In the past few years, Cloud financial management evolved beyond what many cloud stakeholders anticipated. As a result, many companies are unable to monitor, allocate and optimize cloud costs.
Gartner estimates companies will waste as much as 30% of their cloud budgets in 2022 alone owing to this issue.
If you want to reduce waste and optimize cloud spending, you’ll want to take a more holistic approach to cloud cost management.
Embracing FinOps is one way to achieve this. Yet, implementing FinOps manually might be inefficient and error-prone. Instead, you can use a FinOps tool to capture, understand, and control your cloud costs. Exactly how?
Well, let’s start at the beginning.
Table Of Contents:
What Is A FinOps Tool?
A FinOps tool or platform is designed to help you automate and simplify the Financial Operations (FinOps) lifecycle. The idea behind FinOps is to maximize business value by aligning financial accountability, technology, and people in an organization.
FinOps is to cloud financial management what DevOps is to software engineering; a cultural shift meant to maximize efficiency and return on investment.
The FinOps life cycle involves three continuous components: Inform, Optimize, and Operate, according to the FinOps Foundation.
- The Inform phase aims to deliver the visibility you need to create shared accountability.
- The Optimize phase is meant to uncover efficiency opportunities and evaluate their value.
- The Operate phase helps specify and put into action processes that support the goals of business, technology, and finance.
A good FinOps tool can help you collect the cost data you need, analyze it in the context of your business, share it with the right stakeholders in good time, and make informed financial decisions that maximize your business value.
Cost savings are just one aspect of FinOps. By enabling proactive organizations to optimize operations at scale, FinOps also empowers them to make more money.
Through FinOps, you can automate cloud spend management, bringing financial accountability to the cloud’s variable spend model.
For example, when you know the costs involved in running different aspects of your business, you can determine which levers to pull to produce the results you desire.
Also, when you understand your cost per customer, you can more accurately calculate the gross margin per customer. If you discover your gross margin isat risk, you can decide to review review your SaaS pricing for that client.
We’ve covered what FinOps is in more detail before, including how aligning finance and operations benefits SaaS businesses.
In this guide, we’ll go over several of the best FinOps tools you can use to automate financial governance in the cloud — and the difference between FinOps and cloud cost management.
Cloud Cost Management Vs. FinOps: What Is The Difference?
Traditionally, cloud cost management has centered around traditional finance practices; surfacing cloud costs, rightsizing resources, and reducing cloud costs, sometimes at the expense of innovation or velocity.
It hasn’t taken into account whether an increase in costs is due to growth or simply overspending. The major focus has been on reducing costs at all costs.
With FinOps, the focus is on cloud financial optimization or cloud cost optimization. Optimizing costs in the cloud goes beyond cutting cloud spend indiscriminately.
The FinOps framework brings together financial professionals, software engineers, and FinOps tools to identify opportunities for cutting waste while investing more in profitable areas that maximize value to the business.
While cloud cost management is a traditional approach to cost control, FinOps emphasizes maximizing business value, not just reducing costs.
How To Choose The Right FinOps Tool For Your Needs
When deciding on a FinOps tool, you’ll want to consider the capabilities it offers, its cost, user-friendliness, the level of customer support it provides, and the level of integration with other tools and services.
More importantly, consider its ability to provide useful and immediately actionable insights. You want a tool that will help you understand your cloud usage patterns and related costs so you can tell exactly where to optimize for maximum value.
Here are some additional suggestions for selecting the best FinOps tools for your company:
- Consider your organization’s needs. What are your top FinOps priorities? Do you need help with cost allocation, budgeting, forecasting, or cost optimization? Then choose the tool that offers the most features in one platform, so you don’t have to pay for features you don’t need or manage multiple tools.
- Compare different tools. Before you commit to a vendor long-term, you’ll want to shop around. There are a variety of FinOps tools on the market, so it’s worthwhile to compare them and find one that meets your specific needs. Here’s an example comparison of CloudZero vs CloudHealth vs Cloudability, as an example.
- Get buy-in from your cloud financial management stakeholders. FinOps is a team effort, so it’s imperative to get buy-in from all players, from engineering to finance to management.
- Get a tool that delivers granular, immediately actionable FinOps insights. Most cost tools present totals and averages. Instead, get a cloud financial optimization platform that delivers hourly cost per unit, such as cost per customer, per feature, per service, per deployment, per environment, per project, per team, and more.
- Double-check the tool’s integrations, support, and documentation. Make sure the tool has good support and documentation so you can get the help you need when you need it. You’ll also want it to play well with your existing stack.
- Embrace continuous improvement: Continuously measure the effects of the chnages you make in your environment to track what works and what doesn’t.
- Grab the demo to experience the FinOps tool for yourself. You can read a lot about a tool’s capabilities. But it’s when you put it to the test and consider how well it works with your workload and infrastructure that the real assessment begins.
Choosing the right FinOps tool can be the difference between seeing who, what, and why your cloud costs are changing and surprise costs blowing a hole in your cloud budget.
Here are the tools you can use to simplify your FinOps implementation.
What Are The Best FinOps Solutions?
