Assessing Cloud Maturity: Cloud Financial Management

Public clouds have done a phenomenal job at removing the friction of purchasing IT resources-which is great from a user perspective-but leads to massive overspending. The ability to easily scale up resources leads to forgotten instances that are never scaled back down, and limited visibility between teams leads to lack of accountability for excess spending and inefficiencies. With most organizations using two or more public clouds, there is even more complexity involved. Through several research studies, we've discovered that most organizations are just in the beginning stages of optimizing their multi-cloud journey. We've created a framework, The Multi-Cloud Maturity Model, with best practices to categorize each phase. By incorporating the financial competencies in this framework, organizations can realize over 25% cost savings in cloud spend, construct easily managed and simplified cloud processes, and build a strong security posture.

With the Multi-Cloud Maturity Model, there are four stages of progression that assess an organization's level of maturity: visibility, optimization, governance and automation, and business integration. Each of these stages plays an integral role in an organization's ability to get the most bang for their buck with their public cloud investment.

Visibility

The visibility stage involves having a holistic understanding of an organization's cloud cost, usage, configuration, performance, and security. Without visibility across all clouds broken down by business group, companies struggle to predict and forecast costs, identify security vulnerabilities quickly, and maintain consistent infrastructure.

Cloud Financial Management in the Visibility Stage: Accurately allocate costs by team for showback or chargeback

Optimization

The optimization stage enables organizations to find opportunities to be more efficient, whether it's in cost savings, time savings due to operational improvements, or tightening security parameters. At this phase, optimization processes may be manual, but a common best practice is to document the approaches they find beneficial for use across teams.

Cloud Financial Management in Optimization Stage: Find opportunities to eliminate waste and optimize costs

Governance and Automation

Within the governance and automation stage, organizations define their ideal state in order to monitor future drift, which may involve setting up guardrails for their environment. Typically, the ideal state is an optimized state, whether it's cost, security, or usage optimization-related. Once governance policies are established, the next phase is to automate response and remediation of these policies, freeing up employee time for more critical tasks.

Cloud Financial Management in Governance and Automation Stage: Automate cost control measures and delegate to teams

Business Integration

The business integration stage aligns business objectives directly to technology. For example: Cloud KPIs are directly linked to COGS and margins (cloud financial management), new product innovation/competitive win rate (cloud operations), and compliance with industry standards (security and compliance). This stage is critical as it outlines clear ROI of the technology investment.

Cloud Financial Management in Business Integration Stage: Continuous cost optimization based on business strategy (I.e., margins, COGS)

Check out the whitepaper: Benchmark Your Cloud Maturity: A Framework for Best Practices

From these stages of the maturity model, we're able to pull three major cloud financial competencies:

1. Using an automated and repeatable process to provide teams with visibility into resource usage and costs (what is being used, who is using it, how much they are using)

1. Using an automated and repeatable process to identify and rightsize under-utilized or zombie resources

1. Using an automated and repeatable process to identify opportunities to save money through the use of reservations

Ultimately, cloud financial management plays an essential role in an organization's multi-cloud journey, and is a necessary step for continued innovation and growth. By leveraging these best practices and cloud financial competencies, organizations can evolve their multi-cloud approach in a way that's highly efficient and financially optimized.

Want to learn more about how your organization can leverage cloud financial management best practices? Check out this conversation between Apolak Borthakur, VP and GM of CloudHealth by VMware, and Betty Junod, Senior Director of Multi-Cloud Solutions at VMware, as they discuss all things cloud financial management.

Multi-Cloud Maturity: Cloud Financial Management

Interested in learning even more? Check out our in-depth whitepaper on Multi-Cloud Maturity to learn more: Eight Critical IT Practice Areas That Drive Multi-Cloud Use Maturity.