How to wring more value out of your cloud investments

As organisations make technology investments in cloud to align with their business strategy, CIO’s are increasingly reviewing whether these investments are enabling new capabilities and helping to drive fiscal efficiencies. For a lot of organisations achieving the full potential of cloud investments often feels elusive when cloud spending increases and budgets tighten. ?

Companies looking to expand their use of FinOps and embrace advanced practices that demonstrate the value of cloud through Unit Economics, will start to shift focus from merely managing costs to maximising outcomes, and on average establish greater accountability across teams.

More specifically, Unit Economics capabilities are critical to understanding:

The connection between current business demand and cloud costs, at levels such as per customer, per feature, per product, etc.

How predicted changes in business demand will impact future cloud costs, based on maintaining status quo consumption, architecture, provisioning patterns, etc.

What your future cloud costs should be – if wasted spend is minimised by optimisation, improved end-user consumption, and more efficient architectural patterns

Helping CIO’s understand the difference between the marginal cost (eg. unit cost metrics) and marginal revenue (eg. unit revenue metrics) of their cloud investments is an effective way to make data-driven decisions as to how well an organisation is performing against its financial goals and as a business in the market (FinOps.org, 2024) and supports deeper conversations with internal business units.

Let’s dive into how organisations can get more from their cloud investments, guided by insights from industry leaders and real-world tools.

The growing role of FinOps in cloud optimisation

Managing cloud costs has come a long way. What started as a way to monitor cloud compute and storage expenses has grown into a FinOps framework for managing IT spending across the board—from SaaS subscriptions to on-premises infrastructure.

Gartner reports that 58% of business and technology leaders now integrate FinOps practices into their daily operations

The wider market is maturing, where previously when normalising various billing taxonomies and schemas across cloud environments and SaaS tools, complexity and overhead created billing data that was almost incomprehensible without training and knowledge.

Challenges in normalising billing data led to the creation of the open-source FOCUS project for standardising cloud cost and usage data

This evolution requires collaboration between product, finance, and engineering teams, aligning cloud investments with business objectives. FinOps helps create transparency, ensuring that every dollar spent on cloud services contributes to meaningful business outcomes. As FinOps Foundation co-founder J.R. Storment said, "FinOps is about making the connection between engineering decisions and financial accountability."

From cost savings to value optimisation

The days of focusing solely on cloud cost savings are over. Today, businesses are embracing a value optimisation approach, which prioritises maximising return on investment (ROI) over cutting costs.

As a CIO.com article notes, “Cloud value is about tying investment to outcomes, not just tracking spend” (CIO, 2023).

Previously cloud cost comparisons may have used the prior months spending as comparison vs viewed through the lens of a product/service or impact of customer profitability – this is much more powerful conversation that CIO’s can use to engage with their wider business.

A key element of this shift is the adoption of Unit Economics, which looks at:

• Measuring per-unit cloud costs against the revenue generated
• More granular insights helps organisations evaluate financial impact, balancing innovation with efficiency
• For instance; comparing the per-unit cost of launching a digital product with the revenue it generates provides a clear measure of its value

Due to the complexity of obtaining data and building a Unit Economic model for all cloud resources, it is recommended to start small with an iterative process that involves the business, and not seek 100% accuracy. A number of interesting platforms are launching to market that hope to simplify the capture and reporting of cloud costs.

Advanced tools powering Unit Economics

To truly harness Unit Economics, businesses need advanced tools that go beyond traditional cost tracking.

Next-Gen Tools: Platforms like CloudZero and Finout offer deeper insights into cloud usage and costs (TechTarget, 2024)

Unlike legacy systems, these tools integrate data from hyperscalers and other external sources, such as workload tags, operating systems, and regional metadata. This comprehensive approach helps organisations pinpoint cost anomalies, allocate expenses more accurately, and assess the value of specific workloads.

For example; a next-gen platform might pull metadata directly from AWS and combine it with operational metrics to reveal how much a specific application costs relative to its performance

This kind of visibility enables smarter decision-making and stronger ROI. The key is to link the economic activity or behaviours driving the cloud resource costs and not build a comprehensive model for all costs.

Partnering with IT service providers

Navigating the complexities of cloud cost management often requires external expertise. Embedding FinOps capabilities calls for process transformation, which plays into the strengths of consultancies and global systems integrators. Naturally they are stepping up to offer:

• Tailored toolkits combining third-party solutions and proprietary services
• Streamlined tool implementation, embedding governance, and fostering adoption

FinOps services that integrate with third-party and cloud vendor tools are gaining ground among mid-market companies (1000 – 5000 employees) that traditionally don’t have the money to spend on their own FinOps teams.

These partnerships bring expertise and best practices to the table, allowing organisations to focus on strategic objectives rather than operational hurdles.

Building a culture of collaboration and innovation

Cloud optimisation isn’t just about technology—it’s about people. Success requires a culture of collaboration and innovation, where cross-functional teams align technical capabilities with business goals. Transparent communication, backed by metrics like unit cost, ensures accountability and shared understanding at all levels.

This cultural shift depends on strong leadership and continuous learning to diffuse FinOps thinking throughout a business – as opposed to assigning the responsibility to one person. Training employees on new tools and processes helps them adapt, while clear change management strategies ensure smooth transitions.

As the CIO.com article highlights, "Engaging teams across disciplines is critical to building alignment and maximising outcomes" (CIO, 2023).

The long-term impact of value optimisation

Getting started is the crucial first step. Once you've selected your initial unit cost metric and established the data flow for calculations, you'll likely discover new insights about your system's performance and usage patterns. By presenting this data and sharing these insights, you can demonstrate the value of unit cost metrics and build momentum for their wider adoption across the organisation.

After successfully implementing your first metric, consult the Cloud Unit Economics maturity model to guide your expansion strategy and drive more meaningful adoption throughout the organisation.

The path you take will ultimately be dependent on the architecture of your organization. During the crawl phase of adopting Cloud Unit Economics, it is best to start with metrics that can be supported by existing data sources such as logs, data warehouses, or APM platforms.

Focusing on value optimisation rather than cost cutting positions organisations for long-term success. Cloud Unit Economics offer a powerful framework for making data-driven decisions, balancing agility with cost control - the ability to measure and optimise value will remain a critical differentiator in achieving lasting digital transformation success.

As Gartner notes, businesses that adopt advanced FinOps practices and tools are better equipped to manage complex cloud environments and align their investments with strategic goals (Gartner, 2024).

If you would like to explore the application of FinOps principles and advanced practices, or want to understand more about Unit Economics, get in touch! [email protected]