RISE with SAP FinOps: It’s a Strategic Requirement, Not Just a Cost Control Tool

RISE with SAP, implementing FinOps

FinOps refers to Financial Operations, a management approach that combines financial management principles with Cloud engineering operations. It consists of a cross-functional process that reviews Cloud spend to determine why and when that outlay should increase or decrease.

FinOps is a strategic requirement because when you move to the Cloud, managing variable Cloud usage is new to most organizations, and it’s critical to get it right. Traditional cost reduction processes are important to every company. But for the Cloud, it’s not a matter of reducing costs – the focus needs to be on controlling them. The goal of FinOps is to get the most value from the Cloud.

Why FinOps is Needed in the RISE with SAP Environment

Cloud platforms such as RISE with SAP pose some unique challenges. The cost structure can be complex and dynamic resource allocation supports scalability, but it can lead to uncontrolled increases in Cloud spending.

Traditional cost reduction principles shouldn’t be applied wholesale to Cloud expenditures. For example, an increase in Cloud spending could be required to support a new process, or it could help the company to reach strategic goals. FinOps teams must have the ability to review Cloud spending, identify why the Cloud spend is at its current levels, and then determine if outlays need to be increased or decreased.

Every department needs to make sure that their Cloud adoption path includes financial accountability. Managers need to have dashboards that provide real-time visibility into their Cloud spend to promote financial accountability. The FinOps process helps those departments by leveraging SAP analytics and financial management tools to create dashboards that support data-driven decision making.

Understanding Why Cloud Costs Could Be Too High

There are any number of reasons why Cloud costs get out of control, here are some of the key issues that need to be addressed:

• Waste. This is an opportunity for cost reduction. Many stakeholders don’t completely understand how to control waste. It can be easy for teams to purchase Cloud services that become underused or unused over time.
• Excessive data transfer. Cloud vendors frequently charge fees when data moves from their platforms. Minimizing the need for data transfer is an important issue for FinOps and speaks to the need for careful review of vendor pricing.
• Inefficient resource sizing. Costs can be controlled when workload types are assigned to the best set of resources to avoid waste.
• Poor architecture design. Costs rise when Cloud solutions are poorly designed. Examples include poorly written code that takes up too many resources, and applications that constantly seek data transfer from the Cloud.
• Costly vendor agreements. Vendor agreements can increase costs depending on the pricing option that is in place. For example, on-demand payment is the most expensive alternative. Other options such as a flexible pricing model may provide an opportunity to reduce costs.

Implementing FinOps in the RISE with SAP Environment

Moving to RISE with SAP will give your company a range of new capabilities, but it will have an impact on your operating model. These are some of the key factors that need to be considered.

  1. Creating a FinOps Culture

One of the first steps that is required to optimize the use of a RISE with SAP installation is to foster a FinOps mindset within the organization. It’s important that senior executives support the change in emphasis for controlling Cloud expenditures. With strong support, the project will obtain the resources, training, and tools needed to make the culture shift.

Setting clear goals and objectives will also contribute to the success of establishing a FinOps culture. Goals may include increasing the utilization of Cloud resources or reducing idle resources. Identify the KPIs that need to be tracked to measure progress.

  1. Actively Promoting Collaboration and Providing Education

Start by establishing a communication strategy that will explain the FinOps process to employees and focus on the benefits of the activity. Keep communicating updates, best practices, and success stories to keep the staff engaged.

Find ways to promote collaboration among IT and DevOps groups with purchasing, finance, and business teams to create financial accountability. Reinforce the principle that controlling Cloud spend requires data-driven decisions.

Plan for the training and continuing education that is needed for all team members to use the analytics that will help them succeed. And support collaboration by establishing regular meetings of the team members to discuss their challenges and progress.

  1. Pursuing Continuous Improvement

The FinOps process for RISE with SAP isn’t a once-and-done activity. Make sure that the FinOps team continues to regularly review the data provided to monitor costs and KPIs and to identify opportunities for resource optimization, automation, and policy changes.

Conclusion

FinOps is critical to ensure that RISE with SAP environments get the most value from the Cloud. The cost reduction mindset needs to make way for a cost control mentality. Understanding how Cloud costs skyrocket will help the FinOps team to optimize the use of the RISE with SAP analytics. In addition, moving to a FinOps culture will ensure that the organization understands the importance of data-driven decision-making.

For more information about how RISE with SAP will impact your operations, download our latest report, RISE with SAP: How to Manage the Top 5 Impacts on Your Operating Model. If you have questions, please get in touch with the experts at Lemongrass for the answers.

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