Blog post

Group hugs for managing cloud economics

By Lydia Leong | October 22, 2021 | 1 Comment

Cloud Computing for Technical ProfessionalsCloud Computing

You shouldn’t relegate cloud cost governance, management and optimization to a dedicated FinOps team. Effective management of cloud economics requires cross-functional collaboration and the establishment of cloud economics as a pervasive cultural practice.

Cloud economics is a practice that goes beyond cloud cost management. It is focused on maximizing the value of cloud computing to the business, rather than minimizing cloud expenses. For example, business leaders may reasonably make the decision to spend more to deliver a better user experience, or to ignore cost-related technical debt so application teams can focus on delivering more features.

You can’t effectively manage your cloud providers or the consumption of cloud within your organization without a solid collaboration between cloud architects, cloud operations, developers, the sourcing team, and your business leadership. Indeed, the business leadership is absolutely vital, as I’ve noted in a previous blog post (“Cloud cost overruns may be a business leadership failure“), and a new research note titled “Is FinOps the Answer to Cloud Cost Governance?” (Gartner executive leaders paywall).

In fact, that’s the first of a just-published a trio of notes that I’ve been wanting to write for the last five years but hadn’t found the right collaborator. In almost 15 years of covering cloud computing at Gartner, I’ve spent giant amounts of time with IT management (up through the CIO level), cloud architects, and sourcing managers, reviewing cloud contracts, hearing cloud success stories and hearing cost-management woes (the two are certainly not mutually exclusive). I’ve moderated more than a few fights between sourcing managers and cloud architects over topics like “should we choose the cheapest provider” and “who’s responsible for controlling our cloud costs”. Probably unsurprisingly given my technical biases, I’ve generally sided with the cloud architects, even though I’ve spent sufficient time with sourcing managers to be sympathetic to their goals.

In the meantime, my sourcing-analyst colleague Tobi Bet (and the rest of her team) had seen those same fights, but primarily from the perspective of the sourcing team. So I roped Tobi into doing a paired set of research notes with me. They’ve now published under the title “Managing Cloud Economics: A Role‘s Guide to Productive Relationships With Other_Role“. There’s a huge note for cloud architects (Gartner for Technical Professionals paywall) and a concise note for sourcing leaders (Gartner for IT Leaders paywall).

The purpose of these notes is to provide a unified perspective on questions like:

  • Who should decide what cloud providers we use?
  • Who should “own” the relationship with cloud vendors?
  • Who should be responsible for cost management in the cloud?
  • How should we resolve battles over cloud costs?
  • How should we deal with cloud vendor lock-in?

It provides guidance for how to think about cloud economics (i.e. core principles), priorities, and responsibilities. The lengthy note for cloud architects has a giant pile of responsibility matrices for the specific things you have to do, for varying levels of cloud self-service, and across IaaS, PaaS, and SaaS. Ideally, if your various functions are arguing about cost management or cloud provider management, this note has an answer for you.

So group hug time: Everyone’s got to collaborate together to make this work. (And everyone’s got to have some accountability for doing their part.)

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1 Comment

  • Lydia, regarding “maximizing the value of cloud computing to the business” — I’m thinking that a more holistic view of business case development and benefit validation requires a shift in mindset.

    In order to extract the full potential of cloud computing investments, value creation must also be viewed through the lens of top-line growth (revenue/profit) opportunities, not merely the bottom-line cost cutting benefits.

    Line of business leaders seems to be attuned to this 360-degree view, in contrast to the traditional IT leader’s perspective.

    That said, I’m hopeful that more organizations will collaborate and combine their insights and expertise to formulate a total economic value (top-line + bottom-line) perspective.