ISG Provider Lens™ Public Cloud - Services & Solutions - Multicloud FinOps Platforms - Global 2021

In the past couple of years, ISG has seen a strong growth in demand for multicloud services from enterprises of all sizes. Also, enterprises have recognized that moving to the cloud is beneficial for their business. They are now willing to take the help of an outsider for this move and in the right way ― by identifying the cloud that is best suited for a particular workload and by leveraging multiple clouds to avoid a vendor lock in. In the past, there were multiple cloud systems, where each functioned independently. Now we are seeing a shift toward multiple cloud systems ― interconnected, integrated and managed ― creating a complex environment of multi-hybrid cloud systems.

The COVID-19 pandemic has changed the way most enterprises currently operate, and the cloud ecosystem has played a major role in heralding this change. As the world returns to a near normalcy, where employees have started returning to office premises, ISG strongly believes that the hybrid model of working will continue, where the enforcement of some form of restrictions will continue, and employees are allowed the option to work remotely. Most managed services are now virtually and remotely delivered, including transformation and migration of workloads, sales activities and due diligence, where the delivery is faster, better and cost effective.

ISG has also observed an increase in use of platforms and tools by both service providers and the enterprise community for automating cloud operations. Leveraging AI and machine learning technologies has also become a norm, creating differentiation with the level of automation achieved, which can vary from 30 to 70 percent. Some companies are using automation to improve customer experience along with improving the bottom lines. Also, DevOps and security configurations for application migration have been widely adopted, finding increased acceptance in cloud native transformation initiatives.

FinOps is a growing discipline which defines cloud financial operations across multiple clouds in a vendor and cloud provider agnostic way. FinOps brings financial accountability to the dynamic and complex spending of cloud resources in an organization.

The FinOps concept is primarily leveraged for financial management or cost management related to cloud resources, and enables siloed or distributed teams to improve efficiency in the use of public cloud resources. The FinOps practice enables different teams to manage cloud costs by taking ownership of their cloud usage. These teams can be cross-functional within IT, finance, product, procurement and other departments that work together for rapid product delivery, while at the same time, gaining more financial control and predictability. It also helps in increasing the business value of cloud by bring­ing together technology, business and finance professionals with a new set of processes. By following FinOps frameworks, an enterprise can get the most value out of every dollar spent on cloud resources. FinOps practitioners are experts and can continuously optimize cloud investments for strategic business initiatives. The figure below illustrates the FinOps function's central role in driving cost efficiency across the organization to support public cloud use.

Some of the trends that are seen in the market are detailed below:

Focus on optimizing and accounting for cloud costs: ISG has observed that there is much push toward IT cost optimization and operational efficiency. One of the top priorities of enterprises today is to optimize cloud expenses. Many are finding it difficult to manage spending in this context as the hybrid cloud environment is vast and complex. Service providers are playing an important role here by helping large enterprises manage their complex global IT assets while reducing operating costs. These providers are leveraging their vast experience in managing cloud infrastructure and assets with the help of proprietary tools and platforms developed over the years.

The rise of cloud FinOps: Cloud cost management has been around as a concept since 2011 but it was not until the last few years that cloud adoption has skyrocketed, and since then the adoption of FinOps principles and frameworks began to increase considerably among enterprises. FinOps increases the business value of cloud by bringing together technology, business and finance professionals with a new set of processes that help organizations to efficiently monitor and track their cloud resources. FinOps practitioners continuously align and optimize cloud investments to drive strategic business initiatives and bring in the needed discipline to use cloud resources effectively. The FinOps Foun­dation is a strategic program within The Linux Foundation, and a sister organization to the Cloud Native Computing Foundation (CNCF). Its mission is to advance the people that carry out cloud financial management. It has been very active in creating awareness on its principles and the FinOps Framework which provides a map of domains and capabilities. It has a network over thousands of FinOps practitioner around the world who share community, education and open-source standards. There is also a large growing partner ecosystem comprising vendors, service integrators and consultancies contributing to the FinOps initiative ranging including Google Cloud, VMware, SADA, Accenture, Deloitte, McK­insey, Virtasant, Apptio, IBM Nordcloud, and several others. Cost analysis and allocation tools such as VMware’s CloudHealth or Apptio’s Cloudability are prominent in the market and play an important role in the FinOps journeys of many organizations, keeping the finance and procurement teams informed, enabling forecasting, and driving accountability toward the actual users. These tools offer visibility and direction on long-term plans in terms of purchases, savings and reserved instances to bring visibility, accountability and optimization to cloud bills.

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