloud workloads as they were before migration is a case in point; CIOs are typically wearing all the costs that come with consuming cloud-based resources, because they haven’t been optimized.

Until the business understands its cost of cloud services, it is unable to help manage them.

Four Ways FinOps Helps Drive Value and Optimize Costs

Savvy CIOs are implementing FinOps to help their companies improve cloud business value by:

1. Creating visibility of cloud usage and cost – Tools are available to aggregate, normalize and socialize cloud usage and cost data for the required teams to support chargeback and showback. Engineering, finance, executive and business teams have all the information they need to team up on data-driven spending decisions to lower overall costs. The business can also put cost controls in place around high-cloud-consumption areas like test environments. If provisioned services are idle, they are shut down.


2. Optimizing pricing models – Once the business understands the cost of cloud services, it can focus on getting a better price for them. Cloud providers’ prices, pricing models, discounts and billing mechanisms are complex to manage even for mature cloud users. CIOs are using FinOps to build and define pricing model goals, providing consumption guardrails for securing optimized cloud pricing. Automated monitoring allows CIOs to adjust pricing models, buy commitment-based discounts and manage the charging aspects of cloud services to ensure competitive pricing.


3. Tracking and benchmarking performance – FinOps tools allow CIOs to map cloud usage and cost to budgets and establish cloud financial KPIs. Global benchmarking data is also available to help business units understand how they are using cloud compared with the best practices and performers. What is their data and analytics maturity? Are they using enough archival data compared to leading global competitors?


4. Matching cloud resources to actual workload demand – FinOps automation can dramatically optimize utilization. This starts with low-hanging fruit, like identifying where financial institutions are paying for multiple licenses of the same solution or turning resources off when not in use. In the more sophisticated instances of FinOps practices, CIOs are using predictive rightsizing of resources and managing workloads to align with the correct number of scaling resources.

With cloud representing one of the largest IT investments over the next five years, organizations must improve their management of cloud economics. According to the EY 2022 Tech Horizon Survey, 42% of tech leaders in Asia-Pacific financial services ranked cloud among their top three tech investments. Gartner further predicts that two-thirds of spending on application software will be directed toward cloud technologies in 2025, up from 58% in 2022.

By embracing FinOps, CIOs can demonstrate the business value that cloud is creating while increasing financial accountability around the business’ use of cloud services. As the business becomes responsible for its own cloud usage, the paradigm shifts away from cost toward the far more interesting topic of how cloud can help the business create long-term sustainable value.