Cloud spend management: How FinOps can help you control costs

Cloud spending is skyrocketing, with some businesses reporting annual increases of up to 25%, turning what was once seen as a cost-effective solution into a budgeting nightmare.

Certainly, cloud computing has revolutionised the way businesses operate, powering agility, scalability, and innovation. But this transformative technology comes with a growing challenge: managing ballooning cloud costs. As expenses spiral out of control, organisations are being forced to take a hard look at their cloud strategies and financial management practices.

“In the current economic environment, CFOs are now asking why cloud-related costs keep increasing,” the report says. “They want to be shown the actual cost of cloud services, especially after cost savings were sold to them as the primary reason for moving to the cloud.”

Enter FinOps, a game-changing approach that brings financial discipline and visibility to cloud spending. By combining the agility of cloud adoption with robust cost management, FinOps enables organisations to make smarter, data-driven financial decisions.

In this article, we’ll break down why cloud cost control has never been more urgent, the key drivers behind overspending, and how the FinOps framework empowers businesses to take back control and ensure sustainable cloud management.

What is FinOps and how does it work?

For starters, FinOps—short for Financial Operations—is a collaborative framework that combines financial management with operational best practices to optimise cloud spending. Its core objective is to enable organisations to manage cloud costs efficiently while aligning expenditures with business objectives.

To make things even more interesting, FinOps can mean different things to different people depending on their role within an organisation, the cloud services they use, and the specific challenges they face. However, at its core, FinOps is a practice designed to bring financial accountability and operational efficiency to cloud spending.

For example:

Finance teams

For finance professionals, FinOps focuses on managing cloud costs, ensuring there’s financial visibility and control. They may look at cost allocation, budget tracking, and forecasting to avoid overspending and ensure cloud investments align with business goals.

IT and cloud teams

IT teams often see FinOps as a way to optimise cloud usage. They focus on ensuring that resources are appropriately allocated, performance is maintained, and unnecessary costs are eliminated. For them, it’s about having the tools and practices in place to track cloud spending and adjust resources to meet demand efficiently.

Why taking control of cloud costs is crucial

With that out of the way, let’s discuss why it’s so important to take control. Unsurprisingly, cloud adoption has transformed the way organisations operate, offering unprecedented scalability, flexibility, and innovation.

As businesses expand their use of cloud services and adopt powerful tools like Microsoft 365 E5, managing cloud costs effectively has become more critical than ever. While the benefits of these technologies are clear, a proactive approach to financial management ensures businesses maximise value and stay within budget.

What is Microsoft 365 E5?

Let’s consider the role of Microsoft 365 E5 in the story. The solution is a premier subscription plan tailored for enterprises seeking advanced tools for productivity, security, compliance, and analytics. It builds on lower-tier plans (like E3) with added features designed to meet the complex needs of modern businesses.

What’s included in Microsoft 365 E5?

Microsoft 365 E5 offers a comprehensive suite of capabilities, including:

Advanced security tools:

• Microsoft Defender for Office 365: Protection against sophisticated cyber threats.
• Azure Active Directory Premium P2: Enhanced identity and access management for secure operations.

Compliance and governance features:

• Advanced Data Governance: Streamlined data management and regulatory compliance.
• Customer Lockbox: Added control over data access for enhanced privacy.

Analytics and Intelligence:

• Power BI Pro: Powerful tools for advanced data visualisation and analytics.

Unified communications:

• Phone System: Cloud-based telephony integration with Microsoft Teams.
• Audio Conferencing: Dial-in meeting options for seamless collaboration.

These features empower organisations to drive productivity, enhance security, and deliver better insights, all while fostering seamless collaboration.

Synergy between FinOps and Microsoft 365 E5

So, how do FinOps and Microsoft 365 E5 work together?

In essence, FinOps practices ensure that organisations fully leverage Microsoft 365 E5’s comprehensive features by tracking usage, maximising adoption, and identifying opportunities for optimisation.

Together, FinOps and Microsoft 365 E5 empower businesses to drive innovation while maintaining cost control, ensuring cloud investments deliver maximum value.

