I had a great few days at FinOps X, the second annual event hosted by the FinOps Foundation, in San Diego. Since its initial launch in 2022, the event's attendance has tripled, with 48 of the Fortune 50 companies participating. Reflecting its membership, attendees included a mix of vendors and end users providing cloud cost management and optimization (CCMO) services and tools. Companies practicing FinOps.
A surprising theme from my conversations and sessions is that DIY tools are on the rise. Forrester strongly discourages FinOps teams from taking this route due to its level of complexity and the amount of effort required to maintain it. In the past, DIY solutions were typically chosen by tech-minded people with spreadsheets who quickly became overwhelmed with the task.
However, some DIY efforts can be effective. These tools are typically powered by teams of 15 to 45 engineers who act as dedicated product and support teams to build new features, maintain and update the tools as new cloud services emerge, and support existing users. Troubleshoot the issue. The most famous example is Target. Target built everything from the ground up, with his two teams dedicated to data pipelines, data acquisition, dashboards, and engineer persona applications. More commonly, organizations are leveraging existing tools and building capabilities on top of them. They leverage native cloud management tools such as AWS Cost Explorer, Microsoft Cost Management for Azure, Power BI, and Looker. They combine custom tools with observability and monitoring solutions.
Please note that not everyone does this. Third-party CCMO vendors, don't worry yet. The group that chooses DIY is usually made up of spendthrifts with big budgets. Their annual cloud spending averages well over seven figures, and in many cases is much closer to nine figures. Their organizations are technologically forward-thinking, have significant budgets for cloud and cloud initiatives, and have strong executive support.
So why are these organizations choosing DIY? These FinOps teams discovered:
- CCMO tools are too expensive. Even if tool fees account for 1% of your cloud spend, 1% of $100 million is still $1 million per year for tools that don't meet all your needs.
- Their needs are rapidly outpacing existing capabilities. Even with the deepest and broadest solutions, these organizations require additional optimization capabilities, better remediation, more customized policy building and management, and more granular and automated access and permissions.
- Reworking a ready-made item is the same as DIY. Is the amount of rework and customization required by these organizations to their existing third-party CCMO solutions comparable to the time spent building DIY solutions based on free CCMO tools and other adjacent visualization tools? , it would have been longer than that. pay the price.
- Native cloud CCMO is no longer a dumpster fire. If you asked these FinOps teams six to eight years ago if they were using native cloud management tools, most would say a resounding “no.” But that has changed. The native cloud cost management tools provided by cloud providers have improved significantly, and building customized functionality on top of them works for many organizations.
Interested in talking more about this or other FinOps topics? If you'd like to learn more, email inquiry@forrester.com.
