Recent survey reveals that integrating AI into FinOps programs can more than double cost savings for enterprises. The 2023 survey of 200 IT leaders, conducted by Foundry and commissioned by Tangoe, uncovered best practices for managing cloud costs through FinOps. A key finding shows that implementing FinOps with third-party software and services yields 20% average savings, compared to less than 10% for in-house programs.
The study highlights the impact AI has on FinOps outcomes. Companies leveraging AI tools were 53% more likely to report overall cost reductions greater than 20%. Chris Ortbals, Chief Product Officer at Tangoe, explains: "AI can evaluate massive datasets and run what-if scenarios to quickly determine the cost-saving actions that will yield the highest returns at scale. The human touch is still needed to train algorithms, but AI does the heavy lifting in identifying optimization opportunities."
The report provides several other valuable insights for enterprises evaluating FinOps programs:
- The top drivers for adopting FinOps are increasing cloud performance (70%), reducing budgets (60%), and rising costs (58%). This demonstrates it's viewed as a strategic initiative, not just a tactical cost-cutting measure.
- Main benefits include productivity gains (46%), lowered security risks (43%), and cost savings. FinOps elevates efficiency in financial workflows like budgeting and reporting.
- Managing utilization and rightsizing services are top use cases (65%). FinOps provides visibility into waste and aligns resources to real business needs.
- Criteria for solutions include expertise, AI capabilities, and managed services. Turnkey offerings drive better results than DIY approaches.
Advanced analytics was cited as the top use case, with 63% applying AI for this purpose. Half noted AI simplified the management of their FinOps programs through process automation. The majority expect their reliance on AI to grow, with plans to expand its use over the next 3-5 years.
Outsourcing software and services proved 2x more effective, with providers delivering context gained from optimizing millions in spending across hundreds of companies. Looks like an outside perspective can potentially uncover savings that overburdened in-house teams might miss.
SaaS optimization emerged as a key source of savings, with over half reducing SaaS costs by 20% or more. Strategies like managing licenses based on usage and consolidating applications yielded big returns. IaaS optimization netted more modest gains, with most saving less than 10% on infrastructure.
"Start with SaaS and high-volume applications, then expand FinOps more broadly," Ortbals advised. "Being aggressive in cutting waste in your largest cloud expenses brings quick wins. But optimize infrastructure and communication services too, and tap savings from your mobile and telecom spend. Taking a comprehensive approach maximizes the value of FinOps."
However, over half cited challenges in building the right process and human support systems for FinOps into workflows that have been in place for years.
With rising cloud costs driving adoption, this research quantifies the hard dollar impacts of FinOps. Leveraging AI tools and managed services can potentially lead to substantial gains.