Meet Tangoe at the FinOps X event, June 19-22 in San Diego.
Don’t miss our speaking session on FinOps best practices for data normalization.
In ancient times, tools were made from readily accessible natural materials — think stone axes, wrought iron nails, and grinding stones. Sure, these tools got the job done, but not without a lot of manual work.
Fast forward to today, and we find that the majority (57%) of companies are using native tools to power their FinOps practices or cloud services management. A mere 21% percent say they use a FinOps-specific solution (like Tangoe’s). These are the latest findings from the FinOps Foundation’s State of FinOps Report, a study of 1,245 FinOps practitioners.
Native tools refer to vendor-provided tools — the built-in dashboards and analytical tools found inside a cloud service provider’s portal. But are cloud service providers the best ones to help you achieve all that FinOps promises? Can they really help their clients reduce the rate they pay for their services and make the best use of their infrastructure and applications? If not, where does the native approach fail?
Here’s what the experts at Gartner have to say about it.
A FinOps Warning from Gartner: Beware of Native Tools
In late 2023, Gartner issued their own research on the maturity of FinOps programs at many companies, finding that cloud financial governance practices are largely immature. The cause? The tools they use.
“FinOps is a particular implementation of cloud financial management. It is often oriented toward what the vendor’s tools can do, rather than high-value best practices.” –Gartner
Native tools aren’t always enough to achieve all that FinOps aims to be – multi-cloud services management delivering optimization for both IT spending and cloud resource utilization. Our previous article addresses the differences between native tools and purpose-built FinOps solutions, explaining the limitations of dashboards and portals offered by cloud service providers and the conflicts of interest as well. Even Amazon Web Services’ Cloud Cost Optimization Hub has its advantages yet falls short of being a turnkey FinOps solution.
Your FinOps practice will only go as far as your tools, and data collection and analysis are the highest concerns. We all know that garbage in equals garbage out, and Gartner finds that leaders fail at “regularly producing the basic deliverables for essential cloud financial management.” They fail at the very basic, first steps of FinOps, meaning they can’t get their programs off the ground.
Let’s dig into the reasons why.
FinOps Practitioners Have a Data & Analytics Problem
Anyone who has studied the FinOps Framework and maturity model, can appreciate the importance of data analytics in advancing through the “Crawl, Walk, Run” model. Every FinOps practice begins with the “Inform” phase, which is founded in visibility. But achieving data observability is one of the primary challenges for any practitioner. That’s because:
- Data is Distributed: Critical information is distributed across the cloud — many providers and dashboards hinder centralization.
- Information is Complex: Cost and Usage Reports are massive data files with hundreds of thousands of lines to analyze. Without integration, automation, and advanced analytics, finding key insights is akin to building a boat using nothing more than a stone axe and tree trunk.
- There’s No Standardization: From IaaS billing information to discounting models and service structures, cost and usage data is largely unstructured and needs to be normalized across each cloud service provider before any meaningful analysis can take place. Data normalization is one of the largest issues in solving the problems of cloud cost governance.
Untangling data, making it all “sing from the same songbook,” and putting it all into a usable structure are the first prerequisites for FinOps efficiency, and native tools aren’t designed to tackle this work up front. Moreover, native tools are narrow solutions for one cloud service, which is in sharp contrast to today’s IT realities. Most (+80%) companies operate multi-cloud, hybrid-cloud environments. Thus, native tools will likely never have the reach to serve practitioners in a meaningful way.
And this problem extends beyond the cloud.
A recent Vanson Bourne study confirms that companies using in-house IT expense management (ITEM) programs and tools struggle with data analytics and inventory management — more so than companies using third-party ITEM solutions. In fact, 88% of those outsourcing their ITEM programs see faster time-to-insight and faster time-to-savings at a significantly lower cost. Don’t miss this graphical summary of the key takeaways.
Don’t Let Native Convenience Get in the Way of Results
The heavy reliance on native tools for FinOps achievement is prevalent, as indicated by the latest findings from the FinOps Foundation’s research. However, the cautionary note from Gartner highlights their inherent limitations. While native tools offer the convenience of dashboards built into existing services, they often fall short of the analytical capabilities necessary for full optimization. Plus, they’re inadequate in customizing the presentation of data. Information that can’t be personalized for stakeholder teams or tailored to corporate financial practices is unusable – it returns little to no value to the business.
This is why IT and finance leaders rely on FinOps solutions.
Why Trust Tangoe One Cloud as Your FinOps Platform
Tangoe offers a solid solution giving FinOps practitioners the data collection, analysis, and standardization they need with purpose-built FinOps solutions that can address the complexities of multi-cloud and hybrid-cloud environments. Tangoe One Cloud particularly succeeds in offering:
Multi-cloud visibility and insights
With one comprehensive solution that works with both public and private cloud service providers, you get the big picture view together with a single source of truth for holistic cloud cost management.
AI automation so you can work smarter not harder
- Get AI-powered recommendations for cloud cost savings. Advanced analytics use machine learning and AI to cut through mountains of data and IaaS configuration options to reveal the most cost-effective path forward, giving you a tangible list of cost optimization opportunities prioritized by the amount of money they can save you
- Automated invoice processing and management – a known headache for those on the receiving end of complex IaaS invoices with hundreds of line items to decipher
- Automated implementations enable practitioners to immediately act on the cost savings recommendations they receive, capitalizing on savings faster than they could simply by responding manually on their own
Flexible cost management capabilities
- Integration with corporate financial systems that allow custom rules and comparisons between actual spending and budgeted spending
- Customizable reports that slice and dice the right data for many different stakeholders – including utilization insights for IT operations managers
- Advanced cost allocation and chargeback tools that make shared expenses easy to divide across many departments — using less manual work
Tactical help with security and cloud asset management
- Data-level security features supporting Zero Trust security strategies
- Reserved instance management
- Tagging & pausing guidance
- Help in knowing when to use discounts and savings plans
As companies navigate cloud services management, it becomes increasingly evident that success in FinOps requires purposeful tools that can provide centralized visibility, advanced analytics, standardized data structures across diverse cloud platforms, and personalized information. Only by addressing these foundational challenges can FinOps programs fully realize their potential — optimizing both costs and resource utilization in the cloud.