In an era dominated by rapid technological advances, the intersection of financial technology and cloud computing has emerged as a powerhouse of innovation and efficiency.
This article delves into the pivotal statistics and trends of 2024, shedding light on the evolving landscape of FinOps and its impact on the fintech sector.
What is FinOps?
Central to this convergence is the discipline of Financial Operations, or FinOps, a strategic approach to managing cloud costs and investments. As cloud computing becomes central to digital transformation, adopting FinOps is essential for organizations aiming to control their cloud spend and enhance operational efficiencies.
The Rise of Cloud Computing
Cloud Economy and Adoption
The digital landscape is witnessing a significant pivot towards cloud technologies, with Gartner forecasting a striking 65% of enterprise application spending shifting to the cloud by 2025.1
This transition underscores a broader movement towards digital transformation, with the cloud computing market expected to reach $680 billion in spending in 2024.2 The cloud computing market is also expected to grow at a CAGR of 16.8% from 2023 to 2030, hitting a projected $2.8T valuation by 2030.
Venture Capital Trends in Cloud Cost Management
Investment in cloud cost management solutions has surged, with VC funding reaching an estimated $4.2 billion in 2023, indicating strong confidence in the sector’s growth potential.3
The Cloud Shift Phenomenon
Gartner's research also shows that by 2025, over half (51%) of IT spending in application software, infrastructure software, business process services, and system infrastructure will have migrated from traditional solutions to the public cloud.
This marks a notable increase from 41% in 2022, signaling a clear trajectory towards cloud dominance. Particularly in the realm of application software, the investment in cloud technologies is expected to soar to 65.9% in 2025, up from 57.7% in 2022.1
The Top Cloud Providers in 2024
The market dominance of Amazon Web Services, Microsoft Azure, and Google Cloud highlights the confidence and reliance businesses place on these platforms for cloud services. Their comprehensive offerings and global infrastructure make them the preferred choice for organizations looking to leverage cloud computing to drive business growth and innovation.
Top Cloud Services and FinOps Tools
The top public cloud services used by organizations are data warehouses, DBaaS (relational), and push notifications. Many companies are experimenting with machine learning, Disaster recovery as a service, Edge services, IoT, and Serverless.
The State of Cloud in Organizations in 2024
Accelerated Migration to Cloud
The cloud's ascendancy has been further accelerated by the global COVID-19 pandemic, which has compelled organizations to rethink their operational models and adapt to a new business and social reality.
Michael Warrilow, Gartner's research vice president, underscores the urgency of this transition, warning that technology and service providers who lag in adapting to the cloud shift risk obsolescence or relegation to low-growth markets.
Emerging Trends in Cloud Computing
With over half of all workloads and data now residing in the public cloud, a notable 65% of companies are reprioritizing their IT strategies to focus on cloud technologies, highlighting the shift towards cloud-centric operations.3
If your company doesn't have a roadmap for cloud, we recommend utilizing cloud strategy and planning consulting to get expert recommendations tailored to your business's cloud needs.
Organizations Embrace Hybrid and Multi-Cloud
The majority of organizations choose to blend public and private clouds, with 87% using multi-cloud infrastructure.4
According to Flexera State of the Cloud Report for 2024, top reasons for multi-cloud architectures are apps siloed on different clouds, failover between clouds, workload mobility between clouds, and data integration between clouds.
Data and Cloud Migration Approaches
When it comes to storing data on-premise versus on the cloud, many companies store non-sensitive data, orders, and sales data, as well as IoT/data on the public or hybrid cloud, while keeping consumer and corporate financial data on stay on-premise.4 Expert cloud implementation services can help you create the perfect plan for multi-cloud, hybrid, or single cloud use.
Top Cloud Challenges for Businesses
Cost Management Concerns
When asked about the top cloud challenges they are facing this year, both enterprises and SMBs mention managing cloud spend, lack of resources and expertise, and security, with SMBs also identifying compliance as a major challenge.4
In a similar study by Economize, a significant 82% of respondents identified cost management as their primary concern with cloud computing, underscoring the importance of efficient financial oversight.3
Challenges When Migrating to the Cloud
Some of the greatest challenges both enterprises and SMBs face in migrating to the cloud are understanding app dependencies, assessing technical feasibility, selecting best instance, and assessing on-premise versus cloud costs. Other cloud migration challenges include optimizing costs post-migration, knowing the implications of BYOL, and selecting the right cloud provider.
How Much Does the Cloud Cost: Spending Reports
Public Cloud Spending Trends
Statista's data reveals that the global public cloud computing market is poised for substantial growth, with end-user spending expected to reach $679 billion by 2024.5 This encompasses a wide range of services, underscoring the public cloud's role as a fundamental infrastructure for modern business operations.
