If you’re looking to learn more about how your organization can leverage cloud financial management best practices, check out the video below. Apolak Borthakur, VP and GM of CloudHealth by VMware talks with Betty Junod, Senior Director of VMware Multi-Cloud Solutions about all things cloud financial management.
As Apolak highlights in the video, public clouds have done a phenomenal job at removing the friction of purchasing IT resources — which is great from a user perspective — but leads to huge overspending. The ability to easily scale up resources leads to forgotten instances that are never scaled back down, and limited visibility between teams leads to a lack of accountability, excess spending and inefficiencies. With most organizations now being Multi-Cloud, there is even more complexity involved.
Cloud Financial Management – one of eight critical capabilities
This is why Cloud Financial Management is one of the eight critical capabilities we highlight in our multi-part framework for achieving Multi-Cloud Use Maturity. The CloudHealth by VMware team pioneered the area of Cloud Financial Management. A great resource that outlines a best practices based approach to effectively manage cloud spend can be found in their whitepaper: “Building a Successful Cloud Financial Management Practice”.
The whitepaper lays out a highly effective approach that breaks the process down into a four-stage progression that relates to an organization’s level of cloud financial management maturity: visibility, optimization, governance and automation, and business integration. Each of these stages plays an integral role in an organization’s ability to get the most bang for their buck with their public cloud investment.
Visibility
The visibility stage involves having a holistic understanding of an organization’s cloud cost and resource usage. Without visibility across all clouds broken down by business group and lower level dimensions, companies struggle to predict and forecast cloud costs.
Cloud Financial Management in the Visibility Stage: Accurately allocate costs by team for showback or chargeback
Optimization
The optimization stage enables organizations to find opportunities to be more efficient, whether it’s in cost savings, or time savings due to operational improvements. At this phase, optimization processes may be manual, but a common best practice is to document the approaches they find beneficial for use across teams.
Cloud Financial Management in Optimization Stage: Find opportunities to eliminate waste and optimize costs
Governance and Automation
Within the governance and automation stage, organizations define their ideal state in order to monitor future drift, which may involve setting up guardrails for their environment. Typically, the ideal state is an optimized state. Once governance policies are established, the next phase is to automate response and remediation of these policies, freeing up employee time for more critical tasks.
Cloud Financial Management in Governance and Automation Stage: Automate cost control measures and delegate to teams
Business Integration
The business integration stage aligns business objectives directly to technology. For example: Cloud KPIs that are directly linked to COGS and margin (cloud financial management). This stage is critical as it outlines clear ROI of the technology investment.
Cloud Financial Management in Business Integration Stage: Continuous cost optimization based on business strategy (I.e., margins, COGS)
Ultimately, cloud financial management plays an essential role in an organization’s multi-cloud journey and is a necessary step for continued innovation and growth. By leveraging these best practices and cloud financial competencies, organizations can evolve their multi-cloud approach in a way that’s highly efficient and financially optimized. Learn more in this video.
Additional Resources
Want to learn more about Multi-Cloud Use Maturity? Check out our in-depth whitepaper to learn more: Eight Critical IT Practice Areas That Drive Multi-Cloud Use Maturity.