An effective FinOps solution will align finance and operations in a language they both understand. You’ll want a tool that can source the right metrics for each team. To make it more comprehensive, it should also enrich that data with cost insights from multiple, relevant sources, such as infrastructure and app data.
Then it should break down the data into cost dimensions that speak the language of your business and stakeholders, such as finance (cost per customer), engineers (cost per feature), C-suite (COGS), and investors (gross margin).
Among the many cloud cost management tools out there, here are five you’ll want to check out.
CloudZero translates cloud cost into a language that makes sense to your FinOps stakeholders, including finance, engineering, product, and more. You can measure relevant business metrics, like cost per product feature, customers, unit cost, or whatever flexible dimensions make sense for your business.
The advantage of this cloud cost intelligence approach is it enables operations and finance to do so even without engineers implementing a perfect AWS tagging strategy. It also makes CloudZero great at identifying wastage and optimizing costs, breaking down AWS bills into insightful unit cost metrics, and proactively alerting your FinOps team about cost anomalies before they occur.
FinOps teams can easily connect costs to specific events, such as deployments, with CloudZero’s easy-to-explore interface. Your team can then identify the driver of every cost. So for teams looking for a tool that can help forecast, plan, and allocate AWS costs more reliably, CloudZero can help.
You can also get your own FinOps coach at CloudZero, who will help you optimize your cloud spend like a pro, even if you have struggled before. As a result, you’ll have fewer awkward discussions about cloud costs with C-suite, the board, and investors.
Year Founded: 2016
Category: Cloud cost intelligence
Best for companies that want to see who, what, when, and how they spend on the cloud, and how that relates to their everyday business activities, such as onboarding new customers and adding new features.
Pricing model: Flat annual rate
Request a CloudZero demo to learn how CloudZero has helped companies such as Remitly, Drift, MalwareBytes, and more make sense of their cloud costs — and can help you do the same.
ProsperOps leverages AIOps, an always-working-in-the-background approach, and FinOps automation techniques to deliver results.
But ProsperOps has a greater focus on optimizing AWS Reserved Instances and Savings Plans. The tool might be worth checking out if you want a FinOps tool to identify unused cloud resources and that automatically manages RI and Savings Plans in one place.
ProsperOps also charges you for the savings you make, unlike many tools that charge you a percentage of your cloud spend.
Year Founded: 2018
Category: Automated RI and savings management
Best for companies with AWS Reserved Instances and Savings Plans that need automated optimization.
Pricing model: $0.05 per dollar saved (compute) and $0.35 per dollar saved on optimized/purchased RIs.
Harness’s Cloud Cost Management (CCM) makes it possible for finance and IT teams to track cloud spend collaboratively. FinOps teams can prioritize software development projects based on resource allocation and changes to business strategy.
Harness monitors and reports on opportunities to end unused instances on an hourly basis. It also enables FinOps teams to create and enforce cost policies. Teams can also use it with cloud providers such as AWS, Google Cloud, and Microsoft Azure.
Harness’ Continuous Delivery Platform also offers root cost analysis to help correlate cloud events with costs. It may be a bit pricey for some companies, depending on how their cloud infrastructure is set up.
Year Founded: 2016
Category: Automated cost management
Best for companies seeking more granular information on their cloud spending beyond AWS.
Pricing model: Tiers (limited freemium and paid plans) that charge by the percentage of cloud spend (2.25% of cloud spend for Teams, and 2.5% of cloud spend for Enterprise users)
For customers who want FinOps tools that support multiple cloud environments, including IBM Cloud and Google Cloud, Densify is worth considering. It is also compatible with container services such as Kubernetes and RedHat and hybrid environments on VMware.
Using machine learning, the tool identifies optimization opportunities, enables resource matching, accurately forecasts available resources, and prevents overprovisioning to reduce costs.
With Densify, finance and operation teams can intelligently create scaling groups and integrate FinOps workflows with DevOps pipelines to boost their efficiency.
Year Founded: 1999
Category: Hybrid cloud and container financial management
Best for companies that want to reduce overwhelm by checking their hybrid cloud spend in one place.
Pricing model: Request pricing
5. AWS Cost Explorer
Amazon Web Services introduced Cost Explorer in response to customer demand. AWS users previously complained that AWS bills were difficult to understand. Today, Cost Explorer is a popular starting point for cloud cost and usage analysis, rightsizing, cost anomaly alerting, and savings recommendations.
Using Cost Explorer, you can generate customized cost and usage reports sent to you monthly. Although it may not provide unit cost analysis like CloudZero, the tool offers resource-level granularity (hourly, daily, or monthly) and historical data going back 12 months, should you wish to compare your costs over time.
Despite this, most users cannot rely on AWS Cost Explorer because it relies heavily on implementing a perfect tagging strategy, which is challenging, especially in multitenant architectures, shared resources, and untagged resources.
Moreover, AWS Cost Explorer reports are tricky to understand, interpret, and link to real business activities. When visibility is this limited, optimization opportunities become harder to identify.
Year Introduced: 2014
Category: AWS native cost tools
Best for companies with basic cloud costs and usage analysis.
