The cloud spend conundrum: Embracing FinOps in the telco | HCLTech

The cloud spend conundrum: Embracing FinOps in the telco

In a more complex landscape, cloud FinOps will support future revenue growth for telcos
7.2 min read
Steffen Archer
Steffen Archer
Practice Director, HCLTech
7.2 min read
The cloud spend conundrum: Embracing FinOps in the Telco

Today, telcos are steadily moving forward with cloud adoption and have established strategies for moving their considerable workloads to the cloud. According to MarketsandMarkets research, the global telecom cloud market size is expected to grow to $52.3 billion by 2026. This rising trend of adoption has been driven by a need for agility.

Telcos must launch their offerings faster, increase productivity and achieve better outcomes from technology initiatives.

While this demand for cloud has come with considerable benefits amid a digital economy, telcos are increasingly becoming aware of the challenges of managing cloud costs. These challenges are driven by ease of consumption, the need to give platform teams control over environments and the increasing use of rapidly evolving Infrastructure-as-a-service (IaaS) and Platform-as-a-service (PaaS) solutions. In addition, telcos operate in complex ecosystems with a rich mix of technologies.

For most operators, this adoption means they make use of multiple public clouds and Software-as-a-Service (SaaS) vendors, as well as on-premise hosting platforms. This cloud complexity and cost, coupled with the ongoing shift toward cloud, means there is an urgent need for an improved financial management of cloud spending.

The value of cloud spend

According to Gartner, the global spend on public cloud services is projected to be worth $600 billion by 2023, up from $411 billion in 2021, marking a CAGR of over 20% during the 2021-2023 period. The cloud spend on telecom has been focused on IaaS. This investment underlines the growing popularity of a cloud-first approach and cloud-native operations in telecom.

The present reality makes understanding and predicting cloud spend difficult due to the limitations in financial management and reporting, along with the multifaceted richness of various cloud offerings. For enterprises, this means it is not possible to even predict Opex, let alone optimize Capex spend. Such an inability can cause issues with managing project execution budgets, making support costs hard to predict and creating governance challenges across the organization.

Likewise, an excessive focus on cost can lead organizations to lose sight of the significant benefits the cloud can bring to telcos, such as a greater ability to innovate and the provision of zero-touch service delivery. In such a scenario, it is important for operators to fully understand the value that cloud spending can bring forth. Only then can enterprise-level spending be value-driven.

The right FinOps partner

Telcos are rapidly adopting agile principles, DevOps approaches and CI/CD tooling. In this environment, any approach to governing cloud spend must consider the needs of developers, product managers, finance personnel and leadership. New age FinOps takes a holistic approach to meeting the needs of these business functions to provide transparency and the ability to predict and govern cloud spend.

In pursuit of a better approach to finance in the cloud, the right partner is required. HCLTech adopts a holistic strategy that combines a robust tooling approach. This approach captures business metrics and adopts an as-a-service model with an enterprise-wide governance process enabled by a cloud center of excellence (CoE).

Such a CoE has the capability to drive new directions for managing cloud finances through the involvement of finance, HR, procurement and cloud experts. These centers can establish visibility, transparency, policy, controls and charge-back mechanisms for financial control. A CoE can also introduce business metrics and KPIs to show the business value generated from an organization’s cloud environment.

The aim of such a CoE is to create a robust process that incorporates procurement and finance with product engineering and planning functions. Consequently, the CoE can bring clarity on accountability and cross-team collaboration.

Through DRYICE MyXalytics’ dedicated FinOps module, HCLTech delivers industry-leading proficiency in implementing AI for cloud cost visibility and optimization, as well as overall cloud governance.

To strengthen this FinOps practice, HCLTech has also signed a multi-year, strategic partnership with Proximus Group, Belgium’s leading digital services and communications provider. The alliance will transform Proximus’ data center business and create a resilient digital foundation for them.

HCLTech will launch a hybrid next-generation cloud portfolio to support Proximus’ operations and accelerate innovation and growth in the BENELUX market, while investing in a dedicated innovation lab, providing Proximus with exclusive access to IP, products and the partner ecosystem.

This will enable Proximus to use HCLTech’s extensive telecom and technology domain expertise to develop innovative 5G, edge and IoT solutions. Together, HCLTech and Proximus will leverage the innovation lab to upskill employees in AI-led operations, automation, agile infrastructure management and cloud-native development.

Cloud: The catalyst for innovation

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Planning for the road ahead

Backed by a robust CoE, operators will be able to institutionalize a capability for understanding, controlling and driving value from cloud spend. When supported by the right information, they can make decisions in near real-time if needed.

The right information needs to include:

Agreements made with cloud service providers such as Amazon, Google and Microsoft. The usage of all chargeable consumption elements. Agreements with SaaS providers such as Salesforce, ServiceNow and Oracle Cloud and their private cloud(s).

When this information is brought together, it becomes possible for cloud CoEs to:

Demonstrate the value of cloud spend through well-defined metrics. Develop policies for usage, access privileges and more. Identify areas of improvement. Drive a culture of continuous cost improvement across the enterprise.

Going forward, 5G, edge computing and IoT will help in expanding the role of cloud in telecom operators’ revenue strategies. This increasing complexity of the revenue must be properly managed. In doing so, it will enable FinOps to support future revenue growth based on telco cloud services.

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