Public clouds have done a phenomenal job of taking the friction out of purchasing computing resources, which is great from a user perspective, but results in overspending. The ability to easily increase resources leads to forgotten instances that are never reduced, and limited visibility between teams leads to a lack of accountability for overspending and inefficiencies. With most organizations using two or more public clouds, the complexity is even greater. Through several research studies, we’ve found that most organizations are still in the early stages of optimizing their multi-cloud journey. We created a framework, the Multi-Cloud Maturity Model, with best practices to categorize each phase. By incorporating financial literacy into this framework, organizations can achieve more than 25% savings on cloud expenses, create easy-to-manage and streamlined cloud processes, and establish a strong security posture.
With the multi-cloud maturity model, there are four progression stages that assess an organization’s maturity level: visibility, optimization, governance and automation, and business integration. Each of these steps plays a critical role in an organization’s ability to get the most from its public cloud investment.
The visibility stage involves having a comprehensive understanding of the cost, usage, configuration, performance, and security of an organization’s cloud. Without visibility across all clouds broken down by business group, organizations struggle to forecast and forecast costs, quickly identify security vulnerabilities, and maintain a consistent infrastructure.
Cloud Financial Management in the visibility phase: Accurately allocate costs per team for showback or chargeback
The optimization stage allows organizations to find opportunities to be more efficient, whether it is cost savings, time savings due to operational improvements, or strengthening of security parameters. At this stage, optimization processes may be manual, but a common good practice is to document approaches that they find beneficial for use between teams.
Cloud Financial Management in the optimization phase: Find opportunities to eliminate waste and optimize costs
Governance and automation
In the governance and automation phase, organizations define their ideal state in order to monitor future drifts, which may involve setting up safeguards for their environment. Typically, the ideal state is an optimized state, whether it relates to cost, security, or usability optimization. Once governance policies are established, the next phase is to automate the response and correction of these policies, freeing up time for employees for more critical tasks.
Cloud Financial Management in governance and automation phase: Automate cost control measures and delegate to teams
The business integration stage aligns business goals directly with the technology. For example: Cloud KPIs are directly related to COGS and Margins (Cloud Financial Management), New Product Innovation Rate / Competitive Success Rate (Cloud Operations), and Compliance with Industry Standards. industry (safety and compliance). This step is critical because it clearly describes the return on investment of the technology investment.
Cloud Financial Management in the commercial integration phase: Continuous optimization of costs based on commercial strategy (ie, margins, COGS)
Read the white paper: Benchmark Your Cloud Maturity: A Framework for Best Practices
From these stages of the maturity model, we are able to derive three major financial skills from the cloud:
Use an automated, repeatable process to provide teams with visibility into resource usage and costs (what’s being used, who is using it, how much they’re using)
Using an automated and repeatable process to identify and resize underutilized resources or zombies
Use an automated and repeatable process to identify opportunities to save money through the use of reservations
Ultimately, cloud financial management plays a vital role in an organization’s multi-cloud journey and is a necessary step for continued innovation and growth. By leveraging these best practices and financial skills in the cloud, businesses can evolve their multi-cloud approach in a highly efficient and cost-effective way.
Want to learn more about how your organization can leverage cloud financial management best practices? Check out this conversation between Apolak Borthakur, vice president and general manager of CloudHealth by VMware, and Betty Junod, senior director of multi-cloud solutions at VMware, as they discuss all things cloud financial management.
Multi-cloud maturity: Cloud Financial Management
Interested in learning more? Check out our in-depth Multi-Cloud Maturity whitepaper to learn more: Eight Critical IT Practice Areas That Drive Multi-Cloud Usage Maturity.