FinOps-as-a-Service will be a Massive Threat or Opportunity for MSPs

FinOps-as-a-Service will be a Massive Threat or Opportunity for MSPs

By Matthew Vulpis

Cloud computing is currently one of the most essential pieces of technology on planet Earth, seeping into and finding ways to offer advantages in practically every industry out there. For the digitally dominant, modern-day enterprise, the cloud offers faster innovation, flexible resources, economies of scale, and a strong backbone when attempting to have different technologies work in unison.

While the cloud has provided benefits to virtually all sectors of business, the cloud has most notably paired well with the managed service provider (MSP) industry.

Though originally, some MSPs feared the cloud would erode their revenue and make their businesses obsolete, cloud computing has become a critical aspect for MSPs attempting to remain competitive in the digital age. Cloud provides MSPs with a variety of benefits, such as outsourcing some of their infrastructure – and, in certain cases, software – requirements to cloud providers, as well as having fresh sources of innovation available that can lead to a differentiating experience for their clients.

However, there is a growing emphasis among enterprises to optimize their cloud functions as wasteful cloud spending reaches new heights. Cloud waste averaged 30 percent of companies’ cloud budgets in 2021, with that figure jumping to 32 percent by the end of 2022. For MSPs, this sparks necessary action to adopt and implement devices and applications that can help more efficiently manage their clientele’s cloud services for more optimized cloud expenditures.

“For MSPs, one of the more prominent and rapidly emerging ways to help better optimize their client’s cloud services is using FinOps frameworks,” said Ben McGahon, founder and CEO of Kalibr8, a global company based in Ireland, which continues to develop a cloud-native, AI-driven platform for actively understanding and controlling the cost of cloud computing, storage, and application delivery. “FinOps, which is simply a combination of the terms finance and DevOps, is a framework for managing OpEx across an organization, primarily in conjunction with the cloud and cloud computing. The idea on which FinOps bases its framework is that a business should make the best investment decisions, not just the lowest cost decisions. For that reason, we have spent a great deal of time working with MSPs and cloud providers to establish value metrics and management automation.”

An important goal of a FinOps framework is to help engineering, finance, business, and technology teams within the same organization achieve business value and maintain financial accountability for cloud services. FinOps goes beyond the goal of simply saving money and strives to drive revenue by helping cross-discipline teams collaborate to make the best decisions regarding performance, quality, and cost in technology investment and execution decisions, mainly surrounding cloud decisions and usage.

“For MSPs, FinOps shouldn’t be looked at like a threat, as the industry once did with cloud computing,” McGahon explained. “Instead, the rapid rise of FinOps should be seen as a bountiful opportunity for MSPs, as the core concepts make FinOps the ideal program for MSPs to drive. For MSPs, the opportunity lies in the ability to develop and grow customers’ FinOps practices by using data and strategic collaboration to help connect advanced cost management metrics to their wider business goals.”

As MSPs begin to realize the potential opportunities in adopting, implementing, and offering FinOp framework and applications to their clientele, they’re also quickly finding just how many advantages FinOps can provide them.

“I’ve been in the IT outsourcing and MSP industry for decades and rarely have I seen a phenomenon that will be either friend or foe for service providers,” McGahon cautioned. “FinOps can help MSPs deliver greater value to their clientele, as the principles are designed to drive deeper overall cloud savings and cost optimization through more intense focus, better strategy, and greater collaboration. By enhancing their cost management services with FinOps, MSPs can power a high-value strategy of delivering more efficient cloud services, leading to improved business results. The risk for MSPs is doing nothing, in which case they will inevitably – and probably sooner versus later – wake up one day to find FinOps service providers have stepped in to force cost reductions at the request of the MSPs’ own end customers.”

Furthermore, FinOps aids MSPs in creating more confidence among clients when it comes to leveraging the cloud efficiently, as concerns about unexpected overruns and the ability to optimize costs remain key barriers to cloud migration, McGahon’s team has found.

“For MSPs, driving FinOps practices provides better cloud visibility and more meaningful levels of savings,” he said. “These insights can help alleviate stakeholders’ fears, which can encourage them to move more workloads to the cloud even faster.”

With FinOps built into a service portfolio, MSPs can create a path for advancement for current employees and open the door to recruiting finance and cloud experts. Enabling key talent to learn and demonstrate new methodologies like FinOps creates stronger employee engagement and satisfaction for MSPs themselves. This is essential, as employees are the lifeblood of any business, meaning training should be among the first priorities for MSPs when diving into the world of FinOps.

“The most exciting part is that, by offering FinOps services, MSPs can differentiate themselves from other businesses within a marketplace amid what is setting up to be a highly competitive digital era,” McGahon said. “We provide the platform for MSPs to build their multi-cloud FinOps practices, so they are not undercut by new entrants who base their entire business model on cloud cost optimization. Tens of thousands of MSPs are in a great position today to launch their FinOps-as-a-Service practices.”

Overall, studies found that, in 2022, 75 percent of enterprises believed that FinOps is important to cloud success and, while most companies were trying to implement some kind of FinOps, only 10 percent had a mature practice implemented. This is where MSPs can make a difference: Of the companies that use both an MSP and FinOps, 83 percent said their MSP was involved in the practice.

This should have MSPs everywhere searching for ways to start their own FinOp practices to become a reliable FinOp service provider. The world is set to continue down its current technology-dominant pathway, meaning optimization will be what sets the best apart from the rest. Unlike with early hesitation around the cloud, MSPs should be diving headfirst into the world of FinOps, allowing both themselves and their clientele to reap the benefits.

Edited by Erik Linask
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