Why cloud cost management matters today

Why does this matter? With tools like Microsoft 365 E5 forming the backbone of enterprise operations, keeping cloud costs in check is about ensuring every dollar invested delivers measurable value. A well-managed approach enables organisations to leverage these tools’ full potential while maintaining financial accountability.

By implementing FinOps practices, businesses can gain visibility into their spending, optimise resource utilisation, and ensure their cloud investments align with strategic goals.

Challenges of cloud costs (and how to solve them)

Cloud cost management is complex, driven by a range of factors. However, adopting FinOps practices can help organisations navigate these challenges more effectively:

1. Multi-Cloud environments

   Operating across multiple cloud providers offers flexibility, but it complicates cost tracking due to unique pricing structures. FinOps Solution: Implementing a centralised financial reporting system allows businesses to gain visibility across all cloud environments, making it easier to manage costs and develop a cohesive financial strategy.

2. On-Demand scaling

   The ability to scale resources up or down on demand is a key advantage of cloud computing, but it can also lead to unchecked spending. FinOps Solution: Real-time monitoring and cost dashboards ensure that resources are provisioned based on actual needs, helping businesses avoid over-provisioning and maintain control over their cloud spend.

3. Complex pricing models

   Cloud providers frequently change their pricing models, introducing hidden costs like ingress and egress fees, which can accumulate quickly. FinOps Solution: Regular pricing model reviews and cost allocation strategies within the FinOps framework allow teams to anticipate and manage these variable costs, ensuring that pricing models are consistently optimised for the organisation’s needs.

4. Underutilised resources

   Unused or underutilised cloud resources, such as idle virtual machines, often remain active and drain budgets. FinOps Solution: Resource tagging and usage audits help identify and eliminate wasteful or underused resources, allowing teams to allocate funds more effectively and improve overall cloud cost efficiency.

Principles of the FinOps framework

To dig deeper into the principles of the FinOps framework, it’s essential to explore how its core tenets foster efficient and accountable cloud cost management across an organisation.

1. Collaboration Across Teams: FinOps encourages cross-functional collaboration between IT, finance, and business units to ensure aligned cloud usage goals.
2. Ownership and Accountability: Teams take responsibility for their cloud usage and costs, driving more mindful consumption.
3. Data-Driven Decision-Making: Leveraging real-time cost insights empowers teams to make informed choices about cloud spending.

Benefits of FinOps for effective cloud Financial management

Adopting FinOps provides numerous advantages:

Real-Time cost visibility

FinOps tools offer detailed, real-time insights into cloud expenditures. These insights help organisations identify cost trends and make proactive adjustments.

Cross-team accountability

FinOps fosters collaboration and accountability, ensuring all teams understand their role in managing cloud costs. By creating a culture of shared responsibility, businesses can better align financial and operational goals.

Cost optimisation

Through continuous monitoring and resource allocation, FinOps helps identify inefficiencies, such as overprovisioned resources or unnecessary workloads, enabling organisations to cut costs without sacrificing performance.

FinOps and the future of cloud financial operations: Navigating the next frontier

As cloud computing continues to surge in complexity, the future of FinOps is set to be a game-changer.

Here’s a closing thought: By 2026, it’s estimated that FinOps will have reduced budget planning efforts by up to 40% and increased cloud optimisation, according to a PwC report, which reveals that FinOps is the future.

But what does that mean for businesses today? As organisations scale their cloud environments, FinOps will become more crucial in driving financial efficiency, aligning cloud spend with strategic goals, and fostering a culture of accountability.

So, the question isn’t whether FinOps will shape the future—it’s how quickly your organisation can harness its full potential to thrive in an increasingly cost-conscious digital landscape.

How Interactive can help you

At Interactive, we understand the challenges of managing cloud costs and the importance of achieving financial clarity. As one of Australia’s leading IT services providers, we offer tailored solutions that integrate FinOps best practices into your cloud strategy. With our expertise, you can navigate the complexities of cloud financial management, ensuring your business remains agile, efficient, and cost-effective.

To learn more about how Interactive can help you master your cloud spend, contact us today.