Pricing: Free as an AWS user
With CloudCheckr, you get a cloud management platform with security and financial management functionality in one. You can track resource usage trends, what’s driving the consumption so you can eliminate waste.
CloudCheckr also enables you to monitor compliance for over 35 frameworks to stay audit-ready. Also, it continuously scans your environment to detect security vulnerabilities as early as possible.
Like many other platforms, CloudCheckr supports rightsizing resources, managing discount programs, and identifying idle resources. You can also share cost, security risk, and ongoing compliance reports with colleagues or your clients.
Year Introduced: 2011
Category: Hybrid cloud cost optimization
Best for: Companies that want to manage cloud governance in one place, including performance, security, and costs.
Pricing: Custom quote
Apptio provides a suite of tools you can add to your stack. It offers three tools to support FinOps implementation in an enterprise setting.
Cloudability is its multi-cloud financial management platform. It offers insight into cloud resource consumption and related costs in the context of IT, finance, and DevOps teams.
Apptio One provides a more traditional approach by helping you measure your Total Cost of Ownwership (TCO). Yet it also focusses on enabling forecasting and streamlining planning cycles.
With TargetProcess, you can flexibly manage work, resources, and enterprise portfolios while maintaining continuous alignment with business objectives.
Year Introduced: 2007
Category: Enterprise cloud cost optimization
Best for: Companies that want to manage their multi-cloud environment in one place.
Pricing: Custom quote
In some cases, the platform is unable to assign costs accurately, such as in complex environments and shared costs. That means the unit costs it reports are often more like rough estimates and averages that reliable per-unit costs.
Its Kubernetes cost data also less accurate compared to other platforms, like CloudZero’s Kubernetes Cost Analysis.
It’s still better than nothing, since you can track at least some general cost changes over time using these averages. The challenge is without the specificity of unit costs, you can’t tell whether specific optimization efforts are working or not.
Year Introduced: 2020
Category: Multi-cloud financial management
Best for: Companies that want to manage their multi-cloud environment with some level of unit cost insights.
Pricing: Custom quote
If you are looking into increasing cost visibility and accountability into just your Kubernetes environment, the Kubecost platform may help. Kubecost supports real-time cost visbility and notifications for quickly catching K8s infrastructure and cost issues before they become major problems.
Kubecost allocates K8s costs by various concepts, such as by namespace label, service, deployment, and more. You can also allocate the costs by business metrics such as team, product, and custom label.
In addition, you can view your costs across multiple clusters from a single dashboard.
Alternatively, you can view them via an API endpoint. You can then combine Kubernetes costs with those for external cloud services and infrastructure to get a better sense of overall costs. It also lets you share external costs and then attribute them to any Kubernetes concept.
Year Introduced: 2019
Category: Kubernetes cost analysis and management
Best for: Companies that only want to manage Kubernetes spend.
Pricing: Custom quote
VMware’s CloudHealth is an enterprise-level cloud financial management platform. In addition to cloud governance (optimizing system performance and managing security posture), FinOps teams can use it to manage costs.
This tool includes features such as rightsizing, discount program management, identifying idle and unused resources, as well as cloud budgeting and forecasting. CloudHealth also supports cost allocation (chargebacks and showbacks) and surfacing Kubernetes cost data.
There are multiple ways to break down costs in the platform, such as by project, team, or service. As with Cloudability, the product does not provide full per-unit cost visibility. This means you can see your totals and averages, rather than the hourly cost per customer or per feature intel that CloudZero presents.
Year Introduced: 2012
Category: Cloud governance and security management
Best for: Cloudability alternative.
Pricing: Custom quote
Xosphere offers a unique approach to cloud financial optimization. Rather than monitoring idle resources, it optimally switches your workload between expensive On-Demand and cheap Spot instances.
It does that by monitoring instances within AWS Auto-Scaling Groups natively. As soon as Spot instances become available at a reasonable price, Xosphere replaces On-Demand instances with the much cheaper AWS Spot instances.
As soon as Spot instance capacity becomes unavailable, it switches your workload back to the more durable On-Demand instances, ensuring application availability.
The Instance Orchestrator works in the background, automatically swapping Spot and On-Demand instances for you to maximize the benefits of Spot prices without downtime.
Year Introduced: 2020
Category: Spot instance orchestration
Best for: AWS customers that want to automate Spot instance management with minimal service outages.
Pricing: Per hour per Spot instance
See CloudZero In Action
With CloudZero, finance and operations can work together to automate cloud financial management. CloudZero provides insights that both teams, executives, and other stakeholders can use to understand the cost of each business activity in the cloud.
Where CloudZero excels above others is that it delivers granular cost insights you can put to action immediately. Think of cost per customer, per team, per service, per project, and per software feature.
Each party can then make informed, quick, and accurate strategic decisions in the best interests of the organization’s finances.
Drift, one of our happy customers has saved over $3 million in AWS costs this way. Demandbase cut their cloud spend by 36% recently, and justified $175 million in financing. Want to see how CloudZero can help your FinOps program as well?