Streamlining Cost Optimization with FinOps

By Axat Shah, Sakshi Zalavadia / Apr 01,2023

Introduction

This case study discusses the cost optimization and management activities performed by the FinOps Team for Insurance Group. After migrating their data center to cloud, Insurance Group realized that they lacked visibility and control over their cloud spend, resulting in overprovisioned and underutilized resources, variable and dynamic cloud usage, and inefficient license utilization. To address these challenges, the Insurance Group sought the expertise of a FinOps team to help them manage their cloud costs and optimize cloud usage. This case study highlights the challenges faced by the Insurance Group, the solutions proposed by the FinOps team, the implementation strategy, and the results achieved by the Insurance Group after implementing the recommendations provided by the team.

Company Overview

Name: Insurance Group

Industry: Financial Services

Employees: 5000+

Location: StPaul, USA

Established: 1880

Assets under management: $60B+

Revenue: $1 Billion

Challenges

An important part of any cloud strategy is to ensure cloud usage spend is well managed. When the Insurance Group migrated its data center to the cloud, there were several challenges that they faced in terms of managing cloud costs and optimizing cloud usage.

These challenges identified by the FinOps Team included:

  • Lack of visibility and control over cloud spend.
  • Overprovisioned and underutilized resources.
  • Difficulty in Optimization.
  • Lack of accountability and traceability for resources.
  • Inefficient license utilization.

Technology Solutions

The Intuitive.Cloud FinOps team proposed several solutions to overcome the challenges faced by the Insurance Group following their successful migration to cloud.

These actions consisted of:

  • Defining the company FinOps governance
    • Reporting structure (includes business mappings)
    • Tagging strategy
    • KPIs
    • Anomaly detection
    • Automation
    • Review cycles
    • Showback and Chargeback strategy (includes cost allocation)
  • Identifying the underutilized resources.
  • Rightsizing the infrastructure.
  • Identifying existing Commitment Management and Reserved Instance and optimizing them.
  • Optimizing License Management.

Implementation Strategy

Firstly, and to get quick payback, the Intuitive FinOps team started by onboarding the Insurance Group cloud accounts to the Cloudability Tool. Using the tool, the team conducted a thorough analysis of the current cloud infrastructure and the associated costs to identify potential areas of improvement.

After this, the team provided following recommendations:

  • A comprehensive tagging strategy that provides visibility and categorization of cloud resources.
  • Creation of account groups and business mappings to enable better tracking of cloud usage and costs.
  • Detailed rightsizing configuration for the resources.
  • Steps to optimize cloud resource usage and avoid overprovisioning.
  • Management plan for Reserved Instance
  • Elimination of instances with inefficient license utilization.

As a second step, Intuitive defined together with the client the first elements of their FinOps governance, the idea being to put in place the said governance in a phased way.

Results and Impact

Implementation of the recommendations given by the FinOps Team resulted in the following:

  • Insurance Group now has a better cost visibility and accountability of their cloud costs.
  • Out of all the recommendations provided, the one’s that were implemented resulted in 15% savings on their cloud costs.
  • 90% decrease in idle resources like unused EBS, unattached EIPs.
  • A better ROI on their Savings plan and Reserved Instance commitments.
  • Increased cloud cost traceability and transparency.

Lessons Learned

Lessons learned from performing the challenges and implementing technology solutions for cloud cost optimization and management:

  • A comprehensive tagging strategy provides better visibility and categorization of cloud resources.
  • Visibility and control over cloud spend are essential for effective cloud cost management.
  • Dynamic cloud usage requires continuous monitoring and optimization of cloud resources to avoid unnecessary costs.
  • Overprovisioned and underutilized resources can significantly impact cloud costs, and it is essential to identify and address them.
  • Rightsizing the infrastructure can lead to significant cost savings.
  • Commitment management and reserved instance planning can result in a better ROI.
  • Showback and Chargeback can provide greater transparency in cloud costs and help allocate costs to the appropriate departments or projects.

Last but not least, this should not be a one-time effort and FinOps governance is key to insuring the best possible usage of the cloud at the right cost for the long run.

Conclusion

In conclusion, the Insurance Group faced several challenges in managing their cloud costs and optimizing cloud usage after migrating to the cloud. By identifying the challenges and implementing several solutions proposed by the FinOps team, the Insurance Group achieved better cost visibility, accountability, and ROI on their cloud spend. It is essential for organizations to opt for FinOps services to ensure they are optimizing their cloud usage and managing cloud costs effectively.