According to the latest economic data from S&P Global/CIPS UK Manufacturing, July was the worst month for the manufacturing sector—which since May 2020 has accounted for 10% of the UK economy. July results indicated falls in output, new orders and employment.
There were a multitude of reasons for this, including the adoption of high-tech manufacturing processes, competition from cheap labor alternatives in Asia and the uncertainty of Brexit.
Looking to overcome industry disruption like this, UK businesses are steadily adopting a cloud-first approach, with data from the parliament mentioning an estimated 89% of the country’s larger organizations use at least one cloud-based service. The UK’s cloud market is forecast to be worth £59 billion in 2024.
To ensure an organization gets the maximum value from its cloud investments, it’s crucial to embrace FinOps (Finance + DevOps). It is essential in managing costs and helps an organization create a foolproof and long-term strategy that includes a total mindset shift toward cloud financial management.
FinOps is the future of IT cost management for modern businesses. It enables organizations to get maximum business value by helping sustainable engineering, finance, green technology, procurement and business teams collaborate on data-driven spending decisions.
This ensures that these teams can manage their individual cloud costs by taking ownership of their cloud usage and reducing the cloud carbon footprint as an organization.
With cost at the top of mind this year, FinOps is a crucial ally for those who want transparent insights into where money is being spent and its outcome.
In manufacturing, the benefits are obvious. From warehouse management, machine maintenance and efficiency tracking, manufacturers can keep a tab on how resources are being used and the costs related to the operations.
This is where iterations and testing advancements play a pivotal role. When modifications in an application result from a change in business demands, FinOps allows organizations to assess and adjust to the situations as they go along.
To improve the overall operational performance, data analytics and advanced reporting help in measuring and analyzing budgets more efficiently, while enabling more sustainable decisions.
The global cloud FinOps market is worth $832.2 million this year and expected to grow to $2,750.5 million by 2028.
FinOps for sustainability
Arghadeep Mondal, Consultant (Risk Advisory) at KPMG India Services LLP, highlighted how leading IT companies like HCLTech and its partners Google Cloud, Microsoft Azure and Amazon Web Services (AWS) are helping customers with green solutions such as blockchain and FinOps.
Laying out examples of GCP Carbon Footprint, Azure Sustainability Calculator and AWS Customer Carbon Footprint Tool, he said: “Similarly, HCLTech is a leading global tech company among the GSI (global system integrator) community that has already been accredited as FinOps Certified Service Provider (FCSP) and FinOps Certified Platform (FCP) by the FinOps Foundation. I follow these leaders closely and HCLTech use cases—from its FinOps wing MyXalytics—are exemplary in today’s market as how to save cost and embrace sustainable measures.”
He added: “Meant to inform, optimize and operate, today’s FinOps tools have integrated the cloud carbon footprint services to democratize sustainability reporting, and are developing algorithms to provide better visualization, optimize efficiency and reduce carbon emissions.
“With most of the reported carbon emissions in scope 3, the concepts and framework of FinOps aim at reducing them for organizations, thereby creating a governance model for sustainable operations in the cloud. The cloud decarbonization mechanisms measure GHG emissions through the carbon footprint tools; create energy-efficient architectures that are modern and upgradable; use language models and codes to build energy-efficient apps; track waste and unattended resources; based on power usage effectiveness, choose cleaner cloud regions and schedule start/stop to reduce power consumption.”
Going beyond addressing scope 3 emissions
In the era of Industrial Internet of Things (IIoT) and cloud computing, the IT companies are looking beyond reducing scope 3 emissions carbon footprint. The focus is on minimizing infrastructure, using only what’s required, recycling and reusing, moving to microservices, prioritizing green locations and choosing a climate-committed vendor.
“One of the areas where HCLTech believes FinOps can play a critical and crucial role is by addressing scope 4 or avoided emissions. Good FinOps practices help organizations avoid emission,” said Piyush Saxena, Senior Vice President, Cloud Business and Offerings, HCLTech.
“For example, an organization that offers a remote working solution may report on emissions saved from people not having to commute to an office. Scope 4 enables organizations/business units to report on the positive impact they are creating through other organizations using their products or services,” he added.
However, Shahnawaz Khan, FinOps Principal Lead, HCLTech, highlighted that there’s a negative impact to address to in this. “When an employee works from home, prominent cloud resources such as VDI, VPN, storage messaging and document sharing services etc. are required. FinOps aims at optimizing resource utilization and reducing the cost of these resources as part of the FinOps framework. Therefore, when the cost and the remote working resources in cloud are optimized, the carbon emission rate is also optimized. Thereby, saving energy which falls in scope 3 and thus improving the carbon footprints in scope 4.”
With the transformative impact of Generative AI, two new terms are buzzwords today: Artificial Intelligence Internet of Things (AIoT) and scope 4 emissions. Organizations along with their customers and stakeholders are ecologically aware and have been making sustainability a top priority in this rapidly changing world.
With sensors on laptops and desktops of employees, IoT will help keep a track on the number of hours an employee is keeping a laptop working for example and AI will present the right data of the emissions produced at any employee’s home due to this.
“Further, FinOps can present a framework or a set of principles that can increase the resource efficiency and measure and improve scope 4 emissions that are otherwise unmeasurable and are left unoptimized. For example, the large use of such cloud resources and others in a banking institution, emissions of which don’t really or directly fall in scope 1, 2 and 3 categories,” added Khan.
HCLTech’s FinOps journey
With a FinOps’ crawl-walk-and-run maturity model, HCLTech GreenOps, raises awareness among stakeholders; assesses and discovers value in terms of sustainability; creates a roadmap and implements FinOps processes to track waste and reduce carbon emissions. It executes and repeats the iterative process to meet sustainability goals.
It also supports resource tagging, shared cost management, anomaly detection, optimization recommendations, automation, budget alerting, policy management. These bring a set of gold standard blueprints, proven cost-saving methodologies and best practices.
For example, a UK-based utility organization that owns, operates and maintains the largest gas distribution network spending $1 million on cloud services per month. The organization wanted to effectively engineer cost optimization and cloud spending with clearly defined optimization thresholds among other requirements. Using FinOps, HCLTech helped the client realize an average potential monthly savings of $148K. A real-time view of tagging compliance and intelligent tagging enforcement policies ensured a 60% improvement in cost attribution, actionable insights and real-time decision-making, among other benefits.
HCLTech has also helped one of the world’s leading manufacturers of recyclable products manage and optimize cloud spend on AWS and Azure. With operations in over 12 countries, this client faced many issues, including lack of real-time cost visibility to account and business owners, tagging issues, inefficient KPI monitoring and multi-cloud dashboarding. HCLTech FinOps helped the client gain better visibility and transparency of the cloud spend across the distributed system and teams with 31% monthly savings through the continuous cost optimization and governance programs and significant reduction in cloud cost wastage among other benefits.