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In the rapidly evolving landscape of cloud computing, managing costs efficiently has become a critical challenge for enterprises. The dynamic pricing models of cloud services and the shift towards multi-cloud strategies have complicated cost tracking and forecasting. Rishikesh Kamat, Senior Director of Products and Services at NTT Data India, provides valuable insights into the evolution of cloud cost management, the role of FinOps, and how businesses can leverage these principles to optimize their cloud expenditures. In this interview with Amit Singh, Kamat discusses the benefits of FinOps, the importance of collaboration between finance, technology, and business teams, and shares success stories of significant cost savings achieved through NTT Data’s FinOps services.
How do you see the dynamic pricing models of cloud services evolving over the last few years?
Rishikesh Kamat: The consumption-based pay-as-you-go model has defined the model offered by popular hyperscaler service providers. It has found tremendous acceptance among enterprises across industries. A key reason is the flexibility and control it provides the user, allowing them to retain or retire the service while paying only for the consumed period or unit of service.
We haven’t seen a major change in this pricing model, apart from BYOD and BYOL in the cloud. These models would continue to be relevant based on the convenience and control they deliver for the client and service provider. However, the pricing models provided by Cloud Managed Service providers will evolve from a consumption model to one focused on aspects like business service levels and types of service consumed. This reflects the maturing of cloud service consumption in our market.
What are the specific challenges organizations face while managing cloud costs? How does FinOps help as the emerging solution for managing cloud costs?
Rishikesh: Enterprises embraced the cloud on the premise of optimizing their infrastructure spending. As their cloud sprawl grew, visibility became difficult, and tracking spending and maintaining forecasts was further impacted by the shift to a multi-cloud strategy. Enterprises found their actual costs had overshot their earlier estimates impacting their whole infrastructure strategy.
A FinOps practice combined with FinOps tools aims to provide clear visibility on spending and forecasts across various dimensions in any cloud estate with recommendations for optimization. FinOps also allows organizations to develop specific frameworks allowing them to Allocate, Showback, Forecast, and Manage.
The core principles of FinOps can be understood as:
- Allocation
- Analysis and show-back
- Manage anomalies
- Manage Shared Cost
- Forecast
Enterprises and service providers can develop their frameworks using these principles to develop a FinOps practice and manage cloud spending more effectively and efficiently.
How has implementing FinOps changed the way finance, technology, and business teams collaborate?
Rishikesh: The investments and budgets towards technology are no longer restricted to the CIO or IT department alone. As organizations increasingly leverage digital to drive business outcomes, the role played by technology has shifted. This has caused the business, finance, and IT teams to take a collaborative approach to decisions around cloud. A major reason is that LoB owners are today responsible for their IT budgets and spending, unlike the traditional model where IT carried this responsibility.
Managing the P&L of the LOB now includes managing technology spending. However, the skills to manage this estate still reside with the IT team so a collaborative approach is imperative.
How is your organization assisting clients to implement FinOps in their organizations? What specific services or expertise have you built to add value to your clients’ cloud cost management efforts?
Rishikesh: With NTT Data’s Cloud Governance Platform, our clients continue focusing on their core business, while we support them in managing their Cloud estate and Cloud spend in addition to helping them manage compliance. We offer FinOps both as a stand-alone service and also as a package as part of our Cloud Managed Services. All these services are premised on the Core Principles of FinOps and are helping our clients successfully achieve their objectives.
Can you share any success stories where your FinOps services led to significant cost savings or operational efficiency?
Rishikesh: Here are a couple of success stories from our FinOps practice:
- A large bank in India successfully optimized its cloud costs, achieving 20% savings on its cloud spend using our FinOps services and tools.
- We helped a leading financial services firm achieve about 23% cost savings on their cloud spend using our FinOps tool in the 1st three months of our coming on board.
How have you developed a sustainable business model around FinOps? What revenue streams have you found most effective, such as subscription-based services, project-based engagements, or training programs?
Rishikesh: Our current business model and commercial structures support both subscription-based, project-based, and slab-based models. We also offer FinOps as a stand-alone service, where we help the client organization develop their own FinOps practice supported by our platform and tools with any of the previously mentioned commercial models being applicable. We also provide training programs for clients who are keen on being hands-on with their operations.
How do you see the role of FinOps evolving in the next 3-5 years? How do you see the adoption of FinOps principles impacting the broader cloud computing landscape in the coming years?
Rishikesh: FinOps is now an integral part of cloud IT operations and progressively this will also become part of IT service management practice with more and more tools and technologies supporting as part of their COTS solutions. A classic example is the leading ITSM provider ServiceNow, which is bringing FinOps as a capability with offerings for Cloud Management and cost controls. Not only this, industry analysts like Gartner also predict that organizations will begin adopting cloud principles in their private cloud/colocation services. A few service providers are already providing some of these As-A-Service. As the evolution of IT estates and services continues, the adoption of FinOps principles and practices will not be just limited to Hyperscalers alone but extend to private cloud/colocation services as well.
