I just spent an amazing few days at FinOps X in San Diego, the second annual event hosted by the FinOps Foundation. From its initial start in 2022, the event has tripled in attendees and featured 48 companies out of the Fortune 50. Mirroring its members, attendees were a mix of vendors offering cloud cost management and optimization (CCMO) services and tooling, along with end users that have FinOps practices.
A surprising theme that I took away from my conversations and sessions is that DIY tooling is on the rise. At Forrester, we vehemently dissuade FinOps teams from taking this route because of the level of complexity and the number of person-hours required to maintain it. In the past, those that chose a DIY solution were generally tech-inclined individuals armed with spreadsheets who became quickly overwhelmed by the task.
But some DIY efforts do work. These tools are generally powered by teams of between 15 and 45 engineers acting as a dedicated product and support team that builds new capabilities, maintains and updates the tool as new cloud services emerge, and troubleshoots any existing user issues. The most famous example is Target, which dedicates two teams focused on the data pipeline, data acquisition, dashboards, and engineer persona application and has built everything from the ground up. More commonly, organizations are leveraging existing tooling and building capabilities on top of it. They are leveraging native cloud management tools such as AWS Cost Explorer, Microsoft Cost Management for Azure, Power BI, and Looker. They are combining their custom tools with observability and monitoring solutions.
Keep in mind that not everyone is doing this. Third-party CCMO vendors, don’t be worried quite yet! The group that chooses DIY generally consists of big spenders with large budgets. Their annual cloud spend is, on average, well north of seven figures — often much closer to nine. Their organizations have a tech-forward mindset and allocate a large budget to cloud and cloud initiatives, and they have strong support from their executive team.
So why are these organizations choosing DIY? These FinOps teams have found that:
- CCMO tooling is too expensive. Even if the tool charges make up 1% of cloud spend, 1% of $100 million is still $1 million a year for a tool that doesn’t meet all of their needs.
- Their needs have quickly outpaced existing capabilities. Even with the deepest and broadest solutions, these organizations need additional optimization capabilities, better and more remediation, more customized policy build and management, and more granular and automated access and permissions.
- Reworking off the shelf is the same as DIY. The amount of rework and customization that these organizations required of existing third-party CCMO solutions would have been the same, if not more, time than the time spent building out a DIY solution based on free CCMO tools or other adjacent visualization tools that they already pay for.
- Native cloud CCMO isn’t a dumpster fire anymore. If you asked these FinOps teams six to eight years ago whether they used any of the native cloud management tools, most would give a resounding “no.” That’s changed, however. The native cloud cost management tools from the cloud providers have significantly improved, and building customized capabilities on top of them works for many organizations.
Want to talk more about this or any other FinOps topics with me? Email inquiry@forrester.com to go deeper.