What are Companies Spending on the Cloud?
Nearly a quarter of businesses spend over $12M on public cloud per year, with the vast majority of enterprises spending at least $1.2M annually.4
The majority (60%) of companies understand that cloud costs are increasing, and over half of companies said public cloud increased their IT spend in the past three years.6
Budget Wastage in Cloud Spending
Despite the growing sophistication in cloud management, a significant portion of cloud budgets—up to a third—goes to waste, according to Flexera. This statistic highlights the critical need for more effective cloud cost management strategies, where FinOps plays an essential role.
Embracing FinOps for Cloud Cost Management
The Critical Role of FinOps
As cloud adoption skyrockets, managing the associated costs becomes a paramount challenge for organizations. In this landscape, 89% of industry stakeholders identify FinOps as the key to reigning in cloud cost complexity.7
FinOps is Top Priority for Businesses
Research from Wakefield in June 2023 reinforces this viewpoint, revealing that FinOps has ascended to the same level of importance as established IT disciplines like DevOps and SecOps among developers, engineers, and C-suite executives.8
Cloud optimization, also called FinOps, is the top priority for businesses next year, followed by initiatives to have a cloud-first strategy.
Efficiency Through FinOps
The potential for cost savings through FinOps is substantial, with organizations able to reduce cloud expenses by 20 to 30%, as per McKinsey's insights. This efficiency gain underscores the value of integrating FinOps into the broader IT management strategy, offering a clear path to more sustainable and optimized cloud spending.
By 2026, FinOps is expected to reduce budget planning efforts by up to 40%.6 Plus, when it comes to migrations, 70% of companies that performed lift-and-shift without FinOps overspent by 70% during the first year and a half.6
Understanding FinOps Hiring
How Many Companies Have a FinOps Team
While writing this report, we’ve seen a variety of projections of how many companies currently have FinOps teams. This has ranged from 82% of organizations, according to the FinOps Foundation, to just 9% of companies, from Wakefield Research.
These numbers seem to differ depending on the source, we would take a guess that the number is somewhere between these, but it is still a nascent practice for most companies. We assume that many of these companies have use DevOps implementation services or cloud implementation services that assist them in applying cloud cost optimization practices.
What Skills Should FinOps Teams Have
Common skill sets FinOps teams have are expertise in cloud architecture, financial analysis, and understanding of business demand, with fewer teams having an understanding of the cloud market and predictive analytics.
How Much are FinOps Salaries?
When it comes to FinOps salaries, businesses can expect to pay between $75-$300K for FinOps specialists, depending on their level of experience. If your cloud cost optimization projects are a priority, we recommend outsourcing cloud consulting services to help you address priority items, without having to hire a full-time FinOps engineer or team. Often, experienced DevOps engineers can also help with cost-optimization projects for the cloud.10
How to Implement FinOps
Beyond hiring a FinOps team, to establish a FinOps culture, the majority of companies say they try to create visibility and transparency to cloud costs, use cloud cost management reporting best practices, and bring cloud cost data into existing reporting. Beyond enhancing visibility within their company, businesses also can establish a FinOps culture through leadership buy-in, FinOps training, policies, and more.10
FinOps in The Fintech Landscape: A Cloud-Driven Future
According to the World Economic Forum, Cloud Solutions were ranked as the 5th most important topics in the Fintech industry for this year, beaten only by AIML in Finance, Digital Economy, Open banking, and embedded finance.11
Similarly, the Economist also reported a significant shift towards cloud computing in the banking sector, with over half of the survey respondents agreeing that banks will completely migrate to the public cloud, abandoning private data centers within the next five years.12
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The CVP of financial services at Microsoft, Bill Borden, explained that cloud technology has shown where banks can take advantage of scale while not having to build on-premise technology on their own, giving them more space for agility and flexibility while adhering to regulatory-controlled environments.13
Looking Forward: The Next Frontier in FinOps
It's clear that FinOps and cloud computing are not merely fleeting trends but foundational elements shaping the future of technology and business operations. With the necessity for cloud computing on the rise and the increasing complexity of cloud cost management, the adoption of FinOps becomes not just beneficial but essential.
If your organization is on the path to cloud optimization and seeking to harness the strategic benefits of FinOps, now is the time to act. Consider engaging with a FinOps consulting company that can provide the insights, strategies, and support needed to navigate the complexities of cloud cost management.
With the right expertise, your organization can not only avoid the pitfalls of unmanaged cloud spending but also achieve significant efficiency gains, laying the groundwork for sustainable growth and success in the cloud era.
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