Accurately Forecasting Cloud Costs for FinOps

Companies are investing heavily in the cloud for the operational and financial benefits. But without a robust cloud cost management strategy in place, the complexity of cloud services and billing can to overspending and unnecessary cloud waste.

Being able to accurately predict future cloud spend is one way to more optimize cloud spend and inform budgets. Ideally, finance, engineering and executive leadership agree upon and build allocation and forecast models from which to establish budgets that align with business goals.

Once a strategy is in place, cloud cost forecasting accuracy is an important KPI to measure in order to understand cloud efficiency and FinOps success.

Measuring forecast accuracy 

To measure your forecasting accuracy, you’ll need to calculate the variance between your forecast and actual costs. Once the forecasted spend variance (%) is calculated, it can be compared against the FinOps Community of Practitioners‘ recommended thresholds:

• For FinOps practices operating at Crawl maturity, variance from actual spend cannot exceed 20%
• Variance of 15% for a FinOps practice operating at Walk maturity
• Variations of 12% for FinOps practices operating at Run maturity

In the State of FinOps 2022 report, Run organizations reported 5% variance; Walk organizations reported 10% variance; and Crawl organizations reported 20% variance — a testament to the value of a growing FinOps practice.

Accurate cloud spend forecasts require robust FinOps capabilities across the board, including complete multi cloud visibility and the ability to fully categorize and allocate cloud costs.

Forecasting cloud costs with Anodot 

Anodot’s AI-powered solution analyzes historical data in order to accurately forecast cloud spend and usage by unit of choice, anticipate changing conditions, and get a better read on related costs. This helps organizations to make more informed budgeting decisions and find the right balance between CapEx and OpEx.

From a single platform, Anodot provides complete, end-to-end visibility into an organization’s entire cloud infrastructure and related billing costs. By monitoring cloud metrics together with revenue and business metrics, Anodot enables cloud teams to understand the true cost of their cloud resources, with benefits such as:

• Deep visibility and insights – Report on and allocate 100% of your multicloud costs (with K8 insight down to the pod level) and deliver relevant, customized reporting for each persona in your FinOps organization
• Easy-to-action savings recommendations – Reduce waste and maximize utilization with 40+ savings recommendations highly personalized to your business and infrastructure
• Continuous cost monitoring and control – Adaptive, AI-powered forecasting, budgeting and anomaly detection empower you to manage cloud spend with a high degree of accuracy and relevance
• Immediate value – You’ll know how much you can immediately save from day one and rely on pre-configured, customized reports and forecasts to begin eliminating waste