Filippo Vanara
Filippo Vanara (Senior Research Analyst, European CloudOps)

2023 is the year of efficiency and IT optimization.

Cloud computing continues to play a central role for European enterprise IT, so are IT costs. Consequently, avoiding or reducing cloud resource waste is a top C-Suites’ priority.

FinOps is fast becoming a critical part of IT organizations’ strategy for its systematic approach to managing costs and optimizing cloud resources. It provides insights into spending, usage trends, and preferences as well as helps in forecast and change management.

Why FinOps Is Important in Europe

In today’s fast-paced world, inflation, skills gap, supply chain disruptions, and political tensions are reshaping the tech landscape and have significantly impacted IT spend in Europe. In fact, European businesses are more likely to pay more attention to their costs and spendings.

In Europe, public cloud pricing complexity is causing a tremendous shock to customers. In fact, SaaS and software application costs related to licenses and subscriptions are the second and fifth categories that had the greatest impact on costs, according to IDC EMEA, FERS Survey Europe, Wave 1: January 20 – February 3, 2023 (N=340).

Not surprisingly, increasing vendors pricing (43%), impact of recession on expected business revenue (23%), and staff/labour shortages (22%) are among the most concerned risk factors related to the European organizations’ tech strategies and budget in 2023, according to IDC EMEA, FERS Survey Europe, Wave 5:  June 2023 (N=340).

This is bringing additional scrutiny on cloud spend and cloud ROI. Over two thirds of European organizations believe their total cloud spending is not properly utilized, according to IDC European CloudOps survey, 2023 (N=1,057). Here is where FinOps comes in.

Already 46% of organizations have adopted FinOps in Europe, albeit with varied levels of maturity. But the direction of travel is clear, and it brings huge opportunities for cloud vendors to mitigate cost risks around unused resources, costs allocation, and sustainability as a direct result of waste reduction.

Concurrently, FinOps is seen as a solution in Europe, with some cloud vendors to be very active in the first half of the year. IBM, for instance, has just acquired Apptio to enhance its leadership in the FinOps space while Datadog introduced Cloud Costs Management, which further enhances the collaboration between FinOps and engineering teams to remove friction and reduce cloud costs.

Public cloud vendors are acutely aware of the cost pressures and are investing in offering native cost optimization capabilities.

For instance, AWS Cloud Financial Management (CFM) is aimed at helping organizations measure their AWS environments’ cost while providing prescriptive guidance to cost-related pain points such as lack of visibility or instance sprawl or workload rationalization. Microsoft Azure provides multiple features such as Azure Pricing Calculator and Total Cost of Ownership Calculator (TCO) to help users estimate cloud costs.

It has Azure Resource Manager to allocate costs through the creation of tags, and Microsoft Cost Management to report, benchmark, and forecast costs. Similar tools are offered by Google Cloud Platform too. It has Pricing Calculator and Rightsize Recommender to help users compare architectures costs and provide insights on whether and where to save money.

Enterprises are looking to optimize their cloud resources, control their cloud costs, and deliver innovation while creating value to both their businesses and customers. FinOps is focused on long-term value and reliability, but the outcome of an efficient implementation can already be seen in the short time through the optimization of operations and cutting costs.

Cloud spend discipline is essential and FinOps is seen as critical now more than ever before. The good news is this demand is driving a lot of cloud vendors and third-party niche vendors to offer cost visibility and optimization recommendation platforms. It is an interesting and dynamic market, one to watch closely.


Contact Filippo Vanara to learn more about IDC’s European FinOps Research.

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