As the “CFO” of my family, I was scrutinizing my utility bills late one night. As I went through them line by line, I was confused and frustrated – I didn’t understand the jump in costs and what was driving them. It was a confusing mix of kilowatt-hours, supply and transmission costs and local charges. I see a very similar phenomenon with cloud spending.
My day job at IBM is to create automation solutions that help solve organizational problems with efficiency and observability in the IT industry. As the foundation for today’s digital transformation, cloud and hybrid cloud technologies offer many benefits, from cost savings to flexibility, security and automatic software updates; however, all benefits come with various costs that can be difficult to measure and manage.
What Makes Cloud Spending Difficult?
The hardest thing about cloud spending is that it’s too complex to fully understand what cloud costs will cost. Surface-level cloud spending is fairly easy to track, but when you get down to things like Kubernetes workloads—how software is deployed, scaled, and managed in and across the cloud—inferring and provisioning an AI model, cost projections are extremely difficult and often wild. inaccurate because there are too many gaps that are not accounted for.
Some gaps are the size of canyons and others are hard to spot. Remember that even this is not the pinnacle of cloud complexity; it will only get worse.
Think of this situation in the spirit of launching AI initiatives. Organizations tend to be okay with the initial high costs associated with cloud to generate higher revenue and profit; however, this way of spending is not sustainable.
FREE DOWNLOAD: 5 Tips to Control Your IT Budget (TechRepublic Premium)
What is FinOps and how can it help manage cloud spending?
Managing cloud costs is so significant that the IT industry has developed practices to manage it. FinOps, as it is known in my field, is an operational framework for managing cloud costs from engineering to operations. In fact, according to Civo’s The Cost of Cloud Report 2024 , 60% of organizations saw an increase in cloud spending in the past year, and 40% of them said costs increased by more than 25%.
When you throw in the larger macro factors of companies cutting back on resources for efficiency, inflationary price growth and spending on new technology, CFOs need more support and visibility.
How can partnering with CIOs and using automation help CFOs address cloud costs?
CIOs can help their finance colleagues by adopting AI-powered FinOps practices that reduce the burden of tracking, tagging and constantly chasing your operations team to understand how budgets are being spent, bringing real-time visibility and decision support at your fingertips.
The cloud operates in real-time, but can be predicted and forecasted in a way that improves visibility and automates resource management, observability and cost transparency.
SEE: How AI is changing cloud security and the risk equation (TechRepublic)
Automation can save by over-provisioning CPU/GPU, memory and storage. It can help monitor application status and proactively resolve issues. Automation can also provide a holistic and detailed breakdown of how cloud costs are rising.
Partnering with fellow CIOs and implementing automation solutions can help get the CFO off the hot seat. CFOs must be able to manage budget expectations while keeping the business on track with innovation and spending.
CFOs, CIOs, engineers, DevOps and cloud/AI team leaders need to address this issue together. The synergy of aligning business and financial results will make it possible to reduce expenses while maximizing their potential. A good FinOps position means everyone has equal visibility and responsibility for spend.
DOWNLOAD: Annual IT Budget Template (TechRepublic Premium)
Is it worth investing in a FinOps automation solution?
Yes. The additional initial cost of purchasing a FinOps automation solution will pay for itself in less than two years – I bet it could happen in 12 months.
Implementing a FinOps automation solution is critical. Get it right from the start—maximize connectivity, efficiency, and collaboration—and watch your cloud spend and your CFO’s stress disappear.
Some old financial advice has never been more prevalent than it is now: Live within your means. Bills shouldn’t surprise you or make you sweat, and CFOs shouldn’t pay the price for your overspending.
Bill Lobig is responsible for IBM IT Automation Software Product Management. This includes a range of technologies that enable people and organizations to optimize technology spend and ensure application health and performance.
Bill has worked in enterprise software for over 25 years and has held a variety of engineering and product management roles ranging from unstructured data/content management, information lifecycle management, business process management, machine learning and AI and application modernization, FinOps and IT. Operation. Bill graduated Summa Cum Laude from the University of Maryland College Park